Legislature(1999 - 2000)

02/01/2000 01:08 PM House TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
      HOUSE TRANSPORTATION STANDING COMMITTEE                                                                                   
                  February 1, 2000                                                                                              
                     1:08 p.m.                                                                                                  
MEMBERS PRESENT                                                                                                                 
Representative Andrew Halcro, Chairman                                                                                          
Representative Beverly Masek                                                                                                    
Representative Bill Hudson                                                                                                      
Representative John Cowdery                                                                                                     
Representative Allen Kemplen                                                                                                    
Representative Albert Kookesh                                                                                                   
Representative Vic Kohring                                                                                                      
MEMBERS ABSENT                                                                                                                  
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                              
HOUSE BILL NO. 243                                                                                                              
"An Act relating to taxes on motor fuel used in or on boats and                                                                 
watercraft; and providing for an effective date."                                                                               
     - MOVED CSHB 243(TRA) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 182                                                                                                              
"An Act relating to charitable gaming and to gaming on state                                                                    
ferries; and providing for an effective date."                                                                                  
     - HEARD AND HELD                                                                                                           
PREVIOUS ACTION                                                                                                                 
BILL: HB 243                                                                                                                    
SHORT TITLE: MARINE FUEL TAX FOR HARBOR MAINTENANCE                                                                             
Jrn-Date    Jrn-Page           Action                                                                                           
 5/15/99      1445     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 5/15/99      1445     (H)  TRA, FIN                                                                                            
 1/27/00               (H)  TRA AT  1:00 PM CAPITOL 17                                                                          
 1/27/00               (H)  Heard & Held                                                                                        
 1/27/00               (H)  MINUTE(TRA)                                                                                         
 2/01/00               (H)  TRA AT  1:00 PM CAPITOL 17                                                                          
BILL: HB 182                                                                                                                    
SHORT TITLE: CHARITABLE GAMING & GAMING ON FERRIES                                                                              
Jrn-Date    Jrn-Page           Action                                                                                           
 4/08/99       690     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 4/08/99       690     (H)  TRA, JUD, FIN                                                                                       
 2/01/00               (H)  TRA AT  1:00 PM CAPITOL 17                                                                          
WITNESS REGISTER                                                                                                                
PATRICK HARMAN, Staff                                                                                                           
   to Representative Pete Kott                                                                                                  
Alaska State Legislature                                                                                                        
Capitol Building, Room 118                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT: Presented sponsor statement on behalf of                                                                    
Representative Pete Kott for HB 182.                                                                                            
GERALD LUCKHAUPT, Attorney                                                                                                      
Legislative Legal and Research Services                                                                                         
Legislative Affairs Agency                                                                                                      
129 6th Street, Room 329                                                                                                        
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT: Testified on HB 182.                                                                                        
TERRY MARTIN, Former-Representative                                                                                             
PO Box 102381                                                                                                                   
Anchorage, Alaska 99510-2381                                                                                                    
POSITION STATEMENT: Testified on HB 182.                                                                                        
LARRY PERSILY, Deputy Commissioner                                                                                              
Office of the Commissioner                                                                                                      
Department of Revenue                                                                                                           
PO Box 110405                                                                                                                   
Juneau, Alaska 99811-0405                                                                                                       
POSITION STATEMENT: Testified on behalf of the Department of                                                                    
Revenue on HB 182.                                                                                                              
ACTION NARRATIVE                                                                                                                
TAPE 00-6, SIDE A                                                                                                               
Number 0001                                                                                                                     
CHAIRMAN ANDREW HALCRO called the House Transportation Standing                                                                 
Committee meeting to order at 1:08 p.m.  Members present at the                                                                 
call to order were Representatives Halcro, Masek, Hudson, Kemplen,                                                              
Kookesh and Kohring.  Representative Cowdery arrived as the meeting                                                             
was in progress.                                                                                                                
HB 243 - MARINE FUEL TAX FOR HARBOR MAINTENANCE                                                                                 
CHAIRMAN HALCRO announced the first order of business as House Bill                                                             
243, "An Act relating to taxes on motor fuel used in or on boats                                                                
and watercraft; and providing for an effective date."  There is a                                                               
proposed committee substitute.                                                                                                  
REPRESENTATIVE VIC KOHRING made a motion to adopt the proposed                                                                  
committee substitute for HB 243, version 1-LS074\K, Kurtz, 2/1/00.                                                              
There being no objection, Version K was before the committee.                                                                   
CHAIRMAN HALCRO explained the proposed committee substitute                                                                     
incorporates the issues discussed on Thursday [January 27, 2000]                                                                
related to the definition of a qualified municipality.  The                                                                     
proposed committee substitute does not incorporate the issues of                                                                
limiting the tax, a sliding scale, or collecting the rebate because                                                             
the Department of Revenue thought that those issues would be best                                                               
left to the purview of the House Finance Committee.                                                                             
CHAIRMAN HALCRO explained the changes were made to Section 3,                                                                   
subparagraphs (A) and (B) [page 2].  The changes define the                                                                     
qualifying municipality as one that has assumed responsibility for                                                              
its harbor, and has adopted a local ordinance dedicating the funds                                                              
to its harbor for maintenance and operation.                                                                                    
Number 0227                                                                                                                     
REPRESENTATIVE BEVERLY MASEK asked whether the changes apply to                                                                 
Section 4, of the proposed committee substitute, as well.                                                                       
CHAIRMAN HALCRO replied "Yes."                                                                                                  
Number 0282                                                                                                                     
REPRESENTATIVE ALBERT KOOKESH asked whether the proposed committee                                                              
substitute would harm in any way the areas that would normally                                                                  
receive money.                                                                                                                  
CHAIRMAN HALCRO replied no.  It simply addresses the municipalities                                                             
who have chosen to accept responsibility and take title for their                                                               
port or harbor.  The other communities who have not accepted that                                                               
responsibility would still get a benefit through the Department of                                                              
Transportation & Public Facilities.                                                                                             
Number 0336                                                                                                                     
REPRESENTATIVE BILL HUDSON stated, for the record, that this is not                                                             
a dedication of funds; it is strictly an indication of the intent                                                               
of the legislature.                                                                                                             
CHAIRMAN HALCRO noted that the Department of Revenue is very                                                                    
concerned about the dedication of the revenues, which is why they                                                               
prefer to deal with that issue in the House Finance Committee.                                                                  
Number 0377                                                                                                                     
REPRESENTATIVE MASEK made a motion to move CSHB 243, version                                                                    
1-LS074\K, Kurtz, 2/1/00, out of committee with individual                                                                      
recommendations and attached fiscal note; she asked unanimous                                                                   
REPRESENTATIVE KOHRING stated he would like to see the bill go one                                                              
step further of eliminating the tax altogether and going to a                                                                   
user-fee system.  The beneficiaries would then pay directly for the                                                             
different services offered by a harbor, as opposed to a tax being                                                               
applied to everybody across the board, especially since many might                                                              
not benefit.                                                                                                                    
Number 0506                                                                                                                     
REPRESENTATIVE MASEK stated, to Representative Kohring, that his                                                                
comments on moving the bill to a user-fee [system] is way out of                                                                
line.  It would require a lot of changes to a system that is                                                                    
already in place.                                                                                                               
Number 0559                                                                                                                     
REPRESENTATIVE HUDSON asked Chairman Halcro whether there is a                                                                  
revised fiscal note.                                                                                                            
CHAIRMAN HALCRO replied no.  The Department of Revenue wants to                                                                 
work with the House Finance Committee in determining the final                                                                  
outcome in relation to the issues of collection and reimbursement                                                               
before submitting a fiscal note.                                                                                                
CHAIRMAN HALCRO stated, in response to Representative Kohring's                                                                 
comments, that this tax along with the motor fuel tax is as close                                                               
to a user fee as possible.  The problem with eliminating the marine                                                             
fuel tax altogether is because for some ports and harbors it's hard                                                             
to generate revenues.  In addition, under the concept of assuming                                                               
responsibility and relieving the state's liability, he thinks, that                                                             
those communities should be the beneficiary of the revenue.                                                                     
CHAIRMAN HALCRO stated, there being no objection to the motion,                                                                 
CSHB 243(TRA) so moved from the House Transportation Standing                                                                   
HB 182 - CHARITABLE GAMING & GAMING ON FERRIES                                                                                  
CHAIRMAN HALCRO announced the next order of business as House Bill                                                              
182, "An Act relating to charitable gaming and to gaming on state                                                               
ferries; and providing for an effective date."                                                                                  
Number 0691                                                                                                                     
PATRICK HARMAN, Staff to Representative Pete Kott, came before the                                                              
committee to present the sponsor statement.  He will limit his                                                                  
comments to the issues as they relate to transportation.  He read                                                               
the following:                                                                                                                  
     HB 182 also allows machines to be used on vessels of the                                                                   
     Alaska marine highway.  It allows the Commissioner of                                                                      
     Revenue to adopt the necessary regulations for use of                                                                      
     electronic machines on vessels of the Alaska marine                                                                        
     highway.  Revenues generated from this use may go to the                                                                   
     general fund and may be appropriated for funding the                                                                       
     Alaska marine highway.                                                                                                     
     HB 182 does not require the Alaska Marine Highway System                                                                   
     to install electronic gaming machines, it would only                                                                       
     permit or allow their existence.  There are several                                                                        
     benefits for permitting electronic gaming machines on our                                                                  
     ferries.  Primarily, it would be increased revenue,                                                                        
     mostly from out-of-state passengers.  And, the ferry                                                                       
     system presently allows video games, but adult                                                                             
     entertainment is minimal.                                                                                                  
MR. HARMAN explained that he recently road the M/V Kennicott from                                                               
Seward to Juneau, a 2-day trip.  During that time the cafeteria was                                                             
only open during meal hours and the bar was only open for a few                                                                 
hours.  He probably would have enjoyed putting a few dollars into                                                               
a video game.                                                                                                                   
Number 0827                                                                                                                     
CHAIRMAN HALCRO announced that he would like to limit the debate to                                                             
the transportation aspects of the bill.  It has two further                                                                     
committees of referral - Judiciary and Finance - where the other                                                                
issues can be discussed.                                                                                                        
Number 0858                                                                                                                     
REPRESENTATIVE ALLEN KEMPLEN asked Mr. Harman whether the state                                                                 
allows gambling in any of its public facilities.                                                                                
MR. HARMAN replied, no, but he can't say that with authority.  He                                                               
remarked that recently there was a football pool for the Super Bowl                                                             
game floating around the capitol.                                                                                               
Number 0891                                                                                                                     
CHAIRMAN HALCRO stated, in relation to the payout schedule in the                                                               
bill, 30 percent would go to the permittee; 30 percent would go to                                                              
the vendor; 20 percent would go to the state; and 20 percent would                                                              
go to the city and borough.  In light of the fact that a ferry                                                                  
moves from port-to-port, he wondered who would benefit from the 20                                                              
percent that would go to a city and borough.  In other words:  If                                                               
a ferry is going from Sitka to Juneau, who would get that 20                                                                    
percent, Sitka or Juneau?                                                                                                       
MR. HARMAN replied that issue is not addressed in the bill as                                                                   
currently drafted.  Obviously, a ferry is transient while at sea,                                                               
but when tied to a dock that ferry may or may not operate its                                                                   
gaming machines.  He remarked that he would be inclined to let the                                                              
state keep the revenue.                                                                                                         
CHAIRMAN HALCRO stated the term "vendor" is defined in the bill as                                                              
where the machine is located.  He asked Mr. Harman whether a bar                                                                
owner would receive 30 percent of the payout if there was a video                                                               
poker machine in the bar.                                                                                                       
MR. HARMAN replied, "That's correct."                                                                                           
CHAIRMAN HALCRO stated in this case the ferry system is the vendor                                                              
because they are providing a place for the machines; the people to                                                              
use them; and the overhead associated with them.  He said:  "Let's                                                              
be honest.  People aren't going to take the ferry to use -- to play                                                             
video gaming.  They're going to play video gaming because they're                                                               
on the ferry."  He asked Mr. Harman whether the 30 percent should                                                               
then go back to the state.                                                                                                      
MR. HARMAN replied that's what he believes.  The ferry system could                                                             
also be the permittee [and get that portion of the payout], as well                                                             
as the state's portion.  And, in the lack of a municipality having                                                              
jurisdiction, they could also get the municipality's portion.                                                                   
Number 1082                                                                                                                     
REPRESENTATIVE JOHN COWDERY remarked that he has been to places                                                                 
like Las Vegas.  He wondered who would deliver the free cocktails                                                               
and provide change.                                                                                                             
MR. HARMAN replied he can't answer that question.                                                                               
Number 1120                                                                                                                     
REPRESENTATIVE HUDSON stated he sees this bill as a clean-up of the                                                             
existing charitable gaming laws, except for Section 19.65.045,                                                                  
"Revenues to general fund; appropriation for Alaska Marine Highway                                                              
System," [Section 32, of the bill].  He doesn't believe that the                                                                
changes in the early portion of the bill have to do with the Marine                                                             
Highway System.  The only portion of the bill that involves them is                                                             
the authorization - for the very first time - to place video                                                                    
lottery machines [on the vessels] and for the proceeds to go into                                                               
the general fund.                                                                                                               
REPRESENTATIVE HUDSON further stated there are already bars on                                                                  
every one of the vessels; there is already space for these types of                                                             
video machines.  The question is, Do they violate the effective                                                                 
operation of the vessels?  The answer is, "No."  The social                                                                     
question, of whether or not this is this the right thing to do, is                                                              
based on individual judgement.                                                                                                  
Number 1269                                                                                                                     
REPRESENTATIVE KOOKESH noted that the M/V Le Conte and Aurora do                                                                
not have bars; they would not have a place set aside for these                                                                  
machines.  He further noted that when they had a bar and went into                                                              
Angoon - a dry community - they would have to close it for that                                                                 
period of time.  He also stated it seems that the current                                                                       
regulations are set up so that gaming is allowed for everybody.  In                                                             
other words, if the state only allows video lottery machines on the                                                             
ferries, other charitable organizations may say that's not fair.                                                                
He further pointed out that anything allowed in the state for                                                                   
gaming purposes is allowed under Indian gaming compact laws.  He                                                                
cited a compact negotiated by the state with the village of Klawock                                                             
as an example.                                                                                                                  
Number 1341                                                                                                                     
REPRESENTATIVE HUDSON commented that Representative Kookesh is                                                                  
absolutely right.  He would like to see this restricted to the main                                                             
line vessels rather than the feeder vessels, which haul a lot of                                                                
school children, and to the summer season with the possibility of                                                               
removing them in the winter.  That way, the rich outsiders who                                                                  
travel to the state via the ferries can help underwrite some of the                                                             
operating costs, as well as help to keep it out of some of the                                                                  
Number 1385                                                                                                                     
REPRESENTATIVE KOOKESH wondered whether the bill would impact the                                                               
cruise ships while in Alaskan waters, and their ability to use                                                                  
their gaming machines.  Right now, when the cruise ships are in                                                                 
Alaskan waters, they are not allowed to use their machines because                                                              
gambling is not allowed in the state.                                                                                           
REPRESENTATIVE HUDSON stated he remembers when the cruise ships                                                                 
allowed gambling right up to the dock.  He doesn't remember,                                                                    
however, whether it was a statute or lawsuit that stopped them.  He                                                             
suggested looking into that further.                                                                                            
Number 1457                                                                                                                     
REPRESENTATIVE KEMPLEN referred to Section 38, of the bill, and                                                                 
noted that it repeals AS 05.15.690(25) and 05.15.690(34).  He asked                                                             
Mr. Harman to explain what exactly is being repealed.                                                                           
MR. HARMAN deferred the question to the bill drafter [Gerald                                                                    
Luckhaupt, Attorney, Legislative Legal Counsel, Legislative Legal                                                               
and Research Services, Legislative Affairs Agency].                                                                             
REPRESENTATIVE KOOKESH asked Chairman Halcro whether he intends for                                                             
the bill to go to a committee to deal with the legal aspects.                                                                   
CHAIRMAN HALCRO replied he agrees that the House Judiciary                                                                      
Committee should look at the legal aspects.  The question is,                                                                   
Should the state allow video lottery machines on the ferries?  The                                                              
question is not, What are the impacts on the rules that govern                                                                  
Number 1540                                                                                                                     
REPRESENTATIVE COWDERY stated this is an interesting issue because                                                              
he and others who have sat at this table have criticized the                                                                    
subsidy given to the ferry system.  He sees this as an opportunity                                                              
to help the fiscal crunch.  He supports the transportation portion                                                              
of the bill.                                                                                                                    
REPRESENTATIVE KOOKESH stated he agrees with everything that                                                                    
Representative Cowdery just said, except for the part about the                                                                 
state subsidizing the Marine Highway System.  He said, "It's not                                                                
any different than the money we use to plow the roads in                                                                        
CHAIRMAN HALCRO pointed out that is why he brought up the issue of                                                              
payout.  He would like Mr. Doll [Robert J. Doll, General Manager                                                                
Ferry Operations, Southeast Region, Department of Transportation &                                                              
Public Facilities] to have as much money as possible to pay for the                                                             
fast ferries.                                                                                                                   
Number 1632                                                                                                                     
GERALD LUCKHAUPT, Attorney, Legislative Legal and Research                                                                      
Services, Legislative Affairs Agency, came before the committee at                                                              
the request of the chairman.  In response to committee discussion,                                                              
he noted that the sections in the bill to amend Title 5 do not have                                                             
anything to do with the authorization of the Marine Highway System                                                              
to conduct video lottery gaming on their ferries.  That                                                                         
authorization, as observed by Representative Hudson, starts in                                                                  
Section 29; the meat is in Section 32.  He further noted, in                                                                    
response to committee discussion, that the [payout] percentages                                                                 
found in the bill apply to Title 5 - charitable gaming.  The                                                                    
[revenues from] gaming conducted on the state ferries would go to                                                               
the general fund.  That language can be found on page 23, lines                                                                 
MR. LUCKHAUPT explained, in response to committee discussion, that                                                              
the state sort of looked the other way in regards to gaming on                                                                  
cruise ships while in state waters and while in port.  It was not                                                               
until the Hickel Administration that the attorney general's office                                                              
issued an opinion saying that activity was illegal.  The cruise                                                                 
ship industry then came to the legislature for authorization and                                                                
was given a 6- to 8-month window - the end of the legislative                                                                   
session to January 1 of the following year.  The cruise ship                                                                    
industry then approached Congress and [U.S.] Representative [Donald                                                             
E.] Young was able to attach a rider to a budget bill that exempted                                                             
them from federal law.  That exemption allows them to conduct                                                                   
gaming in state waters only if the state allows it.  According to                                                               
his understanding, the cruise ship industry, right now, is                                                                      
conducting gaming in state waters but not while in port and so many                                                             
miles outside of port.                                                                                                          
MR. LUCKHAUPT further explained, in response to committee                                                                       
discussion, that Congress passed the Indian Gaming Regulatory Act                                                               
[IGRA] a number of years ago which allows Indian tribes to conduct                                                              
gaming on Indian lands.  He noted that three types of gaming were                                                               
created under that statute, Class I, Class II and Class III.  Class                                                             
I are traditional types of games such as horse racing.  Class II                                                                
are games such as poker and lotteries.  Class III are the type of                                                               
games found in casinos.  Under the Act, an Indian tribe cannot                                                                  
conduct gaming in a state that does not allow Class III type of                                                                 
gaming.  He noted that there was a court case in which an argument                                                              
was won on the grounds that since a state allowed for Monte Carlo                                                               
nights gambling should be allowed on Indian lands.  That argument                                                               
has failed, however, in the states of California and Idaho in the                                                               
Ninth Circuit Court of Appeals.  As a result of that decision, the                                                              
Alaska State Legislature repealed Monte Carlo nights during the                                                                 
negotiations with the village of Klawock due to the fact that it                                                                
could conceivably authorize full-scale casino gaming on Indian                                                                  
lands by Indian tribes.  Right now, however, that is not allowed.                                                               
He explained the problem for the state under the IGRA is the                                                                    
definition of Indian lands.  The Act doesn't use a traditional                                                                  
definition which includes reservations and the like.  The Act uses                                                              
a term that includes any land held in-trust by the U.S. government                                                              
for any tribe or individual.  He noted that is not a problem down                                                               
South where there are traditional reservations, but it is a problem                                                             
in Alaska.  He cited Juneau as an example where the traditional                                                                 
Native site is located downtown, and conceivably a casino could be                                                              
built at that location.                                                                                                         
MR. LUCKHAUPT further stated, in response to committee discussion,                                                              
that the bill does two separate things.  It authorizes charitable                                                               
organizations to conduct video lottery gaming as part of their                                                                  
authorized activities under their permit, and it authorizes the                                                                 
Department of Transportation & Public Facilities to conduct video                                                               
lottery gaming on ferries.  That authority operates independently                                                               
of Title 5; it is derived under Title 19.  The bill also repeals                                                                
labor and political organizations from the definition of charitable                                                             
organization [Section 38].  As a result, they would no longer                                                                   
qualify to conduct charitable gaming.                                                                                           
Number 2064                                                                                                                     
CHAIRMAN HALCRO asked Mr. Luckhaupt whether it would be possible to                                                             
create a different payout, whereby the state would get more [of the                                                             
revenues] for providing the location and the people.                                                                            
MR. LUCKHAUPT replied, as the bill is currently written, the state                                                              
would receive 100 percent of the revenues - less the prizes awarded                                                             
- from the gaming that occurs on state ferries.  Those revenues                                                                 
would go to the general fund.  Mr. Harman's earlier testimony was                                                               
incorrect.  The payout percentages in Title 5 would not apply to                                                                
the Department of Transportation & Public Facilities; they would                                                                
only apply to charitable organizations, and the state would not be                                                              
considered a charitable organization under the bill.                                                                            
Number 2115                                                                                                                     
REPRESENTATIVE MASEK asked Mr. Luckhaupt whether all of the                                                                     
revenues would go to the state rather than the charities.  The bill                                                             
is not clear.                                                                                                                   
MR. LUCKHAUPT replied 100 percent of the revenues conducted on the                                                              
state ferries would go to the general fund.  That language can be                                                               
found on page 23, lines 5-10, of the proposed committee substitute.                                                             
The state would not be considered a charitable organization, and                                                                
its authority to conduct gaming would not arise from Title 5.                                                                   
Number 2187                                                                                                                     
REPRESENTATIVE MASEK asked Mr. Luckhaupt to discuss the repealers                                                               
in the bill.                                                                                                                    
MR. LUCKHAUPT replied the repealers would remove political and                                                                  
labor organizations from the authorized list of permitted charities                                                             
to conduct charitable gaming in the state.                                                                                      
Number 2226                                                                                                                     
REPRESENTATIVE HUDSON asked Mr. Luckhaupt whether the bill affects                                                              
the cruise ships.                                                                                                               
MR. LUCKHAUPT replied no.  The bill does not do anything to the                                                                 
cruise ships.  As he stated earlier, they have an exemption from                                                                
federal law; they can only conduct gaming in certain areas of the                                                               
Inside Passage.                                                                                                                 
REPRESENTATIVE HUDSON asked Mr. Luckhaupt whether there would be                                                                
restrictions on the Marine Highway System in Seattle and                                                                        
Bellingham, for example, where gambling is not authorized.                                                                      
MR. LUCKHAUPT replied this authority would only apply in state                                                                  
CHAIRMAN HALCRO opened the meeting up to public testimony.                                                                      
Number 2297                                                                                                                     
TERRY MARTIN, testified via teleconference from Anchorage as a                                                                  
former state representative.  He first remarked that the LIO                                                                    
[Legislative Information Office] was not properly notified of the                                                               
hearing today.  It seems that there is a rush to get the bill out                                                               
of the committee.                                                                                                               
FORMER-REPRESENTATIVE MARTIN further stated that Representative                                                                 
Kookesh is actually right.  This type of gaming would oppose the                                                                
Indian Gaming Regulatory Act thereby allowing gambling all over the                                                             
state, not just on the ferries.  In addition, it's unbelievable                                                                 
that the state would allow "gambling," not "gaming," when a few                                                                 
years ago the public absolutely opposed it.  The only difference                                                                
between gambling and gaming, he stated, are the letters "bl."  He                                                               
also noted that the legislature opposed gambling on state ferries                                                               
a few years ago for many of the reasons discussed today.  He also                                                               
remarked that in most states their history of gambling began with                                                               
an innocent saying that, "We're just going to have historical                                                                   
gambling up the Mississippi [River] or down the Missouri [River] or                                                             
down the Colorado [River]."  After that, it spread all over.                                                                    
FORMER-REPRESENTATIVE MARTIN further stated that, when Senator Ted                                                              
Stevens amended the U.S. Coast Guard Act to allow gambling on the                                                               
cruise ships, it was made very clear the state would not be able to                                                             
access any of those revenues.                                                                                                   
FORMER-REPRESENTATIVE MARTIN further stated, in conclusion, that                                                                
the question before the House Transportation Committee is very                                                                  
important because history shows gambling starts in most states on                                                               
ships.  He reiterated it would be a disservice to the people of the                                                             
state to move the bill out of the committee today, especially given                                                             
that there was little notification of the bill being on today's                                                                 
Number 2485                                                                                                                     
CHAIRMAN HALCRO stated, to Representative Martin, that he takes                                                                 
exception to the idea that a lobbyist...[TAPE CHANGE]                                                                           
TAPE 00-6, SIDE B                                                                                                               
Number 0001                                                                                                                     
CHAIRMAN HALCRO continued.  As the new chairman of the House                                                                    
Transportation Committee, he made a decision to clear the calendar                                                              
and give every bill a fair hearing.                                                                                             
Number 0019                                                                                                                     
LARRY PERSILY, Deputy Commissioner, Office of the Commissioner,                                                                 
Department of Revenue, came before the committee to testify.  He                                                                
pointed out that because of a communication problem with the                                                                    
Governor's office the department is not able to provide a fiscal                                                                
note today.  They will present a fiscal note and an analysis of the                                                             
bill to the committee by Thursday.                                                                                              
MR. PERSILY further stated the Department of Revenue is opposed to                                                              
the expansion of charitable gaming in that they are responsible for                                                             
overseeing those regulations.  The department feels that the bill                                                               
would significantly change the state's role from regulating to                                                                  
owning, maintaining, and using these types of machines as a source                                                              
of revenue.  He explained that the department currently regulates                                                               
the industry - a $300-million industry - with six people.  Those                                                                
six people make sure that the charities get their legal minimum                                                                 
guaranteed under statute.  He noted that their concerns will be                                                                 
addressed in the fiscal note, which will be high because they would                                                             
have to buy and maintain the machines, as well as maintain a                                                                    
connection to the ferries via a state mainframe computer system for                                                             
monitoring purposes.  The department is not convinced, therefore,                                                               
that the state's share of 20 percent would cover those costs.                                                                   
MR. PERSILY further stated that the Department of Law is working                                                                
with the Department of Revenue as this issue relates to the IGRA                                                                
and equal protection.  The Department of Revenue feels that the                                                                 
bill could open up full-gaming on tribal lands.  The department                                                                 
also feels that the bill could allow these types of machines on the                                                             
premises of existing pull-tab and bingo operations, bars and liquor                                                             
stores.  The department's not sure whether that would apply to                                                                  
future licensees, however.  In addition, the bill would not limit                                                               
charitable gaming to 26 U.S.C. 501(c)(3) (Internal Revenue Code)                                                                
charities.  Currently, an organization does not have to be a                                                                    
501(c)(3) recognized charity to reap the proceeds from charitable                                                               
gaming.  He lastly mentioned the department feels that such an                                                                  
expansion would mix one addictive behavior - gambling - with                                                                    
another addictive behavior - drinking.                                                                                          
Number 0196                                                                                                                     
REPRESENTATIVE COWDERY stated he has been to a few communities in                                                               
rural Alaska during the fishing season and has noticed two inches                                                               
of used pull-tabs on the floor in places like bingo parlors and                                                                 
town halls.  He wondered whether those revenues are going to a                                                                  
charity and whether or not they would be wiped out under the bill.                                                              
MR. PERSILY replied the department feels that video gaming would be                                                             
more attractive to patrons than pull-tabs.                                                                                      
REPRESENTATIVE COWDERY asked Mr. Persily whether pull-tabs would                                                                
come under the purview of being a charitable organization in                                                                    
relation to his testimony.                                                                                                      
MR. PERSILY replied an organization has to be a charity according                                                               
to state law to hold a charitable gaming permit; it doesn't have to                                                             
fit the more restrictive IRS definition of a charitable                                                                         
REPRESENTATIVE COWDERY asked Mr. Persily whether Emmonak, Mountain                                                              
Village, or Kotlik, where this type of activity takes place, are                                                                
based under a charity.                                                                                                          
MR. PERSILY replied only a charity can operate a game.  A charity                                                               
can hire an operator, but there has to be a charity at the end of                                                               
the line.                                                                                                                       
REPRESENTATIVE KOOKESH pointed out that an organization in any part                                                             
of the state has to show a charitable license to a vendor in order                                                              
to buy a box of pull-tabs.                                                                                                      
REPRESENTATIVE COWDERY said he wasn't concerned about what an                                                                   
organization is suppose to do; he was wondering whether the                                                                     
villages that he mentioned earlier are in fact charities and                                                                    
whether they have gone through the procedure mentioned.                                                                         
REPRESENTATIVE KOOKESH replied they have to.  The non-profit                                                                    
organizations in his village cannot buy a box of pull-tabs unless                                                               
they have a license from the state.  Furthermore, he resents the                                                                
fact that Representative Cowdery wants to check only those                                                                      
REPRESENTATIVE COWDERY said he just named the villages that he has                                                              
been to.  He has doubts that they are conforming to the law.                                                                    
Number 0372                                                                                                                     
REPRESENTATIVE HUDSON asked Mr. Persily whether the Governor                                                                    
supports the portion of the bill that allows for gaming devices in                                                              
the bars on the ferries.                                                                                                        
MR. PERSILY replied, according to his understanding, the Governor                                                               
opposes any expansion of charitable gaming in the state at this                                                                 
time.  He would, however, go back and specifically ask him whether                                                              
there is an exception for state ferries.                                                                                        
REPRESENTATIVE HUDSON stated he would also like to know whether the                                                             
Governor supports or opposes any of the amendments to Title 5 in                                                                
the bill.  He specifically referred to the amendment(s) that would                                                              
replace pull-tabs.  He would also like to know the Governor's                                                                   
position on repealing political parties and labor unions as                                                                     
charitable organizations.                                                                                                       
MR. PERSILY replied he would return with an answer to the question                                                              
regarding political organizations and labor unions, but according                                                               
to the department's understanding, the bill would not replace                                                                   
pull-tabs; it would allow any site that has pull-tabs on its                                                                    
premise to add a video lottery machine.  He cited $216 million as                                                               
the most recent figure for pull-tab gross receipts.                                                                             
Number 0512                                                                                                                     
REPRESENTATIVE KEMPLEN asked Mr. Persily whether the Department of                                                              
Revenue thinks that the Marine Highway System would incur                                                                       
significant costs to allow this to happen.                                                                                      
MR. PERSILY explained his earlier testimony indicated that the                                                                  
Department of Revenue, not the Marine Highway System, would incur                                                               
significant costs because it would be responsible for buying and                                                                
maintaining the machines.  The department would also be responsible                                                             
for maintaining the communication links, and responding to service                                                              
calls within a 24-hour period.  Those are the types of fiscal                                                                   
issues the department is looking at.                                                                                            
Number 0571                                                                                                                     
CHAIRMAN HALCRO noted that HB 182 was notified and posted by the                                                                
Chief Clerk's office on Thursday, January 27, 2000, and that is has                                                             
been in the system since that time.  The committee aide, Kevin                                                                  
Hand, has officially met all of the notification requirements by                                                                
the clerk's office, contrary to earlier testimony.  He did not want                                                             
anyone to think the committee aide was doing anything but a good                                                                
CHAIRMAN HALCRO closed the meeting to public testimony.                                                                         
CHAIRMAN HALCRO announced that the bill would be held over for                                                                  
further consideration in order to look at Representative Hudson's                                                               
suggestion of limiting video gaming machines to the main lines and                                                              
to a particular season.  He also wants to give consideration to the                                                             
Departments of Law and Revenue and their look into the possibility                                                              
of this being a slippery slope.                                                                                                 
There being no further business before the committee, Chairman                                                                  
Halcro adjourned the House Transportation Standing Committee                                                                    
meeting at 2:11 p.m.                                                                                                            

Document Name Date/Time Subjects