Legislature(1997 - 1998)

02/04/1997 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                        February 4, 1997                                       
                            8:00 a.m.                                          
 MEMBERS PRESENT                                                               
 Representative Jeannette James, Chair                                         
 Representative Ethan Berkowitz                                                
 Representative Kim Elton                                                      
 Representative Ivan Ivan                                                      
 Representative Al Vezey                                                       
 MEMBERS ABSENT                                                                
 Representative Fred Dyson                                                     
 Representative Mark Hodgins                                                   
 COMMITTEE CALENDAR                                                            
 OVERVIEW:  Department of Public Safety                                        
 HOUSE BILL NO. 1                                                              
 "An Act relating to taxes on cigarettes and tobacco products; and             
 providing for an effective date."                                             
      - MOVED CSHB 1(STA) OUT OF COMMITTEE                                     
 HOUSE BILL NO. 52                                                             
 "An Act relating to taxes on cigarettes and tobacco products; and             
 providing for an effective date."                                             
      - HEARD AND HELD                                                         
 * HOUSE JOINT RESOLUTION NO. 18                                               
 Proposing an amendment to the Constitution of the State of Alaska             
 relating to changing the rate of a tax or license that supports a             
 dedication of its proceeds.                                                   
      - HEARD AND HELD                                                         
 (* First public hearing)                                                      
 PREVIOUS ACTION                                                               
 BILL:  HB   1                                                               
 SHORT TITLE: CIGARETTE AND TOBACCO TAX                                        
 SPONSOR(S): REPRESENTATIVE(S) BUNDE, Ivan, Croft, Porter                      
 JRN-DATE      JRN-PG             ACTION                                       
 01/13/97        26    (H)   PREFILE RELEASED 1/3/97                           
 01/13/97        26    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/13/97        27    (H)   STATE AFFAIRS, HES, FINANCE                       
 01/21/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 01/21/97              (H)   MINUTE(STA)                                       
 01/28/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 01/28/97              (H)   MINUTE(STA)                                       
 01/30/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 01/30/97              (H)   MINUTE(STA)                                       
 02/04/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 BILL:  HB  52                                                               
 SHORT TITLE: INCREASE TOBACCO TAXES                                           
 SPONSOR(S): REPRESENTATIVE(S) JAMES                                           
 JRN-DATE      JRN-PG             ACTION                                       
 01/13/97        41    (H)   PREFILE RELEASED 1/10/97                          
 01/13/97        41    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/13/97        41    (H)   STATE AFFAIRS, HES, FINANCE                       
 01/21/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 01/21/97              (H)   MINUTE(STA)                                       
 01/28/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 01/28/97              (H)   MINUTE(STA)                                       
 01/30/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 01/30/97              (H)   MINUTE(STA)                                       
 02/04/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 BILL:  HJR 18                                                               
 SPONSOR(S): REPRESENTATIVE(S) IVAN                                            
 JRN-DATE      JRN-PG             ACTION                                       
 01/29/97       164    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/29/97       164    (H)   STA, HES, JUD, FINANCE                            
 02/04/97              (H)   STA AT  8:00 AM CAPITOL 102                       
 WITNESS REGISTER                                                              
 RONALD L. OTTE, Commissioner                                                  
 Department of Public Safety                                                   
 P.O. Box 111200                                                               
 Juneau, Alaska 99811-1200                                                     
 Telephone:  (907) 465-4322                                                    
 POSITION STATEMENT:  Presented an overview of the Department of               
 Public Safety.                                                                
 CRAIG GOODRICH, Director State Fire Marshal                                   
 Division of Fire Prevention                                                   
 Department of Public Safety                                                   
 5700 East Tudor Road                                                          
 Anchorage, Alaska 99507-1225                                                  
 Telephone:  (907) 269-5491                                                    
 POSITION STATEMENT:  Presented an overview of the Division of Fire            
 GLENN G. GODFREY, Colonel, Director                                           
 Division of Alaska State Troopers                                             
 Department of Public Safety                                                   
 5700 East Tudor Road                                                          
 Anchorage, Alaska 99507-1225                                                  
 Telephone:  (907) 269-5641                                                    
 POSITION STATEMENT:  Presented an overview of the Division of                 
 Alaska State Troopers.                                                        
 JAYNE ANDREEN, Executive Director                                             
 Council on Domestic Violence and Sexual Assault                               
 Department of Public Safety                                                   
 P.O. Box 111200                                                               
 Juneau, Alaska 99811-1200                                                     
 Telephone:  (907) 465-4356                                                    
 POSITION STATEMENT:  Presented an overview of the Council on                  
 Domestic Violence and Sexual Assault.                                         
 JOHN GLASS, Colonel, Director                                                 
 Division of Fish and Wildlife Protection                                      
 Department of Public Safety                                                   
 5700 East Tudor Road                                                          
 Anchorage, Alaska 99507-1225                                                  
 Telephone:  (907) 269-5509                                                    
 POSITION STATEMENT:  Presented an overview of the Division of Fish            
 and Wildlife Protection.                                                      
 TIM SCHRAGE                                                                   
 P.O. Box 870769                                                               
 Wasilla, Alaska 99687                                                         
 Telephone:  (907) 440-1512                                                    
 POSITION STATEMENT:  Provided testimony on HB 1 and HB 52.                    
 BOBBY SCOTT                                                                   
 521 Izembek Circle                                                            
 Anchorage, Alaska 99508                                                       
 Telephone:  (907) 338-9257                                                    
 POSITION STATEMENT:  Provided testimony on HB 1 and HB 52.                    
 BRIAN LICK                                                                    
 9720 Vanguard Drive Apt. 28                                                   
 Anchorage, Alaska  99507                                                      
 Telephone:  (907) 522-4610                                                    
 POSITION STATEMENT:  Provided testimony on HB 1 and HB 52.                    
 RICHARD CROSS                                                                 
 P.O. Box 204                                                                  
 Glennallen, Alaska 99588                                                      
 Telephone:  (907) 822-5153                                                    
 POSITION STATEMENT:  Provided testimony on HB 1 and HB 52.                    
 GLADYS THOMPSON                                                               
 7216 Lake Otis Parkway                                                        
 Anchorage, Alaska 99507                                                       
 Telephone:  (907) 349-1456                                                    
 POSITION STATEMENT:  Provided testimony on HB 1 and HB 52.                    
 REPRESENTATIVE CON BUNDE                                                      
 Alaska State Legislature                                                      
 Capitol Building, Room 104                                                    
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-3871                                                    
 POSITION STATEMENT:  Sponsor of HB 1.                                         
 REX SHATTUCK                                                                  
 21665 Sheltering Spruce Loop                                                  
 Chugiak, Alaska 99567                                                         
 Telephone:  (907) 688-0169                                                    
 POSITION STATEMENT:  Provided testimony on HB 1 and HB 52.                    
 THOMAS W. WRIGHT, Legislative Assistant                                       
    to Representative Ivan Ivan                                                
 Capitol Building, Room 418                                                    
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-4942                                                    
 POSITION STATEMENT:  Provided testimony on HJR 18.                            
 JAMES BALDWIN, Assistant Attorney General                                     
 Government Affairs Section                                                    
 Civil Division                                                                
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska 99811-0300                                                     
 Telephone:  (907) 465-3600                                                    
 POSITION STATEMENT:  Provided testimony on HJR 18.                            
 ACTION NARRATIVE                                                              
 TAPE 97-6, SIDE A                                                             
 Number 0001                                                                   
 The House State Affairs Standing Committee was called to order by             
 Chair Jeannette James at 8:00 a.m.  Members present at the call to            
 order were Representatives James, Berkowitz and Vezey.  Members               
 absent were Ivan, Dyson, Elton and Hodgins.                                   
 CHAIR JEANNETTE JAMES announced the first one-half hour of today's            
 meeting was dedicated to an overview from the Department of Public            
 Safety.  The committee would then take testimony from invited                 
 participants only.  They were the remaining participants who wished           
 to testify last week but were not able to due to time restraints.             
 Public testimony would then be closed in the House State Affairs              
 Standing Committee.  Testimony would be taken in the House Health,            
 Education and Social Services Committee and the House Finance                 
 Committee-the next two committees of referral.                                
 OVERVIEW:  Department of Public Safety                                      
 The first order of business to come before the House State Affairs            
 Standing Committee was an overview presentation by the Department             
 of Public Safety.                                                             
 CHAIR JAMES called on Ronald L. Otte, Commissioner, Department of             
 Public Safety, to present the overview.                                       
 Number 0180                                                                   
 RONALD L. OTTE, Commissioner, Department of Public Safety, stated             
 the department appreciated the opportunity to talk to the committee           
 members today about some of the programs included under the                   
 Department of Public Safety.  He introduced the directors and                 
 managers of the department as the best any where in the state                 
 government.  He noted Mary Moran, Director, Highway Safety Planning           
 Agency; Juanita Hensley, Director, Driver Services, Division of               
 Motor Vehicles; John Glass, Director, Division of Fish and Wildlife           
 Protection; Kenneth E. Boschoff, Director, Division of                        
 Administrative Services; Laddie Shaw, Executive Director, Alaska              
 Police Standards Council; Glenn G. Godfrey, Director, Division of             
 Alaska State Troopers; Craig Goodrich, Director State Fire Marshal,           
 Division of Fire Prevention, and Jayne Andreen, Executive Director,           
 Council on Domestic Violence and Sexual Assault.                              
 Number 0266                                                                   
 CHAIR JAMES announced the Department of Public Safety was her                 
 favorite agency because it was the very prime reason there was a              
 Number 0278                                                                   
 COMMISSIONER OTTE replied it was his favorite agency also.  He read           
 the following introduction from the Department of Public Safety               
 Overview handout dated, February 1997:                                        
 "When the public thinks about the Department of Public Safety they            
 mostly think of the uniformed Trooper who they'd call in an                   
 emergency, or of the DMV with whom they register their car.  In               
 fishing communities the public would probably think of the                    
 uniformed Fish and Wildlife Protection Trooper who enforces the               
 commercial harvest regulations.  In rural communities they might              
 think of the Village Public Safety Officer who provides local law             
 enforcement and who coordinates search and rescue efforts.  While             
 each of these public images is correct, the Department of Public              
 Safety services the public and the criminal justice community in              
 many ways, including many not known to the general public."                   
 COMMISSIONER OTTE explained he would bring forward some of the                
 directors today to present their programs.  He would distribute the           
 handout to the committee members so that they would have a chance             
 to look at some of the programs that would not be covered in                  
 today's presentation.                                                         
 COMMISSIONER OTTE continued by stating that public safety provided            
 direct services to the public.  He cited highway patrol and                   
 accident investigation, criminal investigation, search and rescue             
 operations, driver's licensing and motor vehicle registration,                
 concealed handgun permitting, enforcement of sport fishing and                
 hunting regulations, fire prevention and safety education, and                
 criminal history background checks for employment.  Public safety             
 also provided indirect services to the public.  He cited licensing            
 of commercial drivers, security guard licensing, support for                  
 shelters for victims of abuse and sexual assault, highway safety              
 planning grants to local communities, plan review and inspection of           
 all building larger than a 3-plex, coordination of federal drug               
 grants, enforcement of commercial fishing regulations, criminal               
 history information to organizations, licensing of all fire arms              
 and suppression systems, sex offender registration, financial aid             
 for victims of violent crimes, and staffing for the Emergency                 
 Communications Center.  There were other programs and services that           
 literally touched every community in the state.  He explained the             
 handout also addressed the department's budget.  He cited the                 
 department occupied 119 state owned or leased structures in 49                
 communities around the state; the department operated 43 aircraft             
 with a value of approximately $6 million and an average age of 25             
 years; the department operated 19 marine vessels with an estimated            
 value of $12 million and an average age of 16 years; the department           
 operated approximately 1,500 mobile and portable radios, dispatch             
 consoles, and call recorders to support the 911 service; the                  
 department operated more than 1,000 micro computer terminals and              
 printers interconnected by 20 local area networks; and much more.             
 The handout also addressed the volume of crime in the state.  He              
 would not go into detail about that today, however.                           
 COMMISSIONER OTTE called on Craig Goodrich, Division of Fire                  
 Prevention, to address the committee members next.                            
 Number 0590                                                                   
 CRAIG GOODRICH, Director State Fire Marshal, Division of Fire                 
 Prevention, Department of Public Safety, encouraged the committee             
 members to review the information beginning on page 7 of the                  
 handout.  He explained the fire marshall was also responsible for             
 the construction of all facilities larger than a 3-plex.                      
 Furthermore, 1996 was a terrible year for the division.  It                   
 expended $500 million and lost 29 lives to fires.  The division was           
 trying a variety of things to achieve a significant reduction in              
 those areas.  For example, it was partnering with 61 different                
 agencies to apply the rules and to educate the public.                        
 Number 0701                                                                   
 COMMISSIONER OTTE called on Glenn G. Godfrey, Division of Alaska              
 State Troopers, to address the committee members next.                        
 Number 0711                                                                   
 GLENN G. GODFREY, Colonel, Director, Division of Alaska State                 
 Troopers, Department of Public Safety, stated the division was                
 complex.  It was the most complex state law enforcement agency in             
 the United States.  It was empowered to pursue, apprehend and                 
 obtain evidence to allow for the prosecution of offenders.  It was            
 also a highly visible uniform patrol division.  He explained                  
 officers were assigned to specialized major crimes, sexual                    
 assaults, white collar crimes, missing persons, narcotics, and                
 alcohol investigations; as well as, to provide oversight for the              
 Village Public Safety Officer Program.  In addition, out of 328               
 communities in the state, the troopers had direct service to 274 of           
 those communities.  Only 45 communities in the state had                      
 established police departments and 67 percent of those were not               
 accessible by road.  The department, on a continual basis,                    
 supported the 45 established police departments.  Moreover, the               
 licensing section was responsible for administering security guard            
 licenses, sex offender registration, and the concealed handgun                
 permit program.  Another taxing area for the division was the                 
 investigation of deaths.  Last year it investigated 527 incidents             
 that involved death.  That averaged to 11 death investigations per            
 week.  The issues he mentioned facing the division for 1997 were              
 the underfunding of personnel services, improving its access to               
 technology, and paying for the support of search and rescue                   
 services.  These issues were ones that were going to impact the               
 citizens of Alaska.                                                           
 Number 0929                                                                   
 MR. GODFREY further presented a brief overview of the Village                 
 Public Safety Officer Program (VPSOP).  He explained VPSOs                    
 responded to more than 9,100 requests in 1996.  One issue affecting           
 the VPSOP was funding for 10 additional positions.  The program was           
 a challenge for the division, but it did relieve some of the                  
 pressure placed on the troopers.                                              
 Number 1034                                                                   
 COMMISSIONER OTTE called on Jayne Andreen, Council on Domestic                
 Violence and Sexual Assault, to address the committee members next.           
 Number 1075                                                                   
 JAYNE ANDREEN, Executive Director, Council on Domestic Violence and           
 Sexual Assault, Department of Public Safety, explained the council            
 provided funding to locally based programs throughout the state               
 that provided services to victims and perpetrators of domestic                
 violence and sexual assault.  It was also responsible for                     
 coordinating and providing technical assistance at the state level            
 for domestic violence.  The domestic violence and sexual assault              
 movement had been around for the last 20 years to 25 years.  It was           
 exciting because the field was beginning to be recognized for the             
 seriousness of the crimes.  It was also being given the opportunity           
 and the tools to really make some forward progress.  She cited the            
 Domestic Violence Prevention and Victim Protection Act of 1996                
 helped put Alaska in the forefront of developing a consistent                 
 statewide policy that held the offender accountable and provided              
 the maximum level of protection to the victims.  The council played           
 a very significant role in this project.  She hoped that within the           
 next five years the council would be able to know what it needed to           
 intervene in the cycle of violence.                                           
 Number 1197                                                                   
 COMMISSIONER OTTE explained that the delivery of public safety                
 affected every community in the state.  He cited the training                 
 academy in Sitka as an example.  It was a program that trained                
 officers statewide.  The academy combined three programs reducing             
 the need of support from the general fund.  He also cited the state           
 criminal laboratory.  Most of its support went to the local                   
 COMMISSIONER OTTE called on John Glass, Division of Fish and                  
 Wildlife Protection, to address the committee members next.                   
 Number 1335                                                                   
 JOHN GLASS, Colonel, Director, Division of Fish and Wildlife                  
 Protection, Department of Public Safety, explained the primary                
 purpose and function of the division was to enforce the laws,                 
 rules, and regulations concerning fish and wildlife resources                 
 within the state.  These regulations were passed by the various               
 boards and committees throughout the state.  There were two main              
 components within the division-the aircraft section and the marine            
 enforcement section.  The marine enforcement section was primarily            
 used for the enforcement of commercial fishing in the Bering Sea.             
 Commercial fishing, he cited, produced $38.3 million in taxes last            
 year.  The division's 17 marine vessels ranged from 25 feet to 121            
 feet.  Moreover, in 1996 there were 450,000 licenses issued in the            
 state for hunting and fishing, and 35,000 jobs were associated with           
 commercial fishing.  He also explained in some of the communities             
 the fish and wildlife protection trooper was the only public safety           
 resource available.                                                           
 Number 1432                                                                   
 COMMISSIONER OTTE stated he had been in law enforcement for 31                
 years, and had visited virtually every community or area of the               
 country.  The public safety program in Alaska was healthy and was             
 head and shoulders above any other law enforcement or public safety           
 effort he had seen in the country.  It was also the most diverse              
 and challenging.  The managers were extremely professional and                
 competent.  The department did have problems, he declared, but it             
 handled them well.  He would be willing to answer any questions of            
 the committee members.                                                        
 Number 1495                                                                   
 CHAIR JAMES commented that the academy in Sitka mentioned earlier             
 was an example of a building process from one administration to               
 another, and from one legislature to another.                                 
 Number 1537                                                                   
 REPRESENTATIVE AL VEZEY commented that the overview meetings were             
 tantamount to a bathing suit contest.  He believed that legislators           
 should spend more time with the agencies because it was informative           
 for both parities.  He stated legislators did not spend enough time           
 talking with the people that ran the government.  Legislators                 
 tended to concentrate on passing legislation.  It was not the duty            
 of a legislator to run the government, therefore, it was necessary            
 to communicate with those that did run it.                                    
 Number 1591                                                                   
 REPRESENTATIVE ETHAN BERKOWITZ commented he had the privilege to              
 work with the troopers when he was in the district attorney's                 
 office.  He declared one of the serious problems that faced issues            
 of public safety and crime, was that they were chronically                    
 underfunded.  That was the largest complaint from the villages and            
 Anchorage.  It was said there was "a lot of talk out of Juneau,"              
 but not much delivery.  He would like to work together with                   
 everyone to ensure that the legislature started to deliver on the             
 public safety that Alaskans deserved.  A collateral benefit, he               
 stated, would be to improve officer safety.  Furthermore, there               
 were ways to increase public safety at zero cost to the budget.  He           
 cited there were great fishery enforcement ideas that could raise             
 money, as an example.                                                         
 Number 1642                                                                   
 REPRESENTATIVE VEZEY commented on the recent drug bust in                     
 Fairbanks.  He asked Commissioner Otte if he had a handle on                  
 measuring the magnitude of the drug problem in Alaska?  He knew               
 that it was so pervasive that it was hard to describe.                        
 Number 1673                                                                   
 COMMISSIONER OTTE replied he could not give Representative Vezey a            
 measurement today.  He could, however, say that the drug problem in           
 Alaska continued to grow.  As the profits from marketing and                  
 selling drugs remained substantial, there were always people                  
 willing to replace the ones that were arrested.  Law enforcement              
 believed that enforcement would not be the tool that eliminated or            
 reduced drug use.  If it was, the "war on crime" over the years               
 would have done it by now.  But, "Frankly, we haven't really made             
 much of a dent,"  he said.  He believed law enforcement would not             
 make a significant difference until attitudes were changed.                   
 Number 1736                                                                   
 REPRESENTATIVE VEZEY replied the key words were "just growing."               
 COMMISSIONER OTTE responded, "It is growing, yes, sir."                       
 REPRESENTATIVE VEZEY stated he was constantly amazed at how                   
 commonplace drugs were.                                                       
 Number 1745                                                                   
 CHAIR JAMES thanked Commissioner Otte for his presentation.                   
 CHAIR JAMES announced for the record that Representatives Kim Elton           
 and Ivan Ivan arrived shortly after convening the meeting.                    
 HB 1 - CIGARETTE AND TOBACCO TAX                                             
 HB 52 - INCREASE TOBACCO TAXES                                               
 Number 1790                                                                   
 The next order of business to come before the House State Affairs             
 Standing Committee was HB 1, "An Act relating to taxes on                     
 cigarettes and tobacco products; and providing for an effective               
 date." And, HB 52, "An Act relating to taxes on cigarettes and                
 tobacco products; and providing for an effective date."                       
 CHAIR JAMES announced she would open the committee meeting to the             
 invited testifiers only.                                                      
 Number 1805                                                                   
 TIM SCHRAGE was the first person to testify via teleconference in             
 Anchorage.  He stated he was against the tobacco tax.  He was a               
 retail owner of a couple of liquor stores in Anchorage and the                
 Matanuska Valley.  The current state tax was $2.90 per carton, the            
 current federal tax was $2.93 per carton, and the current                     
 municipality of Anchorage tax was $2.72 per carton.  Therefore, a             
 total of 50 percent of the wholesale price was pure tax.  In                  
 addition, the retailer paid for a license to sell tobacco from the            
 federal government, the state government and the municipal                    
 government.  The bill was asking the smoker to pay a higher price.            
 He asked, "Aren't they already doing that?"  Furthermore, a smoker            
 could not smoke in public buildings and on public transportation.             
 A smoker also paid a higher insurance rate.  He asked, "Where do              
 these taxes go that they're paying?"  He believed they were going             
 to the general fund, and he wondered if the public was getting                
 their money back.  Mr. Schrage stated before an additional tax was            
 added, the state should look at other ways to spend the money from            
 the existing taxes.  Furthermore, the heath organizations in                  
 support of the tax had 33 years, since the first report from the              
 surgeon general that indicated smoking was a habit, to educate                
 them.  If the state was truly interested in stopping the children             
 from smoking, then it should enforce the laws already in place and            
 close the loopholes.  Since it was illegal to sell cigarettes to              
 minors he wondered where they were getting them.  He stated they              
 were probably getting them from stealing, their parents, friends,             
 and illegal retailers.  He reiterated, "Let's close the loophole,             
 let's not tax more."                                                          
 Number 1962                                                                   
 BOBBY SCOTT was the next person to testify via teleconference in              
 Anchorage.  He did not promote or condone the use of tobacco                  
 products by the youth.  He wondered why kids were using tobacco if            
 it was illegal now.  The kids today had the same attitude that the            
 adults did when they were in school, therefore, the price did not             
 matter.  The tobacco tax would put an unfortunate amount of                   
 pressure on the less fortunate kids encouraging them to obtain                
 cigarettes in order to fit in with the other kids.  But, it was his           
 responsibility to teach honesty, responsibility and respect to his            
 kids.  He explained he worked for a small retailer and he feared              
 that the small retailers would be put out of business before long             
 and send the economy on a downward spiral.  There were other                  
 powerful ideas that had been discussed in Juneau and he would like            
 to see them continued with the proper communication to reach the              
 goal of deterring teens from smoking.  The tax would not reach that           
 goal.  It would accomplish diversity, havoc and ultimately                    
 destruction.  He thanked the committee for letting him testify.               
 Number 2095                                                                   
 BRIAN LICK was the next person to testify via teleconference in               
 Anchorage.  He was a non-smoker, and he worked in the retail                  
 industry.  A retailer he spoke to recently cited he was missing               
 $20,000 in cigarette products.  A reasonable amount of that was               
 contributed to theft.  He believed the tobacco tax would increase             
 the amount of theft.  In Canada the price of cigarettes went up to            
 $50 per carton and bootlegging and smuggling became a real issue.             
 The retailers would have to absorb $20,000 to $25,000 per year to             
 protect their investments.  This was not a threat, it was just a              
 realistic perspective, he declared.  The retailers would pass that            
 cost on in a gallon of milk, for example, causing all Alaskans to             
 pay and not just the smokers.  Furthermore, he stated that the                
 permanent fund dividend program invested in stock of the Phillip              
 Morris Company.  He felt that was a double standard.                          
 Number 2201                                                                   
 CHAIR JAMES explained that the Phillip Morris Company was a family            
 of trading companies.  It sold more than tobacco products.                    
 Number 2218                                                                   
 RICHARD CROSS was the next person to testify via teleconference in            
 Glennallen.  He was against the cigarette tax.  He did not think it           
 was right to tax one segment of society.  It would not stop the               
 kids from smoking.  He had been smoking for 33 years and the price            
 had increased every since he started.  It did not stop him from               
 smoking.  The kids would steal and borrow for cigarettes.  He                 
 stated the current laws needed to be enforced.  He had seen kids              
 burglarize to get cigarettes and then sell them at school to make             
 money.  It was not right to tax something that did not need to be             
 taxed, he declared.  Enforce what already existed.  Some members of           
 his family smoked and some did not.  He tried it and liked it.                
 "Some people were born with that."  He reiterated the cigarette tax           
 was wrong.                                                                    
 Number 2279                                                                   
 GLADYS THOMPSON was the next person to testify via teleconference             
 in Anchorage.  She was a long time resident of Alaska.  She had               
 also lived in the Midwest and New England.  When she was a little             
 kid she remembered signs on the barns that were paid for by the               
 tobacco companies encouraging the farmers who were not doing well.            
 She agreed with the tobacco tax.  She would even double the amount.           
 She recognized the other ramifications that previous testimony                
 referred to that needed to be addressed also.  It was illegal to              
 steal.  Furthermore, she recalled from her earlier days that the              
 signs on the barns were advertizing chewing tobacco.  In Cleveland,           
 Ohio spittoons were placed on the streets for those chewing                   
 tobacco.  She started to smoke when she went to college because of            
 the influence of the movie stars in the 1930's and the 1940's.  It            
 was considered glamorous.  She only enjoyed it to an extent.  That            
 was another example of how the tobacco companies marketed their               
 products to encourage young people to smoke.  She believed they               
 should be put out of business in the long run.                                
 Number 2414                                                                   
 REX SHATTUCK was the next person to testify via teleconference in             
 Anchorage.  He was representing himself and not the tobacco                   
 industry or the health industry.  It appeared that it was only the            
 tobacco and the health industries that were testifying on this                
 issue.  He believed that testimony should be weighed.  He started             
 smoking 28 years ago and quit last year.  The price of a package of           
 cigarettes was not a deterrent nor was it a consideration when he             
 quit, it was due to the urging of his children.  The gradual price            
 increases over the years were not effective.  Two of his parents              
 suffered from emphysema, but that did not spur him to support a 344           
 percent tax increase.  That was the biggest increase ever.                    
 TAPE 97-6, SIDE B                                                             
 Number 0001                                                                   
 MR. SHATTUCK continued by stating that there was not a way to                 
 earmark the money from this tax to education.  He reiterated he did           
 not support a tobacco tax, and he strongly recommended that the               
 committee members review the federal and the state constitution to            
 determine their responsibilities in terms of raising revenues.                
 Furthermore, last year the legislators did a good job of decreasing           
 the budget.  He suggested they do the same thing this year and not            
 increase the revenues.                                                        
 Number 0041                                                                   
 CHAIR JAMES closed the House State Affairs Standing Committee                 
 meeting to public testimony on HB 1 and HB 52.  It was now time for           
 the committee members to deliberate.                                          
 CHAIR JAMES explained there was an amendment that changed HB 1 to             
 look like HB 52.  She called for a motion to adopt the amendment.             
 Number 0062                                                                   
 REPRESENTATIVE IVAN IVAN moved that the committee adopt Amendment             
 1, dated 1/28/97.                                                             
 Number 0081                                                                   
 REPRESENTATIVE CON BUNDE announced he did not have a problem with             
 Amendment 1, dated 1/28/97.                                                   
 REPRESENTATIVE VEZEY objected.  A roll call vote was taken.                   
 Representatives James, Berkowitz, Elton and Ivan voted in favor of            
 the motion.  Representative Vezey voted against the motion.  The              
 amendment was adopted.                                                        
 CHAIR JAMES announced for the record that Representatives Fred                
 Dyson and Mark Hodgins were excused from today's committee meeting.           
 CHAIR JAMES further explained that HB 1 was the vehicle that would            
 move through the committees, while HB 52 would remain in the House            
 State Affairs Standing Committee.  Two tobacco tax bills were not             
 Number 0127                                                                   
 REPRESENTATIVE BUNDE expressed his appreciation of the efforts of             
 Representative James in soliciting the testimony heard on this                
 subject.  He also thanked the public for taking the time to                   
 testify.  Representative Bunde recapped the goal of CSHB 1(STA) by            
 stating it was designed to achieve an economic barrier to young               
 people starting to smoke, and a user fee for those who wished to              
 continue to smoke.  He responded to prior testimony from the                  
 tobacco industry.  He suggested that the spokes people acquaint               
 themselves with the laws in Alaska.  He explained one had not                 
 bothered to register with the state as a lobbyist.  His latest                
 research showed that the nicotine industry had spent over $200,000            
 in lobbyists.  That alone told him that the bill would work.  The             
 committee members also heard considerable comments about protecting           
 the small business person.  He took those comments to heart.                  
 However, if smuggling was such a challenge, he stated, "I don't               
 think anybody would go so far as to recommend we remove existing              
 taxes."  And, the mail order problem could be addressed through               
 other legislation.  That was something that needed to be looked at.           
 The business people that he heard from supported the notion that              
 the legislators should stop kids from smoking, and research showed            
 that the vast majority of people began smoking when they were                 
 children.  If that was accepted as a fact, then these business                
 people had better be making plans for the future because if they              
 stopped children from smoking they would indeed put themselves out            
 of business over a period of time.  He reiterated he was                      
 sympathetic to the small business owner.  He reminded the                     
 committee, however, that at one time cocaine was put in Coca-Cola             
 because it was thought to be healthy.  And, codeine was put in a              
 lot of patented medicines causing addictions at one time.  As more            
 information was obtained, businesses needed to change.                        
 Furthermore, there were concerns about enforcement and Indian                 
 country.  He thought it was a little unfair to assume that the                
 majority of the Native citizens would become scofflaws and                    
 immediately begin smuggling.  It was necessary to consider the                
 geography of Alaska.  He stated, "Not too many people are gonna go            
 to Egegik to buy smuggled cigarettes."  Moreover, there would not             
 be the common border problems that the Canadians had on the East              
 coast.  The people in Western Canada did not lower their prices               
 because of smuggling problems.  Furthermore, if the state faced the           
 issue of Native sovereignty, he thought that the issue of smuggling           
 tobacco would be only one of many, many challenges the state would            
 face.  The bottom line was that the increase in the tobacco tax               
 obviously worked to reduce the demand.  "If it didn't," he asked,             
 "Why would the nicotine industry be here spending so much time and            
 money to fight this increase."  He thanked the committee members              
 for their time.                                                               
 Number 0335                                                                   
 CHAIR JAMES stated that this issue was not one of her favorite                
 issues.  She believed strongly in a person's right to do what was             
 legal, and smoking tobacco was legal.  She also believed that                 
 imposing a tax at a time when the legislature was trying to cut the           
 budget was not wise.  It violated the pledge to not impose taxes              
 until the budget was under control.  She had never smoked and she             
 hated smoking.  She did not want any children to start to smoke,              
 and she would prefer that everyone would quit.  However, she                  
 recognized the legal right of those that wanted to use tobacco.               
 Therefore, she struggled with this issue and had been very candid             
 about her feelings from the beginning.  She also had a great                  
 passion for school maintenance and construction and the children of           
 the state.  In addition, over the past four years, she had not seen           
 much interest in putting money towards that process.  She did not             
 want to fill the general fund with more money creating a tendency             
 to spend it.  Therefore, the pre-dedicated school fund was much               
 more palatable.  Moreover, she was pleased to have the approval of            
 Representative Bunde as sponsor of HB 1.  She was also pleased to             
 hear the testimony from the public supporting the dedication.  The            
 committee today would also be hearing HJR 18 which called on the              
 people to vote on a constitutional amendment that would allow the             
 raising or lowering of a tax in a pre-dedicated fund and close the            
 opportunity for a law suit.  She thought it was a better idea to go           
 to the public than it was to go to the courts.  She had very little           
 confidence in the court system due to decisions made whimsically by           
 judges.  She felt guilty that she did not have confidence in the              
 judicial system, but she would rather go to the public to vote on             
 this issue.  She was happy to walk together with Representative               
 Bunde the rest of the way with this bill.                                     
 Number 0507                                                                   
 REPRESENTATIVE KIM ELTON stated he hoped the money that went into             
 the school construction and maintenance account was not seen as a             
 substitute for general fund dollars.  The money generated from the            
 tax would not be enough to accomplish what needed to be done in               
 school maintenance and construction.  It should not be seen as the            
 only answer for the problems that many of the school districts                
 Number 0548                                                                   
 REPRESENTATIVE ELTON moved that CSHB 1(STA) move from committee               
 with the attached fiscal note(s) from HB 52 and with individual               
 recommendations.  There was no objection.  The CSHB 1(STA) was so             
 moved from the House State Affairs Standing Committee.                        
 Number 0569                                                                   
 CHAIR JAMES announced that she was in the process of designing                
 legislation that would improve the enforcement of the current laws            
 surrounding teenage smoking.  She asked for assistance from anybody           
 that knew where more enforcement was needed.                                  
 Number 0599                                                                   
 REPRESENTATIVE ETHAN BERKOWITZ stated that he was offended because            
 a representative of the tobacco industry had not provided                     
 information to him within the time that he indicated.                         
 Number 0630                                                                   
 CHAIR JAMES stated that it had only been one week.  She suggested             
 putting his request in writing to ensure a response.                          
 Number 0640                                                                   
 REPRESENTATIVE VEZEY stated that if a lobbyist promised information           
 one should allow three weeks to four weeks to receive it.                     
 HJR 18 - DEDICATED FUNDS: RATE MAY BE CHANGED                               
 The next order of business to come before the House State Affairs             
 Standing Committee was HJR 18, "Proposing an amendment to the                 
 Constitution of the State of Alaska relating to changing the rate             
 of a tax or license that supports a dedication of its proceeds."              
 CHAIR JAMES called on Representative Ivan Ivan, sponsor of HJR 18,            
 to present the resolution.                                                    
 Number 0713                                                                   
 REPRESENTATIVE IVAN IVAN announced his staff, Thomas W. Wright, was           
 here to answer any technical questions about the resolution.                  
 Representative Ivan read the following sponsor statement into the             
 "This resolution proposes an amendment to Article IX, Section 7 of            
 the state constitution.  The current article allows for the                   
 dedication of funds for a specific purpose as long as it existed by           
 April 24, 1956.  This resolution would allow a changing of a rate             
 of a tax or license of which the proceeds are dedicated to a                  
 special purpose.  This proposed amendment would be placed before              
 the voters at the next general election, if approved by the                   
 "I introduced this resolution because of the differing opinions               
 represented by the attorney general's office and Legal Services in            
 regards to the dedication of a tax increment to a specific purpose.           
 In order to avoid litigation, especially if the proceeds of the               
 tobacco tax are to be placed into the school fund or if the                   
 legislature changes any other tax rate or license fee, into which             
 proceeds are to be placed into a dedicated fund, this resolution is           
 a means to resolve that potential problem."                                   
 REPRESENTATIVE IVAN further stated he would like to see that the              
 proceeds of the tobacco tax go to the maintenance and construction            
 of school facilities.  It was an opportunity to assist the                    
 government in some of its most important aspects.                             
 Number 0860                                                                   
 REPRESENTATIVE ELTON asked how many dedicated funds were there,               
 other than the education fund?                                                
 Number 0869                                                                   
 CHAIR JAMES replied there was a fish and game fund and a school               
 REPRESENTATIVE ELTON wondered if those were the only two funds that           
 would qualify under this resolution.                                          
 CHAIR JAMES replied, "Yes."                                                   
 Number 0877                                                                   
 REPRESENTATIVE VEZEY stated he believed that there were more than             
 two funds.  He cited the Fishermen's Fund as an example.  He could            
 not remember how many there were, but he knew there were more than            
 Number 0883                                                                   
 CHAIR JAMES asked Thomas W. Wright, Legislative Assistant to                  
 Representative Ivan Ivan, to respond to the question.                         
 Number 0879                                                                   
 THOMAS W. WRIGHT, Legislative Assistant to Representative Ivan                
 Ivan, stated the opinion of Mr. Gerald L. Wilkerson, Legislative              
 Auditor, dated November 30, 1982, outlined what dedicated funds               
 existed.  He cited the Tobacco Tax (school) Fund, the Fish and Game           
 Fund, the Reserves for Capital Outlay and Energy Facilities                   
 Development, the Renewable Resources Fund, the Public Employees               
 Retirement System Fund, the International Airport Funds, the                  
 Continuing Debt Service Appropriation, and the Rural                          
 Electrification Revolving Loan Fund.  Some of those funds, he                 
 explained, were out of existence and according to the attorney                
 general's opinion, once a dedicated fund was out of existence it              
 could not be re-instituted.                                                   
 Number 0940                                                                   
 REPRESENTATIVE VEZEY asked was that five funds?                               
 CHAIR JAMES replied there were a number of funds listed by Mr.                
 Wright.  Some of which were already gone.                                     
 Number 0948                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Wright, if the funds out of                
 existence had been zeroed out in terms of the account, or had they            
 been repealed?                                                                
 Number 0956                                                                   
 MR. WRIGHT replied he understood that they were not funded and                
 considered discontinued programs.  He suggested asking the                    
 Department of Revenue who had a better understanding.  He did not             
 know if they were out of existence in statute.  He had not gone               
 that far back, yet.  He reiterated he understood that they were in            
 existence, but they were not being funded.                                    
 Number 0978                                                                   
 CHAIR JAMES responded that according to a legal opinion relating to           
 the tobacco tax that once the tax was taken completely away, it               
 could not be brought back.  That was in accordance with the minutes           
 at the constitutional convention.  It would need to be re-                    
 instituted again.  Chair James called on James Baldwin, Department            
 of Law, to address the issue.                                                 
 Number 1016                                                                   
 JAMES BALDWIN, Assistant Attorney General, Government Affairs                 
 Section, Civil Division, Department of Law, stated the question of            
 how many dedicated funds there were, was subject to definition.               
 The only true dedicated funds now were the Fishermen's Fund and the           
 Tobacco Tax (school) Fund.  Those were the only two that he had               
 been able to confirm.  There was, of course, the permanent fund,              
 that was constitutionally dedicated.  There was also the                      
 Constitutional Budget Reserve Fund.  There were also the funds that           
 were required by federal statute.  The funds that Mr. Wright                  
 referred to were not truly dedicated funds.  They were rather                 
 segregated funds that were established for bond covenant purposes.            
 They were an exception to the dedicated fund prohibition because              
 the assets were pledged to buy off bond indebtedness.  There was an           
 exception allowed in the constitution to allow the state to incur             
 debt for that purpose.                                                        
 Number 1085                                                                   
 CHAIR JAMES stated there were funds that the state used as though             
 they were dedicated funds.  She liked the term "segregated fund"              
 that Mr. Baldwin mentioned earlier.  The general public thought of            
 these accounts as dedicated funds when technically they were only             
 considered dedicated for political purposes.  In addition, funds              
 were also appropriated to get around the issue of dedication.  She            
 called it an end-run around the situation.  She believed that the             
 legislature should have free reign of the general fund to spend it            
 in the best way.                                                              
 Number 1186                                                                   
 MR. BALDWIN replied the dedicated fund prohibition was put into               
 place so that the power of the legislature would be preserved to              
 the maximum extent possible over revenues coming into the state.              
 Therefore, as long as the legislature retained its ability to                 
 appropriate funds, it did not violate the dedicated fund                      
 Number 1210                                                                   
 CHAIR JAMES replied she understood that.  However, "It's a                    
 perception, and perception is sometimes reality as far as people              
 are concerned."                                                               
 Number 1217                                                                   
 MR. BALDWIN stated there were many funds that the legislature                 
 established by law and then appropriated money to them.  That was             
 clearly not a violation of the dedicated fund prohibition.  The               
 Governor's bill, he explained, would appropriate the revenues from            
 the tobacco tax to a particular fund rather than dedicate them in             
 the beginning.                                                                
 Number 1246                                                                   
 REPRESENTATIVE ELTON asked Mr. Baldwin if the language in the                 
 resolution would not allow the legislature to change the rate of              
 contribution to the permanent fund or to the Constitution Budget              
 Reserve Fund?                                                                 
 Number 1279                                                                   
 MR. BALDWIN replied it would not because it only referred to those            
 funds in existence before April 24, 1956.  The permanent fund was             
 established after that date.  The constitution did allow the                  
 legislature to change the rate upwards, but the constitution would            
 have to be amended to decrease the rate.                                      
 Number 1317                                                                   
 REPRESENTATIVE ELTON asked Mr. Baldwin if the language in the                 
 resolution would allow the legislature to bring back a fund that              
 had disappeared, such as, the Renewable Resources Fund?                       
 Number 1338                                                                   
 MR. BALDWIN replied he did not think that it did.  The language               
 would have to be changed to do that.  It did not revive passed                
 repealed dedicated funds.  The statutory interpretation would say             
 that "you cannot revive a prior repealed provision unless expressly           
 provided."  This resolution did not expressly provide for that.               
 Number 1382                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Baldwin if, according to the               
 opinion of Mr. Jack Chenoweth, Attorney, Legislative Legal and                
 Research Services, Legislative Affairs Agency, a change in the rate           
 of the tax by the legislature would not have an impact on the                 
 existence of the dedicated fund or undo the legal effect of the               
 dedicated fund?                                                               
 Number 1405                                                                   
 MR. BALDWIN replied the 1959 opinion of the attorney general                  
 indicated such an act would nullify a fund.  "We didn't explore               
 that, as to what would be the effect.  Whether it would destroy the           
 underlying dedication."  He read the opinion to say it would be an            
 empty act.  It would not accomplish anything.  The legislature was            
 without power to do that.  It would leave the existing dedication             
 in place.  It would not destroy the existing dedication.  That,               
 however, was an open question.                                                
 Number 1455                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Baldwin, in his opinion, if                
 there was a change in the tax rate, would it nullify the fund?                
 Number 1469                                                                   
 MR. BALDWIN replied, "No."  If the tax rate was increased then the            
 law was nullified.  If the tax rate was increased and went to a               
 dedicated fund then that law was nullified.  If it was repealed, it           
 was also gone and it could not be revived according to the current            
 wording of the constitution.                                                  
 Number 1490                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Baldwin in his opinion if the              
 increase in the tobacco tax in CSHB 1(STA) that the House State               
 Affairs Standing Committee just passed would nullify the fund?                
 Number 1501                                                                   
 MR. BALDWIN replied the opinion of the attorney general indicated             
 there was a good faith legal argument that could be made of Mr.               
 Jack Chenoweth's opinion.  It was still an open question for the              
 courts to decide, however.  It was the opinion of the attorney                
 general that it was worth testing.  He could not say that it was              
 flat out void or unconstitutional.  The opinion of the attorney               
 general in 1959 had been in effect for a long time, and the                   
 legislature had followed if for a long time.  All those factors               
 would be considered by a court.  He could not say today that the              
 bill passed out of the committee was flatly prohibited by the                 
 Number 1554                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Baldwin if the opinion had ever            
 been tested before in court?  He had more faith in the court system           
 than Chair James.                                                             
 Number 1567                                                                   
 MR. BALDWIN replied this particular issue had not been tested in              
 Alaska.  He was not aware of a case tested in another state either.           
 There were dedicated funds in other states, but he did not believe            
 that there was a dedicated fund prohibition similar to the one in             
 Alaska.  The dedicated fund prohibition had been tested in other              
 aspects, in particular, the breadth of the revenue covered.  It was           
 believed at one time that the prohibition only applied to tax and             
 license proceeds.  But, in the mid-1980's, it was ruled by the                
 court that it covered all revenues received by the state.  The                
 court also ruled that the revenues that went to the ferry proceeds            
 was not a dedicated fund.  He was not aware of any other court                
 Number 1659                                                                   
 CHAIR JAMES stated that Mr. Jack Chenoweth's opinion contained the            
 same caveat-that it could be challenged in court.  The resolution,            
 however, put the choice to the public as opposed to the courts.               
 Number 1689                                                                   
 MR. BALDWIN explained there was a timing issue involved here as               
 well.  The resolution would go before the voters in 1998.  And,               
 according to the terms of the constitution it would take effect 60            
 days after certification.  The CSHB 1(STA) indicated the primary              
 tax would take effect in October of 1997.  There was a one-year               
 difference.  He suggested considering a provision to include                  
 retroactivity or somehow linking the two together.                            
 Number 1770                                                                   
 CHAIR JAMES thanked Mr. Baldwin for his suggestion.  The committee            
 substitute was drafted so that if there was court action that                 
 negated it from putting revenues into the school fund, the money              
 would then go into the general fund.  It was assumed that the taxes           
 collected before the court case would go to the dedicated fund.               
 The money would be identifiable and the net result would then go to           
 the general fund.  She agreed the bill and the resolution should be           
 coordinated.  She hoped that the resolution would deter anybody               
 from challenging this issue in court.                                         
 MR. BALDWIN replied he thought somebody would file as soon as the             
 first return was due.                                                         
 CHAIR JAMES stated it did not deter her determination, however, to            
 move this issue forward.                                                      
 Number 1901                                                                   
 REPRESENTATIVE VEZEY stated the effort of HJR 18 was a bad idea.              
 He called it an attempt to assuage ones conscience over raising               
 taxes.  The legislature had a 38 year history of defending its                
 right to appropriate revenues.  The hottest issue in terms of                 
 dedicating funds was the highway fund.  Moreover, "Every time we              
 get into a dedicated fund, it just turns into such a christmas tree           
 that it goes into a hole and stays there the rest of session."                
 That would probably happen to HJR 18 as well.                                 
 Number 1972                                                                   
 CHAIR JAMES replied during the last legislature, she proposed a               
 bill that addressed a state highway dedicated fund.  She believed             
 there needed to be a relationship between a tax and a fund for a              
 connection.  There was no connection between a tobacco tax and a              
 school fund.  There was a definite relationship between a fuel tax            
 and a road maintenance fund.  However, the state currently spent              
 $75 million on road maintenance, but only collected $24 million in            
 gas taxes.  Even if the current gas tax was tripled there would not           
 be enough money available to maintain the roads.  Therefore, it did           
 not serve the purpose of the dedicated fund.  She agreed HJR 18               
 assuaged her because she had as much passion for spending money to            
 make the schools safe and healthy as the people who supported the             
 tobacco tax.                                                                  
 Number 2080                                                                   
 REPRESENTATIVE VEZEY commented that, if all the fees and taxes were           
 added together that were directly contributed to highway and                  
 vehicle use, they would amount to approximately $75 million.  It              
 just so happened, he explained, that what the legislature                     
 appropriated was at about the level that the state taxed and                  
 assessed fees at.                                                             
 Number 2111                                                                   
 CHAIR JAMES replied she understood that argument.  The general                
 public was concerned about losing federal funding in Alaska if it             
 did not start taking care of its roads.  That was a nationwide                
 problem, however.  She understood in other states that there was a            
 dedicated highway fund and in other states that a transportation              
 authority took care of the funds.  The funds did not go through the           
 legislature.  She was not questioning whether the resolution or the           
 bill was a bad idea or not.  It was just what she wanted to do.               
 Number 2217                                                                   
 REPRESENTATIVE ELTON said he was concerned because the                        
 constitutional convention provided the notion that dedicated funds            
 were not good.  He announced he was not prepared to move the                  
 resolution today, especially since there was a suggestion to                  
 include a retroactivity clause.  He asked Chair James to postpone             
 the final disposition of the resolution until Thursday, February 6,           
 1997, to allow the committee members to review the possible added             
 language.  He also wanted more time to ponder the wisdom of the               
 members of the constitutional convention who were adamantly opposed           
 to dedicated funds.                                                           
 Number 2312                                                                   
 CHAIR JAMES replied she did not have a problem with his concerns.             
 The prohibition in the constitution had a rational purpose.  It               
 also allowed for the grandfathering of those dedicated funds prior            
 to statehood.  That was done for a reason.  She did not want to               
 question the reason, however.  She believed, if the opinion of the            
 attorney general had not been written in 1959 in its context, then            
 the state would probably still have a highway use fund, for                   
 example.  She would like to have a fund for the roads and a tax               
 that was directly related to the use of the roads.  She would not             
 vote for a school fund if a highway use fund was an issue before              
 the committee.  There was no relationship between a tobacco tax and           
 a school fund.  But, it was here, it was reasonable, and it was               
 available.  That was her rationale and she knew there were holes              
 all through it.  She reiterated she would support a dedicated fund            
 for the maintenance of the roads as long as the money going into it           
 had a direct relationship to the use of the roads.  This should not           
 be a political issue, it should be a realistic issue.                         
 TAPE 97-7, SIDE A                                                             
 Number 0017                                                                   
 CHAIR JAMES adjourned the House State Affairs Standing Committee at           
 9:38 a.m.                                                                     

Document Name Date/Time Subjects