Legislature(2009 - 2010)SENATE FINANCE 532

03/26/2010 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 300 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Moved Out of Committee 9 a.m. FIN Mtg.
+= HB 302 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Moved Out of Committee 9 a.m. FIN Mtg.
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 92 U.S. PRESIDENTIAL ELECTION COMPACT TELECONFERENCED
Heard & Held
+= SB 234 EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD TELECONFERENCED
Heard & Held
+= SB 264 COMMERCIAL FISHING & AGRICULTURE BANK TELECONFERENCED
Heard & Held
                 SENATE FINANCE COMMITTEE                                                                                       
                      March 26, 2010                                                                                            
                         1:39 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:39:17 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Stedman   called  the  Senate   Finance  Committee                                                                    
meeting to order at 1:39 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Dennis Egan                                                                                                             
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Johnny Ellis                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Quinn  Kendall, Staff,  Senator Bettye  Davis; Barry  Fadem,                                                                    
President,  National  Popular  Vote; Senator  John  Coghill,                                                                    
District  F;  Lela  Klingert, President,  Alaska  Commercial                                                                    
Fishing  and  Agriculture  Bank; Senator  Kevin  Meyer;  Pat                                                                    
Davidson, Legislative  Auditor, Legislative  Audit Division,                                                                    
Legislative Affairs Agency.                                                                                                     
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Cam   Carlson,  Self,   Fairbanks;   Randy  Griffin,   Self,                                                                    
Fairbanks; Ralph Stevenson,  Self, Anchorage; Trent England,                                                                    
Save  Our  State  Project,   Washington;  Tara  Ross,  Self,                                                                    
Anchorage;  Jim Gillef,  Self, Anchorage;  Stephan Peterson,                                                                    
Self, Anchorage;  Debbie Joslin,  Eagle Forum  Alaska, Eagle                                                                    
River;  Rob Carlson,  Self,  Fairbanks;  Rex Goolsby,  Self,                                                                    
Tok; Shirley Gifford, Alcohol Beverage Compliance.                                                                              
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 92     U.S. PRESIDENTIAL ELECTION COMPACT                                                                                    
                                                                                                                                
          SB 92 was HEARD and HELD in Committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SB 264    COMMERCIAL FISHING & AGRICULTURE BANK                                                                                 
                                                                                                                                
          SB 264 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SB 234    EXTEND ALCOHOLIC BEVERAGE CONTROL BOARD                                                                               
                                                                                                                                
          SB 234 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
SENATE BILL NO. 92                                                                                                            
                                                                                                                                
     "An Act  ratifying an interstate  compact to  elect the                                                                    
     President and  Vice-President of  the United  States by                                                                    
     national popular  vote; and  making related  changes to                                                                    
     statutes  applicable  to  the selection  by  voters  of                                                                    
     electors  for   candidates  for  President   and  Vice-                                                                    
     President of  the United  States and  to the  duties of                                                                    
     those electors."                                                                                                           
                                                                                                                                
1:39:36 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman introduced SB 92.                                                                                              
                                                                                                                                
QUINN KENDALL, STAFF, SENATOR BETTYE DAVIS, discussed the                                                                       
legislation.                                                                                                                    
                                                                                                                                
     The  U.S.  Constitution   gives  each  state  exclusive                                                                    
     control  over  the  manner  of  awarding  each  state's                                                                    
     electoral  votes.  The   current  winner-take-all  rule                                                                    
     practiced by 48 states is  not in the constitution. The                                                                    
     fact that  Maine and Nebraska award  electoral votes by                                                                    
     Congressional district,  is a reminder that  electing a                                                                    
     president  is  a  state's right  issue,  and  does  not                                                                    
     require an amendment to the U.S. Constitution.                                                                             
     Under  the  National  Popular Vote  Interstate  Compact                                                                    
     bill, all the electoral  votes from the enacting states                                                                    
     would  be  awarded,  as a  bloc,  to  the  presidential                                                                    
     candidate who  receives the most  popular votes  in all                                                                    
     50 states  (and DC).  The bill  would take  effect only                                                                    
     when  enacted by  states possessing  a majority  of the                                                                    
     electoral votes - that is  270 of 538, enough electoral                                                                    
     votes to elect a President.                                                                                                
     During previous hearings the question has been raised                                                                      
     "Will a National Popular Vote be good for small                                                                            
    populated states like Alaska?"  The answer to this                                                                          
     question is emphatically 'yes,' it would be tremendous                                                                     
    for a state like Alaska.  And with your indulgence,                                                                         
     I'll briefly explain why.                                                                                                  
                                                                                                                                
     Our relevance as a state in electing the President is                                                                      
     governed solely by whether we are "winnable" or "not"                                                                      
     to a candidate.  In other words, are we a                                                                                  
     "battleground" state, like Iowa, Florida, Ohio and New                                                                     
     Hampshire?  In those states, the vote for President,                                                                       
     are very close, and therefore candidates' allot                                                                            
    copious amounts of campaign resources to win those                                                                          
     states.  In Alaska there are no similar efforts taken                                                                      
     by candidates because we are not a closely contested                                                                       
     state.  In fact, Alaska has not been visited by a                                                                          
     presidential candidate since Kennedy and Nixon arrived                                                                     
     over 50 years ago.                                                                                                         
                                                                                                                                
     Additional  evidence  supports  the  need  for  SB  92s                                                                    
     passage.   In  past elections  candidates have  won the                                                                    
     Presidency  without  winning  the  most  popular  votes                                                                    
     nationwide. This has  occurred in 4 of  the nation's 56                                                                    
     presidential  elections  (or,  1   in  7  of  the  non-                                                                    
     landslide elections).  In 2004,  a shift of  fewer than                                                                    
     60,000  votes in  Ohio  would  have defeated  President                                                                    
     Bush  despite his  substantial nationwide  lead of  3 ½                                                                    
     million votes.                                                                                                             
     In conclusion, SB 92s sole  purpose is to ensure that a                                                                    
     small populated state like ours  would have hundreds of                                                                    
     thousands of  votes that  are Winnable,  Important, and                                                                    
     Valuable to  a presidential candidate.  And ultimately,                                                                    
     whether its  campaign spending in Alaska,  or attention                                                                    
     being  paid   to  our  important  states   issues,  the                                                                    
     National Popular  Vote system is undeniably  better for                                                                    
     Alaska.                                                                                                                    
                                                                                                                                
1:43:44 PM                                                                                                                    
                                                                                                                                
Senator Olson asked about the effect this legislation has                                                                       
on minority groups throughout the nation. Mr. Kendall                                                                           
responded that with this bill, each and every vote counts.                                                                      
                                                                                                                                
Senator Huggins asked if the  function of the legislation is                                                                    
to  eliminate the  Electoral College.  Mr. Kendall  answered                                                                    
no.                                                                                                                             
                                                                                                                                
Senator  Huggins asked  what the  function of  the Electoral                                                                    
College  would  be  under   this  legislation.  Mr.  Kendall                                                                    
responded  that with  the Electoral  College, each  state is                                                                    
designated a  certain number of electoral  votes. Each state                                                                    
sends their electoral votes to  the winner of the most votes                                                                    
nationwide.  Senator Huggins  suggested  that  if the  total                                                                    
vote  count has  been  tallied, then  the Electoral  College                                                                    
would  exist as  a formality.  Mr. Kendall  agreed that  the                                                                    
Electoral College would be a formality.                                                                                         
                                                                                                                                
1:46:18 PM                                                                                                                    
                                                                                                                                
Senator Thomas  struggled with the distinction  this formula                                                                    
provides when compared to the current method.                                                                                   
                                                                                                                                
Senator Olson understood that a  pool of states is joined by                                                                    
the compact. He concluded that  if Alaska joins the compact,                                                                    
then  electoral votes  are added  to the  pool of  compacted                                                                    
states.                                                                                                                         
                                                                                                                                
Co-Chair  Stedman asked  for an  explanation of  the compact                                                                    
along  with  a  list  of states  included.  He  asked  about                                                                    
marginalization for  Alaska. Mr. Kendall responded  that the                                                                    
compact  cannot be  enacted until  270  electoral votes  are                                                                    
met.  Currently  there  are  five  states  enacting  similar                                                                    
legislation: Hawaii,  Washington, Maryland, New  Jersey, and                                                                    
Illinois.  Many  people wonder  how  this  bill will  affect                                                                    
Alaska  as  electoral  votes  were  originally  designed  to                                                                    
represent  states  with  small populations.  He  noted  that                                                                    
Wyoming,  which is  also a  small state,  has three  and one                                                                    
half  times  more  power in  their  Electoral  College  vote                                                                    
compared  to their  population.  Florida  is inundated  with                                                                    
campaign visits  because they are  a battleground  state. He                                                                    
opined that the Electoral College  is not working for Alaska                                                                    
therefore   Presidential  Candidates   do  not   care  about                                                                    
campaigning here.                                                                                                               
                                                                                                                                
1:50:46 PM                                                                                                                    
                                                                                                                                
Senator Huggins  estimated that  the "best  guarantee Alaska                                                                    
has to  get a Presidential candidate  to visit is to  have a                                                                    
Presidential candidate."                                                                                                        
                                                                                                                                
CAM   CARLSON,   SELF,   FAIRBANKS   (via   teleconference),                                                                    
testified in opposition to the  legislation. She opined that                                                                    
the  United States  does  not have  a  basic democracy,  but                                                                    
instead  a representative  republic. She  stressed that  the                                                                    
legislation eliminates  one of the country's  basic forms of                                                                    
government.                                                                                                                     
                                                                                                                                
RANDY   GRIFFIN,  SELF,   FAIRBANKS  (via   teleconference),                                                                    
testified  in opposition  to  SB 92.  He  explained that  he                                                                    
likes the  Electoral College  system because  it accentuates                                                                    
state boundaries and rights. He  opined that state liberties                                                                    
were at risk  and the federal government has  taken too much                                                                    
power.  The  electoral  system  does  benefit  small  states                                                                    
because  we get  three electors  to match  the congressional                                                                    
delegation, which  he opined was  generous in  comparison to                                                                    
the population.                                                                                                                 
                                                                                                                                
1:56:24 PM                                                                                                                    
                                                                                                                                
RALPH  STEVENSON,  SELF,   ANCHORAGE  (via  teleconference),                                                                    
testified  in support  of SB  92. He  stressed the  need for                                                                    
legislation  that allows  each person's  vote to  count. The                                                                    
national popular  vote ensures that each  individual's voice                                                                    
is  heard in  a federal  Presidential election.  He believed                                                                    
that the bill  is right for Alaska and the  compact is right                                                                    
for our country.                                                                                                                
                                                                                                                                
TRENT  ENGLAND,  SAVE  OUR STATE  PROJECT,  WASHINGTON  (via                                                                    
teleconference), testified  in favor of the  legislation. He                                                                    
noted that  the issue reaches  far beyond the  boundaries of                                                                    
each   state.   He   opined  that   presidential   elections                                                                    
recalibrate  politics every  four years.   He  discussed the                                                                    
interstate  compact,  which   he  deemed  extremely  fragile                                                                    
because it is not a change to the constitution.                                                                                 
                                                                                                                                
TARA ROSS,  SELF, ANCHORAGE (via  teleconference), testified                                                                    
in  opposition  to  the  legislation.   She  stated  that  a                                                                    
nationwide  discussion  regarding  the  elimination  of  the                                                                    
Electoral College  is necessary.  Alaska could be  forced to                                                                    
award its  entire slate  of electors to  a candidate  who is                                                                    
not on  the ballot.  She cited further  inconsistencies that                                                                    
might skew election results.                                                                                                    
                                                                                                                                
2:03:15 PM                                                                                                                    
                                                                                                                                
JIM GILLEF, SELF,  ANCHORAGE (via teleconference), testified                                                                    
in support  of the  legislation. He  believed that  the bill                                                                    
allows the  majority to rule  and pulls the  states together                                                                    
increasing state's rights.                                                                                                      
                                                                                                                                
STEPHAN  PETERSON,  SELF,  ANCHORAGE  (via  teleconference),                                                                    
testified  in  support   of  SB  92.  He   stated  that  the                                                                    
constitution  is   an  evolving  and  living   document.  He                                                                    
stressed that it is time for every citizen to be counted.                                                                       
                                                                                                                                
2:05:29 PM                                                                                                                    
                                                                                                                                
DEBBIE  JOSLIN,  EAGLE  FORUM ALASKA,  DELTA  JUNCTION  (via                                                                    
teleconference),    testified   in    opposition   to    the                                                                    
legislation. She  opined that SB  92 would  eliminate rights                                                                    
for Alaskans  to have a  meaningful part in the  election of                                                                    
the  President. Alaska's  electors are  pledged to  vote for                                                                    
the person who wins the national popular vote.                                                                                  
                                                                                                                                
ROB   CARLSON,   SELF,   FAIRBANKS   (via   teleconference),                                                                    
testified in  opposition of the  legislation. He  noted that                                                                    
the bill would undermine Alaska's three electoral votes.                                                                        
                                                                                                                                
2:09:17 PM     AT EASE                                                                                                        
2:09:37 PM     RECONVENE                                                                                                      
                                                                                                                                
BARRY FADEM, PRESIDENT, NATIONAL  POPULAR VOTE, testified in                                                                    
support  of  the  legislation.  He  discussed  the  minority                                                                    
issue.  The  National  Association for  the  Advancement  of                                                                    
Colored People  (NAACP) supports  the national  popular vote                                                                    
proposal  because African  Americans in  battleground states                                                                    
represented 72  percent in  1976, which  fell to  34 percent                                                                    
for  the  last  election.  Hispanic  groups  face  the  same                                                                    
dilemma.  Issues for  states  without proper  representation                                                                    
due to  their size  are never discussed  during presidential                                                                    
campaigns. Six  of the states are  red and six are  blue. He                                                                    
believed that a  vote cast in Juneau should  be as important                                                                    
as a vote  cast in Miami, Florida. The size  of the state is                                                                    
irrelevant. Whether  or not  it is  a battleground  state is                                                                    
the determining  factor. He spoke  to the argument  that the                                                                    
legislation  eliminates  the  Electoral College.  He  stated                                                                    
that  the  allegations  were false.  He  believed  that  the                                                                    
Electoral College is  a rubberstamp for the vote  in each of                                                                    
the  fifty states.  The founding  fathers  decided in  their                                                                    
immanent  wisdom to  give state  legislatures  the power  to                                                                    
decide  how   to  award  the  electoral   votes.  Under  the                                                                    
legislation's proposal,  state action determines  the method                                                                    
of the  election process. All reform  regarding Presidential                                                                    
elections begins at the state level.                                                                                            
                                                                                                                                
2:13:52 PM                                                                                                                    
                                                                                                                                
REX GOOLSBY,  SELF, TOK  (via teleconference),  testified in                                                                    
opposition of  the legislation.  The compromise  of creating                                                                    
the  Electoral  College  was for  the  protection  of  small                                                                    
states. He  opined that  the passage  of the  proposal would                                                                    
benefit the states with large population centers.                                                                               
                                                                                                                                
2:19:23 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman mentioned one zero fiscal note.                                                                                
                                                                                                                                
Mr.  Kendall thanked  the committee  for the  opportunity to                                                                    
testify on behalf  of SB 92. He stated that  the goal of the                                                                    
legislation was to benefit the entire country.                                                                                  
                                                                                                                                
SB  92  was   HEARD  and  HELD  in   Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 264                                                                                                           
                                                                                                                                
     "An  Act relating  to  the  board, investigations,  and                                                                    
     examinations  of  the  Alaska  Commercial  Fishing  and                                                                    
     Agriculture  Bank;  and   providing  for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
2:20:31 PM                                                                                                                    
                                                                                                                                
SENATOR   JOHN  COGHILL   discussed   the  legislation.   He                                                                    
explained that  SB 264 addressed  two different  issues with                                                                    
regard to  the commercial fishing and  agricultural bank. It                                                                    
eliminates  the  requirement  for the  resident  farmer  and                                                                    
places  them  under  an examination  of  the  Department  of                                                                    
Commerce,  Community and  Economic  Development division  of                                                                    
banking for a review in intervals of thirty six months.                                                                         
                                                                                                                                
Senator Coghill provided a  sectional analysis. He explained                                                                    
that Section 1 adds  the commercial fishing and agricultural                                                                    
bank to  the list of requirements  for institutions. Section                                                                    
two  deletes  the requirement  of  resident  farmer for  the                                                                    
board   of  directors   of   the   Commercial  Fishing   and                                                                    
Agricultural  Bank.  Section  three is  the  confidentiality                                                                    
section  of the  records required  when utilizing  financial                                                                    
information.  The authority  to audit  is added  under Title                                                                    
44. Section  4 addresses the authorization  for examinations                                                                    
as  the   requirement  for   the  Department   of  Commerce,                                                                    
Community and Economic  Development Banking Division Audits.                                                                    
Section 5  is a  repealer of  the resident  farmer language.                                                                    
Section  6 addresses  the immediate  effect of  the resident                                                                    
farmer  language  by  removing   it  altogether.  Section  7                                                                    
includes a  later effective  date that  deals with  the bank                                                                    
examiner.                                                                                                                       
                                                                                                                                
2:25:37 PM                                                                                                                    
                                                                                                                                
Senator  Olson asked  why  representation  from the  general                                                                    
public  was  discouraged.   Senator  Coghill  explained  the                                                                    
difficulty  in  finding qualified  people  to  serve on  the                                                                    
board. The  current requirement states that  the seat cannot                                                                    
be filled  unless a resident farmer  is found to sit  on the                                                                    
position.  Senator Olson  asked about  the extension  of the                                                                    
interval. He asked how many loans are delinquent.                                                                               
                                                                                                                                
Co-Chair  Stedman reviewed  one fiscal  note for  $10,600 in                                                                    
Commercial Fishing  and Agricultural  Bank (CFAB)   receipts                                                                    
to cover the cost of examination, travel and per diem.                                                                          
                                                                                                                                
Senator  Coghill stated  that  the  fiscal note  anticipates                                                                    
that CFAB  would cover the  cost listed in the  fiscal note.                                                                    
The fiscal note is a  necessity for the auditors. The fiscal                                                                    
note exhibits a reimbursable cost to the state.                                                                                 
                                                                                                                                
2:27:34 PM                                                                                                                    
                                                                                                                                
LELA  KLINGERT,  PRESIDENT,  ALASKA COMMERCIAL  FISHING  AND                                                                    
AGRICULTURE BANK delivered her testimony.                                                                                       
                                                                                                                                
     When CFAB  was created by  the Legislature in  1979 and                                                                    
     1980,   there   was   considerable  emphasis   on   the                                                                    
     development  of agriculture  in  Alaska  and there  was                                                                    
     hope that  CFAB would  be a  significant player  in the                                                                    
     financing  of that  development.   While CFAB  has made                                                                    
     many  agricultural   loans,  and  continues   to  offer                                                                    
     agricultural  loans today.    However  there have  been                                                                    
     very few  new agricultural loans made,  or applications                                                                    
     received,  in the  last  ten years.    Because of  this                                                                    
     CFAB's  pool of  eligible farmer  members from  which a                                                                    
     farmer   director  candidate   can  be   recruited  has                                                                    
     dwindled.                                                                                                                  
                                                                                                                                
     This  has  resulted  in  increasing  pressures  on  the                                                                    
     individuals  involved, on  CFAB's other  directors, and                                                                    
     on  CFAB's efforts  to maintain  its  viability and  to                                                                    
     properly  serve its  various  constituencies.   Despite                                                                    
     the logical and well-intended  requirement of the past,                                                                    
     it has now become critical  for CFAB's members to reach                                                                    
     into the broad  pool of its total  membership, in order                                                                    
     to maintain the highest  level of competence within its                                                                    
     governing body                                                                                                             
                                                                                                                                
     With  regard   to  the  request  for   examination,  it                                                                    
     admittedly may  seem odd  that a  financial institution                                                                    
     would  seek  some  new  level(s)  of  oversight  and/or                                                                    
     potential criticisms, especially  where it will involve                                                                    
     new and uncontrollable financial costs.                                                                                    
     CFAB  represents  a  collection  of  diverse  fiduciary                                                                    
     responsibilities.   It borrows and  lends money  and it                                                                    
     operates as  a cooperative corporation.   Therefore, it                                                                    
     has a  fiduciary obligation to those  who have borrowed                                                                    
     in the  past, those  who borrower  today, and  to those                                                                    
     who  borrow in  the future.   It  also has  a fiduciary                                                                    
     responsibility to the State of  Alaska - First, because                                                                    
     it  was  a financial  investment  of  the State  (since                                                                    
     repaid) and,  Second, because CFAB is  the only private                                                                    
     enterprise with the authority  to encumber a Commercial                                                                    
     Fishing Limited Entry Permit with a consensual lien.                                                                       
     CFAB's  Board  of  Directors,  Managements,  and  staff                                                                    
     members  have always  been sensitive  to those  diverse                                                                    
     fiduciary responsibilities.   It  is true that  CFAB is                                                                    
     subject to, and welcomes,  an annual financial audit by                                                                    
     a  professional  firm;  but  such  audits  are  focused                                                                    
     primarily   on  quantitative   values  and   accounting                                                                    
     protocols.   Only peripherally, do they  touch upon the                                                                    
     qualitative  aspects  of lending  policies,  practices,                                                                    
     and results.  The  State's bank examiners, however, are                                                                    
     trained  in analytical  and evaluative  procedures, and                                                                    
     they are prepared to express  a judgment, in each case,                                                                    
     as to  the likelihood  of a  loan's repayment  in full.                                                                    
     In addition,  the examiners have access  to the results                                                                    
     and   experiences    of   numerous    other   financial                                                                    
     institutions and  can establish norms or  guidelines by                                                                    
     which  CFAB's effectiveness  can be  measured.   So, in                                                                    
     total,  CFAB's Board  of Directors  and Management  are                                                                    
     enthusiastic in their support of the measure at hand.                                                                      
                                                                                                                                
2:31:02 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman requested  information regarding  defaults                                                                    
or delinquencies.  He asked to  know the status of  the loan                                                                    
portfolio.   Ms. Klingert  stated that  CFAB enjoys  some of                                                                    
its  lowest delinquency  rates in  history at  five percent.                                                                    
Co-Chair   Stedman  requested   more  detailed   and  recent                                                                    
information regarding  the percent  of the  delinquencies in                                                                    
dollar amounts.                                                                                                                 
                                                                                                                                
Co-Chair  Hoffman  asked  for the  breakdown  ratio  between                                                                    
commercial fisheries and agricultural loans.                                                                                    
                                                                                                                                
Ms. Klingert  responded that CFAB  has less than  $2 million                                                                    
in agricultural  loans in a  portfolio of  approximately $27                                                                    
million loans.                                                                                                                  
                                                                                                                                
2:32:20 PM                                                                                                                    
                                                                                                                                
Senator  Coghill appreciated  the  bill's consideration.  He                                                                    
believed that  the legislation provided  one way  to improve                                                                    
the lending institutions.                                                                                                       
                                                                                                                                
SB  264  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 234                                                                                                           
                                                                                                                                
     "An  Act   extending  the   termination  date   of  the                                                                    
     Alcoholic Beverage Control Board;  and providing for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
2:33:07 PM                                                                                                                    
                                                                                                                                
SENATOR KEVIN MEYER explained the legislation.                                                                                  
                                                                                                                                
     AS   04.06.010  established   the  Alcoholic   Beverage                                                                  
     Control  Board   (ABC  Board)  and  provided   for  the                                                                    
     appointment of  members by the governor.  The ABC Board                                                                    
     consists of five members appointed  by the governor and                                                                    
     confirmed  by   a  majority  of  the   members  of  the                                                                    
     legislature in joint session. Two  members of the board                                                                    
     shall  be persons  actively  engaged  in the  alcoholic                                                                    
     beverage industry; at least three  members of the board                                                                    
     shall represent the general public.                                                                                        
                                                                                                                                
     SB 234, if enacted, would extend the ABC Board for one                                                                     
     year to June 30, 2011.                                                                                                     
                                                                                                                                
    In the opinion of Legislative Audit, the Alcoholic                                                                          
     Beverage Control Board (ABC Board) should continue to                                                                      
     regulate the manufacture, sale, barter, and possession                                                                     
     of alcoholic beverages in Alaska in order to protect                                                                       
    the public's health, safety, and welfare. The Board                                                                         
     has demonstrated a need for its continued existence by                                                                     
     providing protection to the general public through the                                                                     
     issuance, renewal, revocation, and suspension of                                                                           
    liquor licenses. Protection has also been provided                                                                          
    through active investigation of suspected licensing                                                                         
    violations and enforcement of the state's alcoholic                                                                         
     beverage control laws and regulations.                                                                                     
                                                                                                                                
     During the review process of the sunset audit, there                                                                       
     were questions raised about the decision of the                                                                            
     Legislature to move the ABC Board from the Department                                                                      
     of Revenue to the Department of Public Safety.  These                                                                      
     questions should be asked and the issue investigated                                                                       
     in depth.  This one year extension will give the                                                                           
    Legislature time over the interim of 2010 to review                                                                         
     the decision and move forward with extending the Board                                                                     
     to 2014 as recommended by the Division of Legislative                                                                      
     Audit.                                                                                                                     
                                                                                                                                
Senator Olson  asked to  know more  about the  difference in                                                                    
the  board's department.  Senator Meyer  responded that  the                                                                    
board has  demonstrated a need  for its  continued existence                                                                    
by  providing   protection  to   the  general   public.  The                                                                    
responsibilities   of  the   board  include   the  issuance,                                                                    
renewal,   suspension   of   liquor  license,   and   active                                                                    
investigation   of   suspected    license   violations   and                                                                    
enforcement of  the estate's  alcohol beverage  control laws                                                                    
and  regulations. The  review process  of  the sunset  audit                                                                    
raised questions  about the decision  of the  legislature to                                                                    
move the  Alcohol Beverage Compliance  (ABC) board  from the                                                                    
Department  of Revenue  (DOR) to  the  Department of  Public                                                                    
Safety (DPS).  He requested  additional time  to investigate                                                                    
the questions  regarding the  best home  for the  ABC board.                                                                    
The original audit recommended board  extension to 2014, but                                                                    
he requested an extension of one year.                                                                                          
                                                                                                                                
Senator Olson  asked why Senator  Meyer chose not  to extend                                                                    
the  board  for  a  longer time  period  as  recommended  by                                                                    
Legislative Budget and Audit  (LB&A). Senator Meyer informed                                                                    
that the  board may  shift departments. The  extension would                                                                    
not  allow  the opportunity  to  move  the board  among  the                                                                    
departments.                                                                                                                    
                                                                                                                                
Co-Chair  Stedman   mentioned  one  fiscal  note   from  the                                                                    
Department of Public Safety.                                                                                                    
                                                                                                                                
2:37:53 PM                                                                                                                    
                                                                                                                                
SHIRLEY GIFFORD, DIRECTOR,  ALCOHOL BEVERAGE COMPLIANCE (via                                                                    
teleconference),    expressed   awareness    of   licensee's                                                                    
dissatisfaction  with  the ABC  board.  She  opined that  an                                                                    
extension of  the ABC board offers  stability. She explained                                                                    
that  she  made  recommended changes.  She  exemplified  the                                                                    
issues. She applauded the efforts  of the agents and servers                                                                    
who  make the  correct decisions.  She anticipated  that the                                                                    
changes would  be well  received. She  wished to  provide an                                                                    
agency that is supportive  of licensees. She understood that                                                                    
licensing and enforcement comprised  the two aspects of ABC.                                                                    
Without enforcement,  laws will  be broken. When  people are                                                                    
held accountable and responsible then they act accordingly.                                                                     
                                                                                                                                
Co-Chair Stedman  noted the  four recommendations  listed in                                                                    
the  audit  report. Ms.  Gifford  explained  that one  major                                                                    
recommendation  was  an  enforcement plan.  The  other  item                                                                    
concerned  a  procedural manual.  She  stated  that she  had                                                                    
organized a  ten year strategic  plan. All three  items have                                                                    
been approved  by the  board of  directors. She  stated that                                                                    
she was  grateful to have  the audit occur at  the beginning                                                                    
of her appointment.  She explained that the  audit allowed a                                                                    
road map to efficiency for the operation of the agency.                                                                         
                                                                                                                                
2:43:41 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman expressed  concern about "sting operations"                                                                    
with underage  persons sent into  a liquor  establishment to                                                                    
purchase alcohol.  His concern included the  risk associated                                                                    
with the  licensed premises operator  and the effect  on his                                                                    
insurance premiums  along with potential felony  charges for                                                                    
the bartender.                                                                                                                  
                                                                                                                                
Ms. Gifford responded that she  was also concerned about the                                                                    
issue.  She stated  that Representative  Ramras  had a  bill                                                                    
that  addressed  minors  using illegal  identification.  She                                                                    
stated  that  law  enforcement must  retain  the  focus  and                                                                    
priority. She mentioned that she  is a member of a committee                                                                    
addressing statistical  crime reporting. She was  pleased to                                                                    
be  included because  departments  across  the state  should                                                                    
report Title 4 violations.                                                                                                      
                                                                                                                                
2:47:19 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman clarified  several  concerns about  minors                                                                    
testing the  liquor establishment by attempting  to purchase                                                                    
liquor as  part of a  "sting operation." He  understood that                                                                    
it  was  illegal to  have  an  underage  minor in  a  liquor                                                                    
establishment although the ramifications  exist only for the                                                                    
business proprietor  and the bartender  if they sell  to the                                                                    
minor.                                                                                                                          
                                                                                                                                
Ms. Gifford responded  that Title 4 for  AS 41.60.490 covers                                                                    
access of persons under the  age of 21 to licensed premises.                                                                    
She continued  that Section  F of the  statute reads  that a                                                                    
person under  21 years of  age does not violate  the section                                                                    
if the person  enters or remains on  premises licensed under                                                                    
this title  at the request  of a police officer.  She stated                                                                    
that  the ABC  board is  afforded  the ability  to do  these                                                                    
compliance  checks.  She  explained   that  an  increase  in                                                                    
compliance checks led to a  decrease in violations. Co-Chair                                                                    
Stedman responded that the shifting  of the ABC board to the                                                                    
Department of Public Safety has  led to increased discomfort                                                                    
among proprietors.                                                                                                              
                                                                                                                                
Ms.  Gifford stated  that the  compliance check  program was                                                                    
not initiated  because the  ABC board  was placed  under the                                                                    
Department of  Public Safety.  The compliance  check program                                                                    
occurs across  the nation  in an  effort to  combat underage                                                                    
drinking.                                                                                                                       
                                                                                                                                
2:51:55 PM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  pointed out number  4 and number 3  of the                                                                    
audit recommendation.  He referred  to the policy  stated in                                                                    
number  4 addressing  a  board vote  during  a tie  breaking                                                                    
situation. Ms. Gifford responded  that Alaska statute covers                                                                    
this issue.  Ms. Gifford believed  that this  statute should                                                                    
be  changed. She  noted that  she agrees  with the  auditors                                                                    
because she is in a  position where she has more information                                                                    
than the board.                                                                                                                 
                                                                                                                                
Co-Chair Hoffman mentioned number  three and the compliance.                                                                    
He asked  if the board  records were complete  and accurate.                                                                    
Ms.  Gifford replied  that the  record keeping  has improved                                                                    
tremendously.                                                                                                                   
                                                                                                                                
2:55:24 PM                                                                                                                    
                                                                                                                                
Senator  Olson asked  how  a  tie might  occur  with a  five                                                                    
member board.   Ms. Gifford answered that a  tie might occur                                                                    
if a  member of  the board  was absent,  as a  quorum exists                                                                    
with four people.                                                                                                               
                                                                                                                                
Senator  Thomas asked  how  long Ms.  Gifford  had been  the                                                                    
director.  Ms.  Gifford  answered  that  she  has  been  the                                                                    
director since January 5, 2009.                                                                                                 
                                                                                                                                
Senator Thomas  asked about  other issues  in the  audit. He                                                                    
asked  if the  four agents  employed by  the ABC  board were                                                                    
sufficient.   Ms.  Gifford   answered  that   she  requested                                                                    
additional   investigators  because   of  duties   including                                                                    
inspections  of  licensed  premises and  investigations  for                                                                    
violations of  the law.  She explained  that she  depends on                                                                    
the state troopers for help.                                                                                                    
                                                                                                                                
2:58:01 PM                                                                                                                    
                                                                                                                                
Senator  Thomas commented  on the  audit and  the compliance                                                                    
check program.  Ms. Gifford  responded that  the enforcement                                                                    
of the  strategic plan adds  a mechanism limiting  visits to                                                                    
establishments.                                                                                                                 
                                                                                                                                
Senator  Thomas asked  about mailings  to the  licensees. He                                                                    
asked  about the  mailings and  the cost  to the  state. Ms.                                                                    
Gifford  was not  aware  of state  mailings,  but agreed  to                                                                    
respond to Senator Thomas at a later date.                                                                                      
                                                                                                                                
3:00:37 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman wondered  how much  time is  given to  the                                                                    
entity to achieve compliance prior to elimination.                                                                              
                                                                                                                                
PAT   DAVIDSON,  LEGISLATIVE   AUDITOR,  LEGISLATIVE   AUDIT                                                                    
DIVISION,  LEGISLATIVE  AFFAIRS   AGENCY  offered  that  the                                                                    
improvements observed in the prior  audit occurred under the                                                                    
current executive director. She  stated that the major issue                                                                    
for  LB&A   was  establishing  quantifiable   and  objective                                                                    
enforcement  goals. Enforcement  is a  large segment  of the                                                                    
ABC  board. Compliance  checks should  not be  based on  the                                                                    
location of  the inspectors.  Issues about  record retention                                                                    
and  data  input  are  smaller issues  and  do  not  require                                                                    
reorganization of the board.                                                                                                    
                                                                                                                                
Co-Chair Stedman asked about the  potential extension of the                                                                    
board. He  asked if  one year  was ample  time to  come into                                                                    
compliance with the audits.                                                                                                     
                                                                                                                                
Ms. Davidson stated that an extension of one year means                                                                         
that LB&A will revisit the board and provide the committee                                                                      
with a status of the current audit recommendations.                                                                             
                                                                                                                                
3:03:04 PM                                                                                                                    
                                                                                                                                
SB 234 was HEARD and HELD in Committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:03 PM.                                                                                           

Document Name Date/Time Subjects
SB92 Press[1].pdf SFIN 3/26/2010 1:30:00 PM
SB 92
SB92 Sponsor Statement[1].pdf SFIN 3/26/2010 1:30:00 PM
SB 92
SB 92 Sectional[1].pdf SFIN 3/26/2010 1:30:00 PM
SB 92
SB 264 2010 HB 159 2003 backup.pdf SFIN 3/26/2010 1:30:00 PM
HB 159
SB 264
SB 264 2010 Payments for Examinations.pdf SFIN 3/26/2010 1:30:00 PM
SB 264
SB 264 2010 Sectional.pdf SFIN 3/26/2010 1:30:00 PM
SB 264
SB 264 2010 Sponsor Statement.pdf SFIN 3/26/2010 1:30:00 PM
SB 264
SB92 Letters of Support.pdf SFIN 3/26/2010 1:30:00 PM
SJUD 2/19/2010 1:30:00 PM
SB 92
SB 264 CFAB Mar 2003 Ltr HB 159.pdf SFIN 3/26/2010 1:30:00 PM
HB 159
SB 264
SB 264 Support Letter Huppert 2010.pdf SFIN 3/26/2010 1:30:00 PM
SB 264
SB 92 RNC letter of support.pdf SFIN 3/26/2010 1:30:00 PM
SB 92
SB92 Letters of Support[1].pdf SFIN 3/26/2010 1:30:00 PM
SB 92
SB 92 National Popular Vote 2010.pdf SFIN 3/26/2010 1:30:00 PM
SB 92