SSHB 132 - MUNICIPAL TAXATION OF ALCOHOL Number 050 CHAIRMAN GREEN announced the first order of business was SSHB 132, "An Act relating to municipal taxation of alcoholic beverages." REPRESENTATIVE GARY DAVIS, Prime Sponsor, explained that SSHB 132 was a relatively simple bill as far as what it would accomplish. The expected impact was benefits to municipalities, but also to address alcohol related problems in municipalities around the state. He advised members that current law restricts municipalities on the amount of tax they can place on alcoholic beverages. They are restricted to the same rate of sales tax imposed on other goods by a municipality, if a tax is imposed by the municipality. Representative Davis explained that SSHB 132 would remove that restriction and allow municipalities to tax alcohol at whatever level they deem necessary. REPRESENTATIVE DAVIS advised members that one of the key reasons he agreed to submit the proposed legislation was because of the amount of past legislation that impacted the municipalities in the form of what might be considered mandates, such as stricter laws relating to the use of alcohol and DWI arrests that impact a municipalities' police departments, hospitals, jail facilities and the court system. Because those laws did not provide additional revenues to support themselves, SSHB 132 would reduce the restriction on the amount of taxes that could be imposed on the sale of alcohol by the municipality. REPRESENTATIVE DAVIS advised members that HB 132 was strictly a permissive bill and did not create or impose any new taxes, but allows the municipalities to consider the impacts of alcohol related problems in their communities and provides the ammunition to deal with those problems as they see fit. REPRESENTATIVE DAVIS pointed out a concern had been raised in a previous committee. If a municipality did impose a higher tax on alcohol and generated additional revenue, how would one know if those revenues were being spent on alcohol services? Representative Davis agreed that that was a valid concern and that his intent was for those additional revenues to go towards alcohol related services. Representative Davis expressed that he had prepared an amendment for members to consider that would add a new section to the bill; \E.2, Ford, 3/28/97. He explained that that language would dedicate those additional revenues to alcohol related services to the degree possible. CHAIRMAN GREEN expressed that the committee would not take testimony on the bill at this hearing; however, it was scheduled to be considered at the next committee hearing. Number 322 REPRESENTATIVE JEANNETTE JAMES referred to the proposed amendment and asked what binding agreement the intent language had on a municipality. REPRESENTATIVE DAVIS advised members that the language was somewhat vague in that regard because there was some question as to whether municipalities could dedicate funds. REPRESENTATIVE JAMES agreed, and that was a concern she had because she did not know if it would be very effective. REPRESENTATIVE DAVIS expressed that it was his belief that it would send a message to the voters, and if the voters passed it with that intent, he thought it would behoove the elected officials to follow the intent of the electorate. CHAIRMAN GREEN reiterated that the bill would be before the committee on Friday, April 4, 1997, and questions could be raised and responded to at that hearing. REPRESENTATIVE DAVIS recognized the concern expressed, and advised members that prior to the next hearing he would conduct some legal research and, hopefully, have some opinions, or additional language that might be somewhat stronger that would address that concern. Number 470 REPRESENTATIVE CON BUNDE pointed out that there were two amendments in his bill packet and asked for clarification as to which one they were discussing. REPRESENTATIVE DAVIS explained that the Amendment labeled E\1., 3/10/97 was no longer current, and members should be looking at Version E\2. Ford, 03/28/97. CHAIRMAN GREEN asked if anyone in the audience was from the Alaska Municipal League (AML), and if there was a member who intended to make comments at today's hearing. REPRESENTATIVE DAVIS expressed that no one from the AML would be testifying today with the understanding testimony would be taken at a later date. Number 540 REPRESENTATIVE ERIC CROFT responded to Representative James' concern regarding the intent language in the proposed amendment relating to the dedication of additional revenues for alcohol- related services. He said it was probably not binding, but such statements were normally adhered to, and it would be a brave municipal assembly that would violate it.