03/25/2004 01:43 PM Senate L&C
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= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
March 25, 2004
1:43 p.m.
TAPE(S) 04-26, 27
MEMBERS PRESENT
Senator Con Bunde, Chair
Senator Ralph Seekins, Vice Chair
Senator Gary Stevens
Senator Bettye Davis
Senator Hollis French
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 337
"An Act relating to the powers of the Alaska Energy Authority to
make grants and loans and enter into contracts; relating to the
bulk fuel revolving loan fund; relating to the Alaska Energy
Authority's liability for the provision of technical assistance
to rural utilities; relating to the Alaska Energy Authority's
investment of the power development fund; repealing the
electrical service extension fund; and providing for an
effective date."
MOVED CSSB 337(L&C) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 285(JUD)
"An Act adopting the Uniform Electronic Transactions Act;
repealing certain statutes relating to electronic records and
electronic signatures; amending Rule 402, Alaska Rules of
Evidence; and providing for an effective date."
MOVED CSHB 285(JUD) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 15(FIN) am
"An Act relating to fair trade practices and consumer
protection, to telephone solicitations, to charitable
solicitations; and providing for an effective date."
HEARD AND HELD
SENATE BILL NO. 368
"An Act relating to taxes on cigarettes and tobacco products;
relating to tax stamps on cigarettes; relating to forfeiture of
cigarettes and of property used in the manufacture,
transportation, or sale of unstamped cigarettes; relating to
licenses and licensees under the Cigarette Tax Act; and
providing for an effective date."
MOVED SB 368 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 337
SHORT TITLE: ENERGY PROGRAMS & FUNDS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/16/04 (S) READ THE FIRST TIME - REFERRALS
02/16/04 (S) L&C, FIN
03/11/04 (S) L&C AT 1:30 PM BELTZ 211
03/11/04 (S) Heard & Held
03/11/04 (S) MINUTE(L&C)
03/25/04 (S) L&C AT 1:30 PM BELTZ 211
BILL: HB 285
SHORT TITLE: ELECTRONIC TRANSACTIONS & SIGNATURES
SPONSOR(s): REPRESENTATIVE(s) MCGUIRE
04/25/03 (H) READ THE FIRST TIME - REFERRALS
04/25/03 (H) L&C, JUD
05/07/03 (H) L&C AT 3:15 PM CAPITOL 17
05/07/03 (H) Scheduled But Not Heard
05/09/03 (H) L&C AT 3:15 PM CAPITOL 17
05/09/03 (H) Scheduled But Not Heard
05/12/03 (H) L&C AT 3:15 PM CAPITOL 17
05/12/03 (H) Moved Out of Committee
05/12/03 (H) MINUTE(L&C)
05/13/03 (H) L&C RPT 2DP 4NR
05/13/03 (H) DP: LYNN, ANDERSON; NR: GATTO,
05/13/03 (H) CRAWFORD, GUTTENBERG, DAHLSTROM
01/21/04 (H) JUD AT 1:00 PM CAPITOL 120
01/21/04 (H) Moved CSHB 285(JUD) Out of Committee
01/21/04 (H) MINUTE(JUD)
01/23/04 (H) JUD RPT CS(JUD) 7DP
01/23/04 (H) DP: SAMUELS, HOLM, GARA, OGG,
01/23/04 (H) GRUENBERG, ANDERSON, MCGUIRE
02/19/04 (H) TRANSMITTED TO (S)
02/19/04 (H) VERSION: CSHB 285(JUD)
02/20/04 (S) READ THE FIRST TIME - REFERRALS
02/20/04 (S) L&C, JUD
03/25/04 (S) L&C AT 1:30 PM BELTZ 211
BILL: HB 15
SHORT TITLE: SOLICITATIONS/CONSUMER PROTECTION
SPONSOR(s): REPRESENTATIVE(s) FATE
01/21/03 (H) PREFILE RELEASED (1/10/03)
01/21/03 (H) READ THE FIRST TIME - REFERRALS
01/21/03 (H) L&C, STA, FIN
01/29/03 (H) L&C AT 3:15 PM CAPITOL 17
01/29/03 (H) <Bill Postponed>
02/07/03 (H) L&C AT 3:15 PM CAPITOL 17
02/07/03 (H) Moved CSHB 15(L&C) Out of Committee
02/07/03 (H) MINUTE(L&C)
02/10/03 (H) L&C RPT CS(L&C) NT 3DP 4AM
02/10/03 (H) DP: CRAWFORD, ROKEBERG, ANDERSON;
02/10/03 (H) AM: LYNN, GATTO, GUTTENBERG, DAHLSTROM
02/18/03 (H) STA AT 8:00 AM CAPITOL 102
02/18/03 (H) Heard & Held
02/18/03 (H) MINUTE(STA)
02/25/03 (H) STA AT 8:00 AM CAPITOL 102
02/25/03 (H) Scheduled But Not Heard
03/11/03 (H) STA AT 8:00 AM CAPITOL 102
03/11/03 (H) Heard & Held
03/11/03 (H) MINUTE(STA)
03/13/03 (H) STA AT 8:00 AM CAPITOL 102
03/13/03 (H) Moved CSHB 15(STA) Out of Committee
03/13/03 (H) MINUTE(STA)
03/26/03 (H) STA RPT CS(STA) NT 3DP 4NR
03/26/03 (H) DP: SEATON, GRUENBERG, WEYHRAUCH;
03/26/03 (H) NR: HOLM, LYNN, DAHLSTROM, BERKOWITZ
02/19/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/19/04 (H) Heard & Held
02/19/04 (H) MINUTE(FIN)
02/23/04 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/23/04 (H) Moved CSHB 15(FIN) Out of Committee
02/23/04 (H) MINUTE(FIN)
02/24/04 (H) FIN RPT CS(FIN) NT 7DP 3NR
02/24/04 (H) DP: HAWKER, CROFT, CHENAULT, FATE,
02/24/04 (H) MEYER, HARRIS, WILLIAMS; NR: STOLTZE,
02/24/04 (H) JOULE, MOSES
03/03/04 (H) TRANSMITTED TO (S)
03/03/04 (H) VERSION: CSHB 15(FIN) AM
03/04/04 (S) READ THE FIRST TIME - REFERRALS
03/04/04 (S) L&C, JUD
03/25/04 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 368
SHORT TITLE: TOBACCO TAX; LICENSING; PENALTIES
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/19/04 (S) READ THE FIRST TIME - REFERRALS
03/19/04 (S) L&C, FIN
03/25/04 (S) L&C AT 1:30 PM BELTZ 211
WITNESS REGISTER
Ms. Sara Fisher Goad
Financial Analyst
Alaska Energy Authority (AEA)
Alaska Industrial Development and Export Authority (AIDEA)
Anchorage AK
POSITION STATEMENT: Commented on SB 337.
Ms. Vanessa Tondini
Staff to Representative Lisel McGuire
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on HB 285 for sponsor.
Mr. Art Peterson, Attorney
Uniform Law Commissioner
State of Alaska
POSITION STATEMENT: Supports HB 285.
Ms. Vicky Backus
State Recorder
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801-1724
POSITION STATEMENT: Supports HB 285.
Mr. David Jones, Assistant Attorney General
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Commented on HB 285.
Ms. Cindy Drinkwater, Assistant Attorney General
Consumer Protection Unit
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Commented on HB 15.
Mr. Pat Luby
AARP Alaska
3601 C Street, Ste 1420
Anchorage AK 99503
POSITION STATEMENT: Supports HB 15.
Mr. Robert Flint, Atty.
Hartig Rhodes Hoge & LeKisch
Counsel for the Direct Marketing Association (DMA) &
Magazine Publishers of America (MPA)
717 K Street
Anchorage AK 99501
POSITION STATEMENT: Opposes HB 15.
Mr. Joel Gilbertson, Commissioner
Department of Health &
Social Services
PO Box 110601
Juneau, AK 99801-0601
POSITION STATEMENT: Supports SB 368.
Mr. Steve Porter, Deputy Commissioner
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Supports SB 368.
Ms. Johanna Bales, Program Manager
Cigarette and Tobacco Products Excise Tax
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Supports SB 368.
Ms. Carole Edwards
Alaska Nurses Association
3998 Diane Rd.
Juneau AK 99801
POSITION STATEMENT: Supports SB 368.
Ms. Jennifer App, Alaska Advocacy Director
American Heart Association
1057 W. Fireweed Lane, Suite 100
Anchorage AK 99518
POSITION STATEMENT: Supports SB 368.
Ms. Christie Garbe, Director
American Lung Association of Alaska
500 W. International Airport Rd., Suite A
Anchorage AK 99518
POSITION STATEMENT: Supports SB 368.
Ms. Mariah Warren
UAS student
Juneau AK 99801
POSITION STATEMENT: Supports SB 368.
Ms. Emily Nenon, Alaska Advocacy Manager
American Cancer Society
1057 W. Fireweed Lane, Suite 204
Anchorage AK 99503
POSITION STATEMENT: Supports SB 368.
Ms. Doris Robbins
PO Box 21011
Juneau AK 99802
POSITION STATEMENT: Supports SB 368.
Ms. Marguerite Stetson
AARP
Anchorage AK
POSITION STATEMENT: Supports SB 368.
Ms. Joelle Hall
Anchorage AK
POSITION STATEMENT: Supports SB 368.
Ms. Kattaryna Stiles
Alaska Native Health Board
Anchorage AK
POSITION STATEMENT: Supports SB 368.
ACTION NARRATIVE
TAPE 04-26, SIDE A
SB 337-ENERGY PROGRAMS & FUNDS
CHAIR CON BUNDE called the Senate Labor and Commerce Standing
Committee meeting to order at 1:43 p.m. Present were Senators
Bettye Davis, Hollis French and Chair Con Bunde. Senator Gary
Stevens arrived at 1:50 and Senator Ralph Seekins arrived at
2:35. The first order of business to come before the committee
was SB 337. This was its second hearing.
SENATOR HOLLIS FRENCH moved to adopt amendment 1.
23G-2
A M E N D M E N T 1
OFFERED IN THE SENATE LABOR
AND COMMERCE COMMITTEE
TO: SB 337
Page 7, line 9:
Delete ", 42.45.200,"
Page 7, following line 9:
Insert new bill sections to read:
"* Sec. 12. AS 42.45.200 is repealed.
* Sec. 13. The uncodified law of the State of Alaska is
amended by adding a new section to read:
TRANSITION: ELECTRICAL SERVICE EXTENSION FUND. Subject to
appropriation, the money in the electrical service extension
fund established in former AS 42.45.200, repealed by sec. 12 of
this Act, is transferred to the general fund."
Renumber the following bill sections accordingly.
Page 7, following line 12:
Insert a new bill section to read:
"* Sec. 15. Sections 12 and 13 of this Act take effect
July 1, 2004."
Renumber the remaining bill section accordingly.
Page 7, line 13:
Delete "This"
Insert "Except as provided in sec. 15 of this Act, this"
CHAIR BUNDE objected for discussion purposes.
MS. SARA FISHER-GOAD, Financial Analyst, Alaska Energy Authority
(AEA), explained that amendment 1 repeals the Electrical Service
Extension Fund effective July 1, 2005 and makes it subject to
appropriation.
CHAIR BUNDE removed his objection and amendment 1 was adopted.
SENATOR FRENCH moved to adopt amendment 2.
23G-2
A M E N D M E N T 2
OFFERED IN THE SENATE LABOR
AND COMMERCE COMMITTEE
TO: SB 337
Page 1, line 2:
Following "loans":
Delete "and"
Insert ", to"
Following "contracts":
Insert ", and to improve, equip, operate, and maintain
bulk fuel, waste energy, energy conservation, energy
efficiency, and alternative energy facilities and
equipment"
CHAIR BUNDE objected for an explanation.
MS. GOAD explained that it expands the title to contain the
subject of the whole bill.
CHAIR BUNDE removed his objection and amendment 2 was adopted.
He recapped that SB 337 would change the AEA to make additional
loans for waste energy, energy conservation and efficiency
projects.
MS. GOAD agreed that was a good explanation of that section.
SENATOR FRENCH said his questions were cleared up.
CHAIR BUNDE said CSSB 337(L&C) would be set aside until other
members of the committee arrived.
HB 285-ELECTRONIC TRANSACTIONS & SIGNATURES
CHAIR CON BUNDE announced CSHB 285(JUD) to be up for
consideration.
MS. VANESSA TONDINI, staff to Representative Lisel McGuire, said
the uniform laws were promulgated by the Uniform Law
Commissioners in 1999 in an effort to prepare state law for the
electronic commerce era.
The objective of UETA (Uniform Electronic
Transmissions Act) is to establish the legal
equivalence of electronic records and signatures with
paper writings and manually signed signatures removing
barriers to electronic commerce. This is a very
limited, but important objective - that an electronic
record of a transaction is the equivalent of a paper
record and that an electronic signature be given the
same legal affect, whatever that may be, as a manual
signature. UETA does not attempt to create a whole new
system of legal rules for the electronic marketplace.
It doesn't make any changes substantively to rules of
law that currently apply, such as contractor agency
law, and it's really a framework that allows for
regulations and acceptance if - and this is important
- both parties voluntarily choose to use electronic
communication.
If we don't set this framework up on a state level,
the federal E-sign Law will apply and UETA is much
more comprehensive than that. Forty-five states have
already adopted UETA to date, so we're a little bit
behind the curve. I believe that Alaska should now
join the rest of the nation in adopting this bill. The
version that you have before you is the version that
unanimously passed the House.... The only change from
the original version of the bill is the addition of AS
45.02 in section 1...the UCC chapter on sales. Its
omission was just a drafting oversight.
MR. ART PETERSON, Uniform Law Commissioner, State of Alaska,
said he is one of the five commissioners. He said this bill is a
product of the Uniform Law Conference along with the Uniform
Commercial Code, the Uniform Probate Code, Child Custody
Jurisdiction. The conference covers a broad variety of subjects
in the legal world that are thoroughly analyzed, studied, well-
written, etc. He supported Ms. Tondini's testimony in favor of
this bill and speculated that not enacting it would hinder
commerce within the state and interstate commerce significantly.
It's the first comprehensive state law for the electronic
commerce era.
It doesn't change contract law; it simply says that
when you engage in contracts, when you engage in
transactions by means of electronics, it will have the
same effect as the old-fashioned paper method.
MR. PETERSON said the federal E-Sign Law has a provision that
says if states enact UETA essentially verbatim, state law would
govern and not the federal one.
It's a very unusual situation. I believe it's the
first time federal law has actually included a
provision that specific to a product of the national
conference.
He said that section 7 of AS 09.80.040 is the heart of the act
and sets out some basic rules on page 3, line 19. Page 10 deals
with governmental entities.
CHAIR BUNDE politely asked Mr. Peterson to stay on hand to
answer questions.
MS. PAULA KELSEY, Recorder Manager, State Recorders Office,
deferred testimony to Vicky Backus, but said she was available
to answer questions.
MS. VICKY BACKUS, State Recorder, supported UETA saying:
A high percentage of mortgage transactions in Alaska
today involve out-of-state lenders and standardizing
the electronic recording process within the framework
of a uniform law like UETA will benefit commerce in
those states with a uniform approach. The handful of
states that don't have uniform laws may find
themselves at a disadvantage when we get into the
world of electronic commerce and recordation. E-Sign
and UETA permit state and federal agencies to allow
and control electronic filings, but E-Sign doesn't
provide any authority for establishing filing
standards and this must be derived only from UETA or
from other state law. So, UETA will encourage
government filing offices to promote consistency and
inner operability and that's what we're looking for.
MR. DAVID JONES, Assistant Attorney General, wanted to answer
any question and to clarify that 43 states, the District of
Columbia and the U.S. Virgin Islands have adopted UETA in the
five years since the Uniform Law Commissioners drafted it. "It's
clear that it's not particularly controversial." It primarily
gives folks who choose to conduct their transactions
electronically the ability to enforce them in court. It will
allow efficiencies not only to private sector transactions, but
to governmental operations, as well.
CHAIR BUNDE observed that there was no opposition to the bill.
SENATOR HOLLIS FRENCH said the signature section of the bill on
page 12, lines 3 - 5, is a crucial aspect and asked how it
works.
MR. JONES said he had some background in electronic signatures.
Currently under Alaska statutes, which would be
repealed by this bill, we have very technologically
specific definitions of electronic signatures that are
sort of the Cadillac version of electronic signatures.
They require that the electronic signature be attached
to the electronic record in such a way that if any
change is made to the electronic record, that will be
evident and the signature will be registered as
invalid by what is known as a certifying authority.
It's a fairly complicated process to explain, but the
UETA has the advantage in the beauty of not making the
technological choices in defining electronic
signatures. One, because there may be different levels
of security that are appropriate for different
transactions. Just as when we go to the store, some
may require that we show an i.d., some may be
satisfied with just a signature or for some
transactions it may be necessary that we provide a
notarized signature, a birth certificate, a passport.
Depending on the significance of the transaction,
there may be different types of the electronic
signatures that would suffice. In one case, a personal
identification number, a PIN, might do the trick. In
another case, you might want the Cadillac version,
which involves the public in private key
infrastructure and a certifying authority that I
referred to earlier.
Another reason it's a good idea not to be
technologically specific in the definition is that
technology is changing so rapidly that the definition
we adopt today, if it's technologically specific, may
be obsolete in another five years or sooner. So, this
definition of electronic signature is not very
definite; it's fairly broad and that is very useful
for purposes of a uniform law.
CHAIR BUNDE asked if signing a credit card at a store is one
level of electronic signature where others might be a
typewritten name with a PIN.
MR. JONES replied that is correct.
SENATOR FRENCH said that answers his question and asked another
- if buying something from Amazon.com and clicking "I Accept" is
another version of electronic signature.
MR. JONES replied that is correct.
SENATOR FRENCH said it looks like they are leaning toward
raising or lowering the level of formality a person chooses to
use. He was wondering what kinds of formality and
trustworthiness were going to follow the new transactions. "It
sounds to me like you're saying it's just going to be up to the
players?"
MR. JONES replied that is correct.
They are going to be in the best position to decide
between themselves what level of security and
formality they need for those electronic signatures.
SENATOR FRENCH asked if the act has fraud provisions.
MR. JONES replied:
There are not specific fraud provisions in the act.
The same fraud rules that would apply to a paper
contract or transaction will apply to electronic
records and transactions.
SENATOR FRENCH said he would have to reread the forgery statutes
in light of this bill.
CHAIR BUNDE said it appears that the bill is running the gamut
from buying a book on Amazon.com to signing a 30-year mortgage.
At one level, my electronic signature could simply be
"I Accept." The other would have to be an actual
physical replication of my signature something along
the Cadillac that you've mentioned.
MR. JONES replied that is correct.
MR. PETERSON commented that the House Judiciary Committee
discussed fraud also and he wrote a letter to Professor Pat Fry
who chaired the committee that drafted this act and her response
regarding the fraud question was:
Use of electronic technology is consensual. No one is
required by statute to use them. Accordingly, parties
are free to condition their assent to the use of
electronic technologies on the use of agreed security
procedures. Consequently, any security technologies to
be used are to be taken into account when courts
consider issues of identity and agreement. The
strength of the technology should go directly to the
evidentiary weight of the electronic record or
signature.
As to opening up people to fraud, all UETA does is say
that people may deal electronically. As I noted, it
does not require one to do so. There are fraudsters on
line. UETA is not designed to, nor does it in any way
supersede, the common law or statutes dealing with
various forms of fraud and larceny. [Indisc.] statute
has been on the books for years or is newly enacted
specifically for the on-line environment. UETA is not
a regulatory or criminal statute; it's a piece of
infrastructure validating electronic transactions and
records. [Indisc.] tells courts to accept electronic
evidence; it should assist in the prosecution of
frauds. At the same time, it validates millions of
legitimate transactions entered into by individuals
every day.
Everyone I have contacted as someone who has been
thoroughly immersed in these technologies and the law
surrounding them feel that this is not opening up any
fraud potential that's really any different from
current potential on paper.
CHAIR BUNDE said, "Senator French, I note that you will have
another bite at this apple if you want to bone up on your
fraud."
SENATOR FRENCH responded, "Fair enough, Mr. Chairman."
CHAIR BUNDE noted there were no more witnesses and closed public
testimony.
SENATOR GARY STEVENS moved to pass CSHB 285(JUD) out of
committee with individual recommendations and the attached
fiscal note.
CHAIR BUNDE asked for the roll call vote. Senators Bettye Davis,
Gary Stevens, Hollis French and Chair Con Bunde voted yea; and
CSHB 285(JUD) moved from committee.
HB 15-SOLICITATIONS/CONSUMER PROTECTION
CHAIR CON BUNDE announced CSHB 15(FIN)am to be up for
consideration.
MR. JIM POUND, staff to Representative Hugh Fate, sponsor, said
HB 15 was introduced to put a stop to annoying telemarketing
telephone calls that people get during the dinner hour. He
related that Congress passed HR 385 establishing the national
th
do-not-call list and the 10 Circuit Court recently affirmed
that it does not violate the U.S. Constitution. CSHB 15(FIN)am
puts language in statute that acknowledges there is a national
do-not-call list, establishes registration for telemarketers and
enhances the federal restrictions they must follow while
conducting business in the State of Alaska. It gives the Alaska
Department of Law authority to enforce and go after those people
who do not comply. The language is a combined effort of
Representative Fate and the Department of Law and is aimed at
filling in the gaps left by the federal law, which was very
broad.
CHAIR BUNDE asked for information on the fee that was
established and if the state was going to make money on this.
MR. POUND replied that the fiscal note indicates that the state
should bring in $76,000 per year from telemarketing registration
fees.
CHAIR BUNDE asked, "Is this a break-even proposition or an
actual net gain?"
MR. POUND replied:
There will be a net gain. The original bill...requires
us to set up our own do-not-call list and of course,
there's a negative fiscal note on that because of the
amount of labor-intensive aspects of it. Tying in with
the federal legislation basically makes it a lot
easier as far as us not having to maintain a do-not-
call list specifically for Alaska.
CHAIR BUNDE asked him to expand on the exemptions in section 21.
MR. POUND explained that language was in existing statute and
essentially exempts people from paying the registration fees.
SENATOR HOLLIS FRENCH asked if an embalmer or funeral director
has to abide by the national do-not-call list.
MR. POUND replied, "Yes, he does."
SENATOR FRENCH asked if they would have to pay a fee.
MR. POUND replied that they don't.
SENATOR FRENCH said they would have to register, though.
MR. POUND indicated that was correct.
CHAIR BUNDE asked how an entity goes through the process of
registering with the department and if there is criteria for
approval or disapproval.
MR. POUND deferred that answer to Ms. Drinkwater, Department of
Law, who helped draft the legislation.
MS. CINDY DRINKWATER, Assistant Attorney General, Consumer
Protection Unit, answered:
If a telemarketer wants to solicit in the state, they
can either request from the Department of Law a copy
of the registration form or they can simply down-load
it off our website. It's a fairly straight forward
form that requests that they attach copies of their
articles of incorporation, that they provide a
description of any affiliated companies or parent
companies, that they provide a list of the actual
solicitors who would be making the calls and the
managers of those solicitors. They are asked to attach
a copy of the scripts or the sales presentation that
they use over the phone to customers and they are
asked to attach a copy of a written contract. Our
registration statute requires that telemarketers who
are going to be selling over the phone in terms of
accepting a credit card number, that before that
transaction happens, they need to have a signed
purchase agreement from the consumer. So, as part of
the registration process, they would need to show us
an example of the contract form they intend to use.
CHAIR BUNDE asked how a national firm would know about
registering and how would the department enforce it.
MS. DRINKWATER replied that it's not unusual for states to have
registration statutes like Alaska's. Any national company would
know it has to make the inquiry about registration statutes. Her
office gets quite a few phone calls and hits on its website on
that question.
Regarding enforcement, she said the department relies on
consumers to file complaints of telemarketers who are breaking
the law. Because of the large number of exemptions to the
registration statute, many telemarketers can conduct business in
the state without having to register.
CHAIR BUNDE said that might take quite a few teeth out of this
bill.
MS. DRINKWATER agreed and explained that is existing statute.
The amendments in HB 15 include requiring businesses that are
registering to pay a fee and tightens up other aspects of the
current law such as for paid solicitors, who in addition to
paying fees, would have to submit financial reports after their
solicitation campaign ends.
CHAIR BUNDE said that the trend is for user fees to equal the
cost of providing the service, but HB 15 has a positive fiscal
note and asked Representative Fate to explain his thoughts on
that.
REPRESENTATIVE FATE replied that it was felt that this service
should pay for its own way under today's fiscal regime.
SENATOR FRENCH asked if this act applied to charities.
MS. DRINKWATER replied:
Basically, HB 15 amends not only the Consumer
Protection Act and, in particular, the state do-not-
call bill, which is in existence now, but it also
amends the Charitable Solicitations Act and Telephone
Solicitations Act, as I mentioned before, as well as a
separate statutory scheme called the Business
Opportunities Act, although the amendments to that are
fairly minor.
As to your question, does this affect charities - it
does affect charities and their paid solicitors in
terms of the registration requirements. Perhaps your
question is more directed to the do-not-call aspect of
the bill and the answer to that would be that under
the federal do-not-call registry, charities do not
have to purchase the registry. They do not have to
scrub their lists of people who do wish to be called.
However, there is also another means by which people
can express their desire not to receive telephone
calls. Not only can they sign up for the do-not-call
list, but they can also tell companies on a case-by-
case basis that they do not want to be called and that
is referred to as the internal do-not-call list. In
other words, the paid telemarketers for charities
would have to abide by that internal do-not-call list,
although they would not have to purchase the federal
registry.
SENATOR FRENCH asked if he puts himself on the federal do-not-
call list, would the local television station that he
contributes to be free to call him once a year to remind him
that he is a contributor.
MS. DRINKWATER replied, "Yes, they would be able to do that,
because they do not have to scrub their lists from the federal
do-not-call registry."
SENATOR FRENCH asked if that would apply to any other charities
that he has not contributed to. "It sounds like you're saying
these charities sort of fall out of the blocked category."
MS. DRINKWATER replied:
That is correct.... The best thing that a consumer can
do in terms of if they are receiving charitable
solicitations that they do not wish to receive,
chances are that the calls are being placed by a paid
solicitor and they can request on an individual basis
that they do not wish to receive any calls in the
future.
MR. PAT LUBY, AARP Alaska, said:
Thousands of Alaskans are signed up for the national
do-not-call list. AARP's interest is in maintaining
the privacy of our citizens who have signed up for the
national do-not-call list. Older persons are home most
of the day. They get many more calls than those of us
who are in the workplace - in particular, magazine
sales are the most notorious ones. We get complaints
from our members. These are folks who bother people;
they have what they call goose lists that they sell to
each other and anything we can do to control some of
those calls is going to be helpful to those
constituents.
If an Alaskan citizen is signed up for the national
do-not-call list, they should not be subjected to
telemarketing calls that originate in Fairbanks or
Anchorage or anywhere else in the state. Federal
courts have reaffirmed that citizens have the right to
privacy in their homes. They should not be subject to
home invasion over the telephone if they indicate that
they do not want to be bothered. We hope that you'll
give us back our dinner hour and respect the wishes of
Alaskans who have signed up for the national do-not-
call list. AARP requests your support of
Representative Fate's HB 15. Thank you.
SENATOR STEVENS asked for an explanation of violation on page 2,
in section 4.
MR. POUND replied that section refers to someone who did not
mean to make the call, for instance, a solicitor who got a wrong
number.
SENATOR STEVENS asked who decides what the violations are and
whether the punishments fit the crimes.
MS. DRINKWATER replied that the penalty for a violation of this
provision is in the state's Consumer Protection Act. That means
that if the state were to seek a lawsuit, it could ask up to
$5,000 per violation, restitution for damages, injunctive relief
and any other remedy that might be appropriate. The other key
feature is that it gives the private right of action to
consumers, because the Consumer Protection Act has a provision
awarding triple damages.
If we're left with just trying to enforce the federal
law, which state attorneys general have the authority
to do, we would be limited to bringing cases in
federal court, although the amount of the possible
fine or civil penalty is higher - it's up to $11,000
per violation. There is more flexibility in terms of
other relief under our Consumer Protection Act in
state court.
SENATOR STEVENS asked if penalties are just a fine of money.
MS. DRINKWATER replied that injunctive relief is a possibility.
That means shutting a business down or ceasing the illegal
conduct at the very least.
TAPE 04-26, SIDE B
MR. ROBERT FLINT, Hartig Rhodes Hoge and Lekisch, said he
represents Direct Marketing Association (DMA) and Magazine
Publishers of America (MPA).
These are trade associations of businesses that market
products directly to consumers by mail, advertising
and telephone. Products include periodicals, sound
recordings, books, CDs videos and similar items.
Promotions often include free gifts or trial periods
with a cancellation option if the customer is not
satisfied or has a change of mind. In all cases, the
customer specifically accepts the offer before it goes
into effect.
HB 15 contains a Section 21 on page 8, line 14, that
would remove the exemption for magazines and other
periodicals and similar items from the Alaska
Telemarketing Act, AS 45.63.80(10). I want to hasten
to add I'm talking about this particular section and
not the direct call provision. The concern that my
clients have is with this exemption, which is an
exemption from the Telemarketing Act. We have no
testimony or complaint about the do-not-call list
either state or federal.
For reasons I will discuss, the direct marketing
publishers oppose the removal of this exemption. I was
saying also that from the beginning the summary of the
bill says that the changes to the exemption statues
are technical. This is not a technical amendment. It
takes a large segment of the industry, removes it from
exemption of the act and subjects it to severe
criminal penalties for violation of that act.
The origin of the Alaska Telemarketing Act...is an
anti-fraud statute that was originally aimed at fly-
by-night telemarketers. It requires registration,
which is easier to charge as a violation than proving
fraud. So, the charge and the penalties are for
failure to register rather than the fraud, itself. But
here, to underline the non-technical aspect of the
change of section 21, are the criminal penalties,
which you will find in the Telemarketing Act, [AS]
43.63.060. That hasn't been changed, so it's not in
the CS bill.... This is in AS 43.63.060, the
Telemarketing Act. A person who sells or attempts to
sell property or services by telephonic means by
making substantially the same offer and substantially
the same terms to two or more persons without
complying with the registration - that's one - or who
solicits or receives payment for a purchase before
receiving the written contract required, is guilty of
a class C felony. The people who are after the fly-by-
nighters were serious about this and that is why this
is a [indisc.] statute. We're not talking about a fine
or an injunction or even a misdemeanor for heaven's
sakes. It's a class C felony. So, for example - let me
back up just a second - to sell property or services
by telephonic means is defined in the act - '
Telephonic means includes a letter, postcard, notice
or other written communication advising, requesting,
motivating or otherwise encouraging a person to
contact a seller by telephonic means.' So a small
publication, for example Archeology Today.... It has
an ad in its publication...on the newsstand in Alaska,
which says you can subscribe to this magazine by
calling this number. If they are not registered, that
is a violation of the act and subject to felony
penalties.
The other circumstance is the written contract, which
simply does not conform with what national business
does. First of all, I'd like to put it in context
here. The calls we all love to hate are the solicitors
that call us at dinnertime. We all have that; we all
hate them. That's why there is a do-not-call list. But
the Telemarketing Act is not determined by the origin
of the call. An incoming call from a customer to a
seller is covered by the act. So, someone sees the ad.
It may be the ad in a magazine, which is already a
class C felony, or it may be someplace else. A
magazine may have placed an ad in the newspaper. It
could even be on the Internet, I suppose, these days -
definitely these days. So, the customer originates the
call to the operator at Rapid City, South Dakota, or
India, wherever these people are these days, and says
I'd like to subscribe to your magazine. And she says
fine, thank you, you can pay by credit card. What is
your credit card number? The customer gives the credit
card number; she books the sale and she's guilty of a
class C felony because there's no written contract.
Now, how do you cure that? Well, the way you cure it
is you either, first, conform to the act and you have
a written contract or you redline Alaska. The
practical fact is that this national business, which
does transactions in the hundreds of thousands,
doesn't do business that way.
A written contract in advance has the effect of
selling twice, I guess. It just isn't the way national
business is done. So, the seller of Archeology Today
magazine or Time magazine or anything else isn't going
to conform the national market to Alaska. After all,
the national market is - well let's see - my figures
were Alaska is one quarter of one percent of the
American market. So, they would have to create a
special procedure for Alaska that would be costly and
raise the cost for them, at least, for the Alaska
consumer. They'll absorb it, if they could do it.
Generally, these people have uniform prices across the
country. This, after all, is a national marketing
business to the entire country.
Now, we are an association. The Direct Marketers and
the Magazine Publishers Association is a trade group.
So, they don't actually do it. And there are hundreds
and literally thousands of marketers and they all had
to make their own decisions. But the fact of the
matter is to do that for a small market would be
extraordinarily costly and, I think, the only
conclusion that they would come to basically with one
quarter of one percent of the market is, as I say, to
take Alaska out of the market. So, that the ads would
have, in small print I guess, offer not valid in
Alaska. And the operators would have to be instructed
to basically not take the call over the telephone. I
think that's a pretty drastic solution, particularly
because when this law was enacted in Alaska in 1993 -
it was originally enacted in California in 1985 - that
actually, I gather, happens to be where a lot of this
back room stuff goes on - where people do this
telemarketing, get credit cards and then move and
basically have no fixed address. So, California would
start that and Alaska followed along with a lot of
other states.
In 1993, the Direct Marketing Association was involved
with the Attorney General's Office. Attached to my
testimony I've given you a letter from the assistant
attorney general at the time who worked with, in fact,
the principal that I work with now [indisc.].... At
that time, the Attorney General's Office seemed to be
in sync as to who the target of the Telemarketing Act
really was and who was not a target and the legitimate
businesses represented by the association were not the
target. This law changes that substantially to bring
them under basically the same as the fly-by-nighters.
The [indisc.] of my testimony here is that what we
have substantial businesses nationwide who have long
done this legitimately. They are subject to Federal
Trade Commission regulations that are extensive and
govern these items; they were not involved in the
rash, as I've noted here, in the 80s and early 90s
where there was prosecution by the state and federal
governments for this type of fraud....
As I say, it's deliberately onerous. The registration
itself is 20 questions including the name and address
and principal address of each seller. So, I assume the
telephone operator in India would have to be listed.
We are not sure what the impetus for this removal of
the exemption is. In my discussions with the
Department of Law, magazines were supposed to be a
problem. Now, whether that's an inbound problem or an
outbound problem, I don't know and can't tell. I've
asked for statistical information from the Department
of Law. I've filed a freedom of information request to
try to see what the scope of the problem is, but have
heard nothing back from that. So, basically, for this
amendment, there is actually no empirical data that
supports the removal, much less the imposition of
criminal penalties. Again, I would note that the
association, as you see from my correspondence, makes
every effort to work with states and work with
attorney generals to deal with these problems. It is
as much in their interest as it is in the consumer's
to have honest business conducted so they don't get
mud splashed on them.... Nothing of the kind happened
here. I must say that I do not believe an effort has
been made by the Department of Law to educate itself
on how this business works and the impact.
CHAIR BUNDE asked him to summarize.
MR. FLINT summarized:
The people I represent aren't the crooks and we don't
think we should be made the crooks. There are
significant regulations and we believe those are
adequate. We do not believe the exemption should be
removed.
CHAIR BUNDE asked Ms. Drinkwater if he went to a magazine stand
and bought a magazine with a printed solicitation for him to
call in and order a magazine, would that company be in violation
of HB 15 as currently written.
MS. DRINKWATER replied that was a possible interpretation. An
amendment could exclude that kind of situation, because the
purpose of that definition, which is found in AS 45.63.100, that
is not part of the bill, was to include letters, postcards,
notices or other written communications to a consumer
encouraging them to call.
What the problem that we see is that people sometimes
get postcards that have very little information on
them and it will say we've been trying to reach you.
Please call us at our 800 number. The consumer doesn't
know what the nature of the postcard is or why someone
has been trying to contact them. They call and find
that it's a magazine offer that's being presented to
them.... So, I think that's something that can be
fixed.
MS. DRINKWATER explained that magazine scams have a lot of
effect on consumers in Alaska, often senior citizens. She
outlined four consumer complaints from 2003. One gentleman
complained that for a year he had received magazines and had
been billed for them, but he had never ordered them. He spent
considerable efforts over 18 months trying to resolve the
problem. When he left the country to be a missionary in South
Africa, his subscriptions were forwarded to his sister in
California and the bills continued to arrive.
Another example is a woman received a phone call offering a
subscription to some magazines for a year. She told them she was
on disability and could only afford payments of $29.90 per
month. That amount was debited electronically from her bank
account. Suddenly the company started taking out twice that
amount. When she called about it, they told her it was because
she had two separate accounts and they were going to continue
billing her in that same fashion.
A third example is of magazine renewal scams. Another gentleman
complained about receiving a subscription renewal, but the
information did not come from the company that had sold him the
magazine, rather from a fraudulent business that somehow learned
subscribers' information.
A fourth complaint is from an 86-year old gentleman who did not
order any magazines, but was suddenly billed for them. When the
department wrote to the company with his complaint attached, the
company responded that he did, in fact, make the order on tape.
It appeared that he had consented over the phone to receive the
magazines, but he didn't recall that phone conversation. A
written contract would have provided him with the paperwork
necessary to review the information.
CHAIR BUNDE asked the bill's sponsor, Ms. Drinkwater and Mr.
Flint to work together to address the concerns that were raised.
REPRESENTATIVE FATE pointed out that language on page 3, line
18, exempts a customer who initiates a phone call from being in
violation of this act.
CHAIR BUNDE related a solution he used once for a long-play
record club. He was sent to Germany by the military and tried to
discontinue his subscription, but the company never got any of
his cancellation notices. It sent "tons" of records to Germany
that arrived in multiple pieces. He wrote to the company many
times saying he never received the records and asked to be left
alone, but they threatened to sue him. When he got married, his
wife took the situation seriously and tore a piece of paper out
of a spiral notebook and wrote in pencil, "My husband, he ain't
workin'. We ain't got no money." They never bothered him again.
SB 337-ENERGY PROGRAMS & FUNDS
CHAIR CON BUNDE announced CSSB 337(L&C) to be back before the
committee.
SENATOR RALPH SEEKINS moved to pass CSSB 337(L&C) from committee
with individual recommendations and attached fiscal note.
Senators Gary Stevens, Bettye Davis, Hollis French, Ralph
Seekins and Chair Con Bunde voted yea; and CSSB 337(L&C) moved
from committee.
SB 368-TOBACCO TAX; LICENSING; PENALTIES
CHAIR CON BUNDE announced SB 368 to be up for consideration.
MR. JOEL GILBERTSON, Commissioner, Department of Health and
Social Services (DHSS), explained why it is important for the
state to address the tobacco levy this year. It is the number
one public health crisis threatening the state of Alaska
according to a new report called Tobacco in the Great Land - A
Portrait of Alaska's Leading Cause of Death, published Feb 2004.
He summarized:
Tobacco is the number one cause of death, disability
and chronic illness in this state. We have already
seen in Alaska, alone, the impact of increasing the
tobacco tax on consumption of tobacco products. Since
1997, which is the year in which the most recent tax
was increased, we've seen a 30 percent decline in the
consumption of tobacco products in Alaska. Those are
round numbers done for the section of Epidemiology.
It's also true to say that there is an absolute link
between the price of a tobacco product and its
consumption both by youth and adults. Increasing the
unit price of tobacco products is one of the most
effective ways in deceasing the utilization of tobacco
products by minors. Young individuals have limited
resources; they are least prepared to afford higher
tobacco prices and for that reason we see a very
beneficial affect on the consumption of tobacco
products by minors.
As youth are especially sensitive to the proposed $1
per pack tax increase, we believe this will add to the
50 percent decline we have seen in the consumption of
tobacco since 1995. In 1995, we conducted a
statistically valid youth risk behavior survey and we
have completed another statistically valid survey in
2003, just last year. The numbers between those two
studies have shown a 50 percent decline in
consumption. We believe that can be built upon and
additional successes can be realized with the increase
in the tobacco tax. A further drop in youth smoking of
just 15 percent from the current levels would
translate to 1,800 lives saved from premature death
due to smoking.
Adults will also see a great benefit from this tax
increase, because it is also an effective way of
discouraging continued use of tobacco products and to
incentivize the use of tobacco cessation programs. It
is estimated that the increased cost of purchasing
cigarettes following this tax increase will lead to
about 350,000 adult smokers to finally quit smoking.
For every 3,500 smokers who quit, that means you'll
have about 800 individuals who will not die because of
a smoking caused death.
We have some other vulnerable populations in the state
as a result of tobacco consumption. Smoking among
expectant mothers would also reduce significantly and
we believe that this would result in an estimated 850
babies being spared from exposure to maternal smoking
while in utero during the next five years.
With the smoking prevalence of 44 percent, Alaska
Natives have the most to benefit from this program.
Alaska Natives disproportionately consume tobacco
products. It's one of a number of unacceptable health
disparities that we're working in the department to
correct. We see it in suicide, we see it in alcohol
consumption, but it's also in tobacco consumption. The
Alaska Natives who smoke is nearly double the rate of
non-Natives. Among the high school population, of
those who participated in the youth risk behavior
survey, smoking is almost four times that of the non-
Native population. We believe that is another great
reason to move ahead with the tobacco tax increase.
This reduction in Alaska's health burden due to
tobacco will translate into health care cost savings.
Within five years, Alaska's health care savings from
fewer smoking related pregnancies and births will
amount to $1.6 million in savings and that came from
the Campaign for Tobacco-Free Kids.... In 1998, the
medical expenditure cost in this state, alone, was
$133 million as a result of tobacco consumption. In
terms of lost productivity just because of tobacco
related deaths was $137 million. That does not include
illness, sickness, breaks - that's just deaths from
tobacco.
This proposed increase will raise $45.5 million.... I
would say that we did look at some of the econometric
studies that were done. We looked at the 17 largest
econometric studies and they analyzed the effects of
price increases on tobacco use prevalence and
consumption in the general population. In every single
study, in each one of the 17 econometric studies, they
did find a correlation between an increase in price
and a decrease in consumption of tobacco products.
That has ranged from 1.5 to 3.7 percent. It's more
acute in juvenile populations. There are strong public
health reasons.
I started out by saying that tobacco is the number one
public health problem for the State of Alaska. It is
our leading cause of death; it is our leading cause of
disability; it's our leading cause of chronic illness
and I can go through a litany of health care
complications that come from tobacco consumption. I
think you're aware of them and, ironically enough, so
are smokers. We did do an analysis of what smokers,
themselves, think of the health consequences of
smoking.... Alaska ATS in 2003, found that 5 of 6
Alaska adults who smoke wish they could quit. Of 85
percent that were surveyed, 85 percent said that they
would like to quit and would like to have assistance.
Three out of four adults who smoke believe that people
should be protected from second hand smoke.
We know there's a public health problem here and this
is an appropriate step to bring our tobacco tax in
alignment with other states, but also to insure that
we're protecting young people from beginning to smoke.
People don't start smoking when they are 30, 40 or 50.
Some do, but very few. Most start when they are under
the age of 18. The more we can do to make the cost
prohibitive for the consumption of tobacco products,
the less we will have of downstream consequences of
tobacco. On behalf of the governor, I urge your
consideration of this bill and moving it forward.
CHAIR BUNDE observed that during the previous tobacco tax war,
many people didn't believe that price would have any impact, but
later acknowledged that the consumer was affected by price. He
said a lot of people wanted to testify on this issue and limited
the time to two minutes a person.
MR. STEVE PORTER, Deputy Commissioner, Department of Revenue,
said the governor totally supported this bill, which increases
the excise tax from $1 to $2 per pack. The total revenues for a
fiscal year is estimated to be $35 million.
MS. JOHANNA BALES, Program Manager, Cigarette and Tobacco
Products Excise Tax, Department of Revenue, pointed out that
this bill has some clean up measures from old tax law in the
first sections that weren't addressed last year when the
cigarette excise tax stamp legislation passed. The issue of
double taxation where the tax had to be paid again in state if
the licensee was from out of state and had already paid the tax.
A couple other items had to do with technical corrections to the
same legislation. Current law has no provision that allows a
distributor who makes sales of product out of state to get a
credit for taxes that may have been paid in Alaska. Now there is
a credit provision. Another issue was corrected by providing
credit for tax stamps that get lost in transit.
The new legislation increases the cigarette tax from $1 to $2
per pack. Tax on other tobacco products would increase from 75
percent to 100 percent of the wholesale price. There are also
forfeiture provisions, which means if someone imports unstamped
cigarettes into the state for sale, that the state would be able
to seize assets that were used in the commission of that crime,
which is a felony tax evasion.
The final, major, provision would require a floor stock tax to
be paid on all inventories that are currently in the state at
the time of the effective date of the act. A floor stock tax is
the difference between the old and new tax rates. Every person
who stocks cigarettes for sale would be required to take an
inventory and pay the tax to the Department of Revenue within 30
days. This is an important provision because in 1997 when the
tobacco tax was originally increased without a floor stock tax,
a significant amount of stock piling occurred. She estimated
about 200 million sticks of cigarettes were stockpiled primarily
by retailers who didn't pass the savings on to consumers.
Approximately $7 million of revenue was lost and the department
received numerous complaints about it.
MS. CAROLE EDWARDS, Alaska Nurses Association, said she has been
an oncology nurse for 20 years.
The Alaska Nurses strongly support the tobacco tax.
Tobacco use, as you know, is directly linked to cancer
and it is the most preventable cause of death in our
society. Second-hand smoke causes illness and death to
innocent victims who have chosen not to smoke or in
our children who cannot make that decision for
themselves.
Tobacco use is alarmingly high in our Alaska Native
population, particularly in children and adolescents.
Statistics do show that increased cost of tobacco
decreases the use particularly in our youth.
MS. EDWARDS related a short story about how she became a
cigarette smoker at the age of 17. She tried to quit many times,
but was unsuccessful, even after her second child was born seven
weeks prematurely and almost died. "It is an extremely addictive
disease and very difficult to quit once you have started." She
finally quit when her husband left the army and she didn't have
access to cheap cigarettes any more. This happened 31 years ago.
MS. JENNIFER APP, Alaska Advocacy Director, American Heart
Association, strongly supported SB 368.
Cardiovascular disease takes a big toll in the State
of Alaska. It is the number one cause of death in this
state, if you combine heart attacks and strokes. The
number one preventable cause of cardiovascular disease
is cigarette smoke.
She supported the testimony of Commissioner Gilbertson regarding
the costs of smoking.
If we actually wanted to recoup the amount of money
that this state subsidizes every year in terms of
taking care of people sickened by cigarettes or in
terms of lost productivity, we would need to tax each
pack of cigarettes at $6.38 per pack. So, when we talk
about increasing this tax to $2 a pack, we're not even
making up the difference. So, I really urge this
committee to think hard about both the financial
aspects and also the important health costs.
MS. CHRISTIE GARBE, Director, American Lung Association,
strongly supported SB 368.
High school smoking rates have dramatically dropped
since 1995 and it's a commitment from all these
program elements working together. One of the big
features in that was increasing the tax in '97. What
we're talking about is children not picking up that
first cigarette... and don't have to quit later....
I just heard yesterday in the Alaska Tobacco Control
Alliance meeting [that] the number one cause of cancer
with Alaska Natives is now lung cancer and this has
come upon them as a new horizon and this is a very
serious problem.... The reason we are here today
supporting the tax has nothing to do with the revenue.
It has only to do with lives saved and future health
care costs reduced.
MS. MARIAH WARREN, Alaskan resident, said she is a student at
the University of Alaska Southeast and works at a local super
market and it's very apparent to her that the cost of cigarettes
has a very direct link to who smokes. She fully supported SB
368.
MS. EMILY NENON, Alaska Advocacy Director, American Cancer
Society, supported everyone's testimony and passage of SB 368.
CHAIR BUNDE asked her what percentage of the general Alaska
public supported the tobacco tax.
MS. NENON replied that 67 percent of Alaska voters support
increasing the tobacco tax. The support is the same whether it
is at 50 cents or $1. There is consistent support from all
regions of the state.
MS. DORIS ROBBINS, Juneau resident, said she is on a crusade
against tobacco. She agreed with everything that has been said
here today. The tax would obviously lower the number of kids
starting to smoke and encourage adults to stop. She has read
biological data that says when children get addicted to
something, it is much harder for them to stop. Something happens
to their brains in their formative years. She also heard Dr.
Urata say on KTOO radio that if tobacco was introduced as a new
product today, the Federal Drug Administration (FDA) would never
allow it to be put on the shelves.
MS. ROBBINS thought that stopping kids from ever starting was
important, but focusing on the cost was important as well. Data
from Alaska Tobacco-Free Kids said that in 1998, $60 million was
spent in Medicaid costs for tobacco related illnesses.
TAPE 04-27, SIDE A
MS. ROBBINS related how a friend of hers died last year after
contracting pancreatic cancer from smoking. She lasted about
four months and in that time she used all of her savings and had
to go to the hospital because the pain was so severe she could
not be at home. She spent the last months of her life in the
hospital trying to relieve pain.
Personally, she has permanently reduced lung function and asthma
caused by second-hand smoke and has to take daily medications to
be able to breath. That costs her $4,800 per year if she doesn't
get sick. She pointed out that a few people in senior housing
smoke and it affects all the other people who live there; she is
personally trying to help one of them now.
Apparently, smoking is allowed in all [senior] Alaska
housing which is partially financed with state
funding. In order to save the state money, we need to
look at tobacco as a whole - what it is costing the
state. I look at this tobacco tax as pre-insurance for
tobacco users, because they're going to wind up at the
end of their ropes on Medicaid.... This is a big bill
for the State of Alaska.
MS. MARGUERITE STETSON, State Coordinator for Advocacy, AARP
Alaska, supported SB 368.
...a higher tobacco tax will help prevent our youth
from beginning to smoke. It will also help some
current smokers to stop. If raising the cost of a pack
of cigarettes helps prevent any of Alaska's
grandchildren from starting to smoke, we are strongly
in favor of it.
We are concerned with the data in the governor's
transmittal letter indicating that Alaska Natives, and
particularly Alaska Native high school students, smoke
at a much higher rate than the non-Native population.
We strongly recommend that some of the new revenue
coming in to state government from the tax increase be
used to target cessation efforts to Native smokers
and, in particular, to our Native youth.
This week we heard a report from the Medicare trustees
indicated that health care costs were higher than
expected. In AARP, we worry about Medicare's financial
status. We also know that Medicare would be in better
financial shape if so many current retirees had not
been smokers. Increasing tobacco taxes in Alaska has
immediate beneficial health consequences. It also will
have beneficial long-term financial consequences for
both Medicare and Medicaid. SB 368 is good economic
policy and good health policy. It makes sense and it
is fair.... Thank you.
MS. JOELLE HALL, mother of two young children, said when they
reach 12 and 13 years old, she really hopes that smoking is cost
prohibitive for them.
I hope you will consider this inflation proofing of
Alaska's tobacco tax and that you will consider doing
it again in a couple years, because I think we need to
keep it expensive and keep it away from our kids.
Thanks.
MS. KATTARYNA STILES, Alaska Native Health Board, said:
I do think this proposal is a good idea. It's a good
idea because it will save lives. It's a good idea
because it will raise money; and it's a good idea
because it will reduce health care costs....
She supported previous testimony, especially comments on what it
means particularly to the Alaska Native community.
In western Alaska, among pregnant women, the tobacco
use rate is as high as 67 percent. Sixty-seven percent
of any demographic using tobacco is unacceptable, but
100 percent of those unborn children are ingesting
tobacco products.
CHAIR BUNDE asked if anyone else wanted to testify. There was no
response and he closed public testimony. There were no
amendments and he asked the will of the committee.
SENATOR SEEKINS moved to pass SB 368 from committee with
attached fiscal note and individual recommendations.
CHAIR BUNDE asked for a roll call vote. Senators Hollis French,
Ralph Seekins, Gary Stevens, Bettye Davis and Chair Con Bunde
voted yea; and SB 368 moved from committee. There being no
further business to come before the committee, he adjourned the
meeting at 3:30 p.m.
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