HOUSE BILL NO. 162 "An Act increasing the fee for a state business license; and providing for an effective date." RICK URION, DIRECTOR OCCUPATIONAL LICENSING, DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT, testified in support of the legislation. He stated that the cost of business licensing had remained at $25 per year in Alaska since 1949. He noted that a method had been devised [in the House Labor and Commerce Committee] of stepping up the licensing fee depending on the number of employees: $50 for those with five or less employees, $100 for those with between 6 and 25 employees, and $200 for business with more than 25 employees. He stated that the revenue generated from that method was less than desired. He explained that the bill proposed a new method that depends on the type of business. He noted that sole proprietors would be charged $100 per year, and corporations $300 per year. He pointed out that this new method generated $2.8 million more revenue for the state of Alaska. He maintained that the new method was simple to administer. He noted that the only objections to the proposal have come from small businesses. TAPE HFC 03 - 65, Side B  Mr. Urion referred to the proposed changes in a Committee Substitute. Co-Chair Harris observed that under the new system, smaller employers that were incorporated would still pay the higher amount since corporations would typically have a larger cash flow. Vice-Chair Meyer MOVED to Adopt the Committee Substitute Work Draft 23-Gh1102\I (4/25/03). Representative Croft OBJECTED. Representative Croft commented that his small business, because it is incorporated, would go from paying $25 to $300 per year. He maintained that this was too large an increase. He stated that he preferred the Labor and Commerce Committee Substitute. A roll call vote was taken on the motion. IN FAVOR: Foster, Meyer, Stoltze, Williams, Harris OPPOSED: Croft, Moses There being NO OBJECTION, the Committee Substitute was ADOPTED. Representative Moses noted that his small business would now pay the same amount as a large corporation. Co-Chair Harris asked how many categories now existed; he pointed out that the previous Committee Substitute contained three categores. Mr. Urion noted that there were two categories: sole proprietorships and corporations. He maintained that corporations would be more sophisticated businesses. In response to a question by Representative Stoltze, Mr. Urion noted that the licenses would now be annual. The cost will be $190 thousand more per year, as indicated in the fiscal note, due to the need for more personnel. He speculated that the system might be streamlined in the future when the computer system is updated to allow purchasing of businesses licenses online. Representative Stoltze asked if businesses could apply for two-year licenses. Mr. Urion conceded that this was possible. He stated that the goal was to have a consistent system. Representative Croft asked for the reason to begin licensing every year. Mr. Urion noted the rationale that to charge annually minimized the impact on businesses. Representative Moses asked whether a small family business would be considered a sole proprietorship, even though they have a partnership. Mr. Urion confirmed that such a business would be considered a sole proprietorship. Co-Chair Harris referred to the fiscal note that listed three full time positions. Mr. Urion stated that the fiscal note referred to the Labor and Commerce proposal that was more difficult to administer. He noted that the new Committee Substitute required only two new positions. Co- Chair Harris observed that no cost was listed on the fiscal note for these two positions. Mr. Urion could not produce the rationale for that figure. CSHB 162 (FIN) was heard and HELD in Committee for further consideration.