Legislature(2015 - 2016)SENATE FINANCE 532
04/17/2015 01:30 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB123 | |
| HB135 | |
| HB176 | |
| HB123 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| = | HB 123 | ||
| = | HB 135 | ||
| + | TELECONFERENCED | ||
| += | SB 50 | TELECONFERENCED | |
| += | HB 105 | TELECONFERENCED | |
| += | HB 176 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
April 17, 2015
1:54 p.m.
1:54:14 PM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 1:54 p.m.
MEMBERS PRESENT
Senator Anna MacKinnon, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Peter Micciche, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
Cynthia Franklin, Director, Alcoholic Beverage Control
Board, Department of Commerce, Community and Economic
Development; Chris Hladick, Commissioner, Department of
Commerce, Community, and Economic Development; Bruce
Schulte, Spokesman, Coalition for Responsible Cannabis
Legislation, Juneau; James Barrett, Self, Juneau; Kate
Burkhart, Executive Director, Advisor Board on Alcoholism
and Drug Abuse, Department of Health and Social Services,
Juneau; Andy Mills, Legislative Liaison, Department of
Administration; Kathy Lea, Chief Pension Officer, Division
of Retirement and Benefits, Department of Administration;
Lacey Sanders, Legislative Analyst, Legislative Finance
Division.
PRESENT VIA TELECONFERENCE
Kirsten Myles, Vice President, Alaska Cabaret, Hotel,
Restaurant and Retailers Association, Anchorage.
SUMMARY
CSHB 105(FIN)
AIDEA: BONDS;PROGRAMS;LOANS;LNG PROJECT
CSHB 105(FIN) was SCHEDULED but not HEARD.
CSHB 123(JUD) am
ESTABLISH MARIJUANA CONTROL BOARD
SCS CSHB 123(FIN) was REPORTED out of committee
with a "do pass" recommendation and with two new
fiscal notes from the Department of Commerce,
Community and Economic Development and the
Department of Administration.
CSHB 213 (JUD) was HEARD and HELD in committee
for further consideration.
HB 135 PUBLIC EMPLOYEE ROTH CONTRIBUTIONS
HB 135 was REPORTED out of committee with a "do
pass" recommendation and with one previously
published zero fiscal note: FN1 (ADM).
HB 176 REPEAL ST EMPL SALARY INCREASE
CSHB 176(FIN) was REPORTED out of committee with
a "do pass" recommendation and with three
previously published fiscal impact notes: FN1
(AJS), FN2 (GOV), and FN3 (LEG).
CS FOR HOUSE BILL NO. 123(JUD) am
"An Act establishing the Marijuana Control Board;
relating to the powers and duties of the Marijuana
Control Board; relating to the appointment, removal,
and duties of the director of the Marijuana Control
Board; relating to the Alcoholic Beverage Control
Board; and providing for an effective date."
1:55:10 PM
CYNTHIA FRANKLIN, DIRECTOR, ALCOHOLIC BEVERAGE CONTROL
BOARD, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT, testified that the bill would create a
Marijuana Control Board; the board would consist of 5
members and would be served by the same agency as the
Alcoholic Beverage Control Board (ABC), with shared staff
and resources. She stated that the fiscal note reflected
the cost of regulating marijuana in the state, the actual
money expended for the creation of the board, and other
costs associated. She asserted that the administration
strongly believed that regulating marijuana in a safe and
responsible manner was an accomplishable goal through
passage of the legislation. She shared that the board would
be comprised of individuals representing the areas of;
Public Safety, Public Health, the marijuana industry, rural
representation, and an individual from the public or a
second representative of the marijuana industry. She said
that the board would be subject to a sunset review.
1:57:57 PM
AT EASE
1:59:00 PM
RECONVENED
CHRIS HLADICK, COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT, testified that the
department supported the legislation. He believed that a
board needed to be established quickly in order to realize
the voter's initiative.
2:00:02 PM
Ms. Franklin spoke to the sectional analysis (copy on
file):
Section 1: Amends Title 4 naming the director of the
Alcoholic Beverage Control Board as the director of
the Marijuana Control Board. Establishes the process
for appointment and removal of the director.
Section 2: Establishes the 5 member Marijuana Control
Board in Title 17 with designated seats for public
health, rural, public safety, and industry.
Section 3: Establishes terms of office for board
members and chair, sets out requirements for board
meetings and provides for board member per diem.
Outlines the powers and duties of the board to propose
and adopt regulations, establish qualifications for
licensure, review applications for licensure, hear
appeals from the actions of the director, reduce the
area of a licensed premise, and to adopt regulations
according to AS 44.63. Establishes the board's
enforcement powers as mirroring those of the Alcoholic
Beverage Control Board outlined in AS 04.06.110.
Provides for appointment and removal of the director
and establishes the duties of the director.
Section 4: Adds a new subsection prohibiting marijuana
establishments from being registered if individuals
who have been convicted of a felony within the last
five years or who are currently serving probation or
parole for a felony fare an owner, officer, or agent
of the establishment.
2:01:31 PM
Ms. Franklin continued with the sectional analysis:
Section 5: Defines board in AS 17.38.900(1) to mean
the Marijuana Control Board created by this act.
Section 6: Defines "director" as the director of the
Alcoholic Beverage Control Board and Marijuana control
board. Defines "registration" to mean registration or
licensure as determined by regulation.
Section 7: Amends the duties of the Department of
Commerce, Community, and Economic Development to
include providing clerical and administrative support
for the Marijuana Control Board.
Section 8: Places the Marijuana Control Board on the
list of entities whose procedural hearings are held by
the Office of Administrative Hearings.
Section 9: Provides for a sunset date.
Section 10: Amends uncodified law for initial
appointment of board members.
Section 11: Provides for transition regulations such
that if the Alcoholic Beverage Control Board adopts
any regulations before the Marijuana Control Board is
created, those regulations can be implemented,
enforced, amended or repealed by the Marijuana Control
Board and provides that regulations adopted by the
board in any transition period take effect after the
effective date of the act.
Section 12: Provides for an immediate effective date.
2:02:48 PM
AT EASE
2:03:33 PM
RECONVENED
Senator Bishop understood that four new law enforcement
positions would be established as a result of the bill.
Ms. Franklin responded that the fiscal note reflected the
addition of three additional officers to the five existing
officers currently employed by the ABC Board.
2:04:18 PM
Senator Dunleavy asked whether there would be a
representative of the federal government present on the
board.
Ms. Franklin replied that the guidance provided by the
federal government in the Coal Memorandum provided that the
state must strictly regulate marijuana. She said that the
hope was that a scheme would be established that was strict
enough to appease the federal government. She added that
the federal government would not be providing assistance in
regard to establishing or enforcing the regulations.
2:05:07 PM
Vice-Chair Micciche opined the lack of a seat on the board
for urban representation. He worried that urban areas might
not be properly represented.
Ms. Franklin stated that the rural area component of the
board had been inspired by the current composition of the
ABC Board, which had the minimum requirement that there be
one representative from a rural area to assure bush Alaska
had a voice on the statewide board. She said that the other
designations did not have geographic components, only
background components, and people filling those positions
could be from urban areas of the state.
2:06:53 PM
Vice-Chair Micciche about the five-person board. He
lamented that there was not a requirement that one of the
positions be filled by an urban representative.
Ms. Franklin stated that the composition and size of the
proposed board was designed to mirror the ABC board. She
said that the designated seats represented changes that had
been negotiated through the stakeholder process in
reviewing Title 4 and issues related to alcohol regulation.
She warned that solely designating seats for industry
representatives could lead to an industry dominated board;
the Public Safety and Public Health seats were inspired by
the Title 4 work, and all of the seats would be subject to
legislative confirmation.
2:08:50 PM
Co-Chair MacKinnon queried the sunset date of June 30, 2017
reflected on page 6, section 9. She wondered whether the
date provided for enough time for auditors to collect data
to use in evaluating the success of the program.
Ms. Franklin responded that the version that had passed out
of the house had reflected a sunset date of June 30, 2018;
the change in the date had been made in the committee
substitute (CS) out of Senate Labor and Commerce Committee.
She understood that the change had been made because the
board was new and should have an earlier review date. She
shared that HB 116 had just passed through the committee
and set the sunset date for the ABC Board for June 30,
2018, which could result in the two boards, living under
one agency, but being audited a year apart. She added that
auditing work generally began in advance of the sunset date
and that licenses might not be in place in time of the 2017
date. She asserted that the department would prefer that
the dates aligned, but did not want to see the bill held up
over the sunset date.
Co-Chair MacKinnon stated that she had wanted to highlight
the difference between the house and senate proposals.
2:11:46 PM
Co-Chair MacKinnon OPENED public testimony.
2:12:25 PM
BRUCE SCHULTE, SPOKESMAN, COALITION FOR RESPONSIBLE
CANNABIS LEGISLATION, JUNEAU, testified in support of the
bill. He believed that a dedicated marijuana control board
would be crucial to the successful development of marijuana
regulations. He asserted that the industry would pay off
the cost of the legislation several times over. He
discussed the fiscal note and suggested that the tax
revenue from the marijuana industry could be in the range
of $7 million per year, increasing to $23 million annually
by 2020. He stated that the ballot measure established a 9
month regulatory process that began on February 24, 2015.
He said that no regulations had been established, but the
timeline had not changed, leaving only 7 months to complete
the regulatory work. He reiterated that the bill was
critical to the successful implementation of Ballot Measure
2.
2:15:59 PM
KIRSTEN MYLES, VICE PRESIDENT, ALASKA CABARET, HOTEL,
RESTAURANT AND RETAILERS ASSOCIATION, ANCHORAGE (via
teleconference), testified in support of the bill. She
stated that resources should not be taken from the ABC
Board in order to regulate marijuana.
2:17:41 PM
JAMES BARRETT, SELF, JUNEAU, testified in support of the
bill. He said that the legislation would buy Alaskans
safety education, industry direction for law enforcement,
the ability to benefit from a new international market,
lower litigation costs, and put the state in compliance
with the federal government, for less than $2 per Alaskan
resident.
2:18:43 PM
KATE BURKHART, EXECUTIVE DIRECTOR, ADVISOR BOARD ON
ALCOHOLISM AND DRUG ABUSE, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, JUNEAU, testified in support of the legislation.
She discussed the importance of not diverting resources
from the ABC Board in order to manage marijuana. She
related that the state's investment in prevention efforts
related to alcohol had proven successful. She furthered
that the "two board, one staff" model was effective because
the Alaska Mental Health Board and the Advisory Board on
Alcoholism and Drug Abuse used the same model with positive
results. She concluded that the bill met the Public Safety
and Public Health concerns related to implementation of
Ballot Measure 2 in a fiscally responsible way.
2:21:28 PM
Co-Chair MacKinnon CLOSED public testimony.
HB 123 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 135
"An Act establishing a Roth contribution program for
the public employees' deferred compensation program;
and providing for an effective date."
2:22:10 PM
ANDY MILLS, LEGISLATIVE LIAISON, DEPARTMENT OF
ADMINISTRATION, explained that the legislation would allow
for a Roth 457 contribution option for state employees. He
relayed that state employees could currently pay into
deferred compensation, which allowed them to save
additional money, for dispersement at the time of
retirement. The deferred compensation option was a pre-tax
option, with taxes being paid at the time of distribution.
He said that the Roth 457 would allow for a post-tax
option, giving the employee the ability to not be taxed at
pay out. He stated that the option would allowed for
diversification in retirement choices and was optional. He
explained that in January of 2011 the federal government
began offering the option. He added that the option would
be useful given the uncertainty of future taxation rates
due to the federal deficit.
2:25:06 PM
KATHY LEA, CHIEF PENSION OFFICER, DIVISION OF RETIREMENT
AND BENEFITS, DEPARTMENT OF ADMINISTRATION, reviewed the
sectional analysis (copy on file):
Section 1. AS 39.45.050 is repealed and reenacted to
provide for a post-tax Roth investment option in the
public employees' deferred compensation plan and
clarifies that state and federal income tax is not
deferred under this option. The section establishes if
no positive election is made for a Roth investment,
contributions will be deemed to be on a pre-tax basis.
This allows the pre-tax target date options to
continue as the default option for the plan if the
member makes no investment election. The section
establishes dollar limitations in accordance with
Internal Revenue Code rules and allows the
Administrator of the plan to establish rules and
procedures governing the election process by
participating employees.
Section 2. AS 39.45.060 adds a definition of "Roth"
contributions to have the meaning under 26 U.S.C.
402A(c)
Section 3. Establishes an effective date of July 1,
2015.
2:26:10 PM
Senator Bishop asked for more information on how the plan
would be taxed.
Mr. Mills explained that the bill would allow the
investment to be taxed now; at the time of retirement the
money set aside, plus earnings, would be tax free.
2:26:56 PM
Senator Dunleavy understood that the bill would not limit
the investment tools that could be used, such as investing
in high risk stocks.
Mr. Mills replied that all of the options currently offered
by the state would be available to the plan.
2:27:39 PM
Co-Chair MacKinnon OPENED public testimony.
Co-Chair MacKinnon CLOSED public testimony.
2:28:34 PM
AT EASE
2:29:56 PM
RECONVENED
Co-Chair MacKinnon discussed housekeeping and the suggested
a break in the meeting to discuss the course of action
pertaining to the legislation on the agenda.
2:31:08 PM
RECESSED
3:13:15 PM
RECONVENED
HOUSE BILL NO. 135
"An Act establishing a Roth contribution program for
the public employees' deferred compensation program;
and providing for an effective date."
3:13:40 PM
Vice-Chair Micciche discussed the fiscal note.
Vice-Chair Micciche MOVED to report HB 135 out of Committee
with individual recommendations and the accompanying fiscal
note. There being NO OBJECTION, it was so ordered.
HB 135 was REPORTED out of committee with a "do pass"
recommendation and with one previously published zero
fiscal note: FN 1(ADM).
3:14:51 PM
AT EASE.
3:16:14 PM
RECONVENED
CS FOR HOUSE BILL NO. 176(FIN)
"An Act repealing state employee salary schedule
increases; and providing for an effective date."
3:16:32 PM
Vice-Chair Micciche spoke to the three fiscal notes.
Co-Chair MacKinnon solicited comments from the committee.
3:18:47 PM
Co-Chair Kelly said that all state employees would forego
the 2.5 percent cost of living adjustment (COLA) for an
anticipated savings of $9.2 million. He asserted that the
legislature was not breaking any promises through the
passage of HB 176, or the budget action the committee had
taken, but in certain financial situations the legislature
had to take action to protect the state's reserves and
spend less money. He stressed that no employee would be
experience a reduction in pay, they would be foregoing a
raise due to a shortfall of revenue.
3:21:29 PM
Co-Chair MacKinnon added that the committee appreciated all
of the state employees, but that the fiscal crisis made the
committee action a necessity.
3:21:59 PM
Vice-Chair Micciche MOVED to report CS HB 176(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSHB 176 was REPORTED out of committee with a "do pass"
recommendation and with three previously published fiscal
notes: FN1 (AJS), FN2 (GOV), and FN3 (LEG).
3:22:29 PM
AT EASE
3:23:30 PM
RECONVENED
CS FOR HOUSE BILL NO. 123(JUD) am
"An Act establishing the Marijuana Control Board;
relating to the powers and duties of the Marijuana
Control Board; relating to the appointment, removal,
and duties of the director of the Marijuana Control
Board; relating to the Alcoholic Beverage Control
Board; and providing for an effective date."
3:24:13 PM
AT EASE
3:25:20 PM
RECONVENED
LACEY SANDERS, LEGISLATIVE ANALYST, LEGISLATIVE FINANCE
DIVISION, explained the two new fiscal notes that would be
attached to the legislation. The first note was from the
Department of Commerce, Community and Economic Development
and was informational only; four full-time positions and
the cost of $1,574,400 in general funds reflected on the
note was included in the governor's FY16 budget. She stated
that funding for the Alcohol Beverage Control Board was
included in the Capital Budget as a multi-year supplemental
item.
3:27:04 PM
Ms. Sanders explained the second new fiscal note was for
the Department of Administration and was informational
only; the fiscal note had originally included $10,000 of
inter-agency receipts and had been zeroed out for FY16. She
explained that the department could use unbudgeted inter-
agency receipts for 2016.
3:27:36 PM
Co-Chair MacKinnon referred to an earlier question
concerning Page 6, line 21 concerning the sunset date of
the board. She related that the chairman of Senate Labor
and Commerce supported the change in the sunset date.
Vice-Chair Micciche moved to MOVED to ADOPT Amendment 1,
29-GH1110\S.1, (Martin, 4/17/15), (copy on file).
Page 6, line 21:
Delete "2017"
Insert "2018"
There being NO OBJECTION, it was so ordered.
3:28:37 PM
Vice-Chair Micciche MOVED to report SCS CSHB 123(FIN) out
of Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
SCS CSHB 123(FIN) was REPORTED out of committee with a "do
pass" recommendation and with two new fiscal notes from the
Department of Commerce, Community, and Economic Development
and the Department of Administration.
3:29:03 PM
AT EASE
3:30:42 PM
RECONVENED
Co-Chair MacKinnon discussed housekeeping.
ADJOURNMENT
3:31:33 PM
The meeting was adjourned at 3:31 p.m.