CS FOR SENATE BILL NO. 312(FIN) "An Act relating to the deposit of the proceeds of the tax on gambling operations aboard certain commercial passenger vessels into the general fund; providing for a reduction in the excise tax to $34.50 for a passenger for each voyage on a commercial passenger vessel; describing the passengers that are subject to the excise tax and liable for the payment of the tax; providing for a reduction in the state excise tax imposed on a passenger traveling on a commercial passenger vessel by the amount of tax on a passenger traveling on a commercial passenger vessel imposed by a municipality under a law enacted before December 17, 2007; authorizing appropriations from the commercial vessel passenger tax account to the first seven ports of call in the state and for costs associated with commercial passenger vessels and the passengers on board; limiting the use of funds appropriated from the commercial passenger vessel tax account to expenditures related to port facilities, harbor infrastructure, other services provided to the commercial passenger vessels and the passengers on board those vessels and certain other purposes; repealing the regional cruise ship impact fund; relating to the administration of the excise tax by the Department of Revenue and regulations required to be adopted; requiring a report from the Department of Commerce, Community, and Economic Development relating to safely and efficiently hosting passengers; defining 'voyage' for purposes of the excise tax; relating to municipal levies on a passenger on a commercial passenger vessel; and providing for an effective date." 12:51:52 AM Co-Chair Stoltze announced the beginning of the committee's amendment process to the legislation. Vice-Chair Thomas MOVED to ADOPT Conceptual Amendment 1, work draft 26-LS1633\W: "An Act relating to the deposit of the proceeds of the tax  on gambling operations aboard certain commercial passenger  vessels into a special fund within the commercial vessel  passenger tax account in the general fund; providing for a  reduction in the excise tax to $40 for a passenger for each  voyage on a commercial passenger vessel; describing the  passengers that are subject to the excise tax and liable  for the payment of the tax; providing for a reduction in  the state excise tax imposed on a passenger traveling on a  commercial passenger vessel by the amount of tax on a  passenger traveling on a commercial passenger vessel  imposed by certain municipalities under laws enacted before  December 17, 2006; authorizing appropriations from the  commercial vessel passenger tax account to the first seven  ports of call in the state to certain other municipalities  and for costs associated with commercial passenger vessels  and the passengers on board; limiting the use of funds  appropriated from the commercial passenger vessel tax  account to expenditures related to port facilities, harbor  infrastructure, other services provided to the commercial  passenger vessels and the passengers on board those vessels  and certain other purposes; repealing the regional cruise  ship impact fund; relating to the administration of the  excise tax by the Department of Revenue and regulations  required to be adopted; requiring a report from the  Department of Commerce, Community, and Economic Development  relating to safely and efficiently hosting passengers;  defining 'voyage' for purposes of the excise tax; relating  to municipal levies on a passenger on a commercial  passenger vessel; and providing for an effective date."  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:   * Section 1. AS 43.35.220 is amended to read: Sec. 43.35.220. Disposition of receipts. The proceeds from the tax on gambling operations aboard commercial passenger vessels in the state's marine water shall be deposited in the commercial vessel  passenger gambling fund within the commercial vessel  passenger tax account (AS 43.52.230(a)) [A SPECIAL "COMMERCIAL VESSEL PASSENGER TAX ACCOUNT" IN THE GENERAL FUND].  * Sec. 2. AS 43.52.200 is amended to read: Sec. 43.52.200. Levy of excise tax on overnight  accommodations on commercial passenger vessels. There is imposed an excise tax on passengers traveling [TRAVEL] on commercial passenger vessels providing overnight accommodations that anchor or moor on [IN] the state's marine water with the intent to allow  passengers to embark or disembark.   * Sec. 3. AS 43.52.210 is amended to read: Sec. 43.52.210. Rate of tax. The tax imposed by AS 43.52.200 - 43.52.295 is levied at a rate of $40  for [$46] a passenger for each [PER] voyage.  * Sec. 4. AS 43.52.220 is amended to read: Sec. 43.52.220. Liability for payment of tax. A passenger subject to[TRAVELING ON A COMMERCIAL PASSENGER VESSEL PROVIDING OVERNIGHT ACCOMMODATIONS IN STATE MARINE WATER IS LIABLE FOR] the excise tax imposed by AS 43.52.200 - 43.52.295 is liable for the  payment of the tax. The tax shall be collected from  the passenger [AND IS DUE AND PAYABLE TO THE DEPARTMENT (1)] by the person who provides travel aboard a commercial vessel and shall be paid to the  department [FOR WHICH THE TAX IS PAYABLE; AND (2)] in the manner and at the times required by the department by regulation.  * Sec. 5. AS 43.52.230(a) is amended to read: (a) The proceeds from the tax imposed under  AS 43.52.200 - 43.52.295 [ON TRAVEL ON COMMERCIAL PASSENGER VESSELS PROVIDING OVERNIGHT ACCOMMODATIONS IN THE STATE'S MARINE WATER] shall be deposited in a special "commercial vessel passenger tax account" in the general fund. The legislature may appropriate money from this account for the purposes described in (b) and (d) [(c)] of this section and in AS 43.52.250 [, FOR STATE-OWNED PORT AND HARBOR FACILITIES, OTHER SERVICES TO PROPERLY PROVIDE FOR VESSEL OR WATERCRAFT VISITS, TO ENHANCE THE SAFETY AND EFFICIENCY OF INTERSTATE AND FOREIGN COMMERCE, AND SUCH OTHER LAWFUL PURPOSES AS DETERMINED BY THE LEGISLATURE].  * Sec. 6. AS 43.52.230(b) is amended to read: (b) For each voyage of a commercial passenger vessel [PROVIDING OVERNIGHT ACCOMMODATIONS], the commissioner shall identify the first seven [FIVE] ports of call in the state and the number of passengers subject to the tax imposed under  AS 43.52.200 - 43.52.295 on board [THE VESSEL] at each port of call. Subject to annual appropriation by the legislature, the commissioner shall distribute to each port of call $8 for each [$5 PER] passenger subject to  the tax imposed [OF THE TAX REVENUE COLLECTED FROM THE TAX LEVIED] under AS 43.52.200 - 43.52.295. If the port of call is a city located within a borough [NOT OTHERWISE UNIFIED WITH THE BOROUGH], the commissioner shall [, SUBJECT TO APPROPRIATION BY THE LEGISLATURE,] distribute $4 for each [$2.50 PER] passenger to the city and $4 [$2.50] to the borough. A city or borough  that receives a payment [EACH PORT OF CALL RECEIVING FUNDS] under this subsection [SECTION] shall use the funds for [IN A MANNER CALCULATED TO IMPROVE] port [AND HARBOR] facilities, harbor infrastructure, and other services provided to the commercial passenger  vessels and the passengers on board those vessels [TO PROPERLY PROVIDE FOR VESSEL OR WATERCRAFT VISITS AND TO ENHANCE THE SAFETY AND EFFICIENCY OF INTERSTATE AND FOREIGN COMMERCE].  * Sec. 7. AS 43.52.230 is amended by adding a new subsection to read: (d) In addition to making an appropriation for the payments described in (b) of this section, the legislature may appropriate money from the commercial vessel passenger tax account to projects that (1) improve port and harbor infrastructure, (2) provide services to commercial passenger vessels and the passengers onboard those vessels, (3) improve the safety and efficiency of the interstate and foreign commerce activities in which the vessels and the passengers onboard those vessels are engaged, or (4) other lawful purposes.  * Sec. 8. AS 43.52.240 is amended to read: Sec. 43.52.240. Administration. [(a)] The department shall (1) [ADMINISTER AS 43.52.200 - 43.52.295; AND (2)] collect [, SUPERVISE,] and enforce the collection of taxes due under AS 43.52.200 - 43.52.295 and penalties as provided in AS 43.05;  (2) [. (b) THE DEPARTMENT MAY] adopt regulations necessary for the administration of AS 43.52.200 - 43.52.295; and  (3) subject to annual appropriation,  distribute the payments described in AS 43.52.230(b)  and in 43.52.250.  * Sec. 9. AS 43.52.250 is repealed and reenacted to read: Sec. 43.52.250. Local levies. (a) A municipality that imposes and collects a tax, in any form, on a passenger traveling on a commercial passenger vessel under an ordinance enacted by the municipality before December 17, 2006, may not receive a distribution under AS 43.52.230(b). (b) Subject to appropriation and to (c) of this section, a municipality that imposes and collects a tax of less than $8 on a passenger traveling on a commercial passenger vessel under an ordinance enacted before December 17, 2006, may receive a distribution from the commissioner equal to the difference between $8 for each passenger and the amount of the municipal tax imposed and collected for each passenger. If the municipal tax is reduced, the distribution from the commissioner increases accordingly, so that the combination of the state distribution and the municipal tax equals $8 for each passenger. If the municipal tax is increased to $8 for each passenger or more, the municipality may not receive a distribution under this subsection. (c) If the municipality that imposes and collects the tax of less than $8 on a passenger traveling on a commercial passenger vessel under an ordinance enacted before December 17, 2006, is a city within a borough, the commissioner shall distribute to the borough in which the city is located $1 and distribute the balance of the amount calculated under (b) of this section to the city. (d) The state tax imposed on a passenger by AS 43.52.220 - 43.52.295 shall be reduced by the total amount of each tax on the passenger that was imposed and collected by a municipality under an ordinance adopted before December 17, 2006. The amount of the reduction shall be based on the tax rate levied under each ordinance when it was first adopted, except that, if a municipality subsequently decreases its tax rate, the amount of the reduction shall be based on the decreased tax rate.  * Sec. 10. AS 43.52 is amended by adding a new section to read: Sec. 43.52.260. Periodic report. The Department of Commerce, Community, and Economic Development shall, every three years, prepare and submit to the governor, the legislature, and the public a report that addresses the projected needs of communities to safely and efficiently host passengers that pay taxes under AS 43.52.200 - 43.52.295.  * Sec. 11. AS 43.52.295(4) is amended to read: (4) "voyage" means any trip or itinerary lasting more than 72 hours in the state.  * Sec. 12. AS 43.52.230(c) is repealed.  * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to read: CONTINGENT EFFECT OF SECS. 1 - 12 OF THIS ACT. (a) Sections 1 - 12 of this Act take effect only if the state and the Alaska Cruise Association reach a settlement in Alaska Cruise Association v. Galvin, Case Number 3:09-cv- 00195-RRB (D. Alaska) before October 31, 2010, that disposes of the case with prejudice. (b) The attorney general shall notify the revisor of statutes if a settlement is reached as described in (a) of this section.  * Sec. 14. If, under sec. 13 of this Act, secs. 1 - 12 of this Act take effect, they take effect October 31, 2010.  * Sec. 15. Section 13 of this Act takes effect immediately under AS 01.10.070(c). Co-Chair Stoltze OBJECTED for the purpose of discussion. Vice-Chair Thomas announced that he was the sole sponsor of the amendment. PETER ECKLAND, STAFF, REPRESENTATIVE BILL THOMAS, stated that the amendment set the passenger head tax set at $40 per passenger with a local deduct of $15; $7 in Ketchikan and $8 in Juneau. Ports that had a local tax were not eligible to also receive state tax dollars. The amendment created a gambling sub fund, and set a flat rate of $8 per port, per passenger. Under the amendment, if a local tax were to be lowered from $8 to $5, the amount deducted would also be lowered by $3, in order to maintain the $8 tax across the board. Finally the contingent effect in the bill states that the Attorney General must notify the reviser of statutes by October 31, 2010, that the Alaska Cruise Association case had been dropped, with prejudice, in order for the bill to go into effect. Vice-Chair Thomas MOVED Conceptual Amendment 1 to Conceptual Amendment 1 for CSSB 312: Page 1, line 9  After: 17 Delete: 2006 Insert: 2007  Page 2, line 14-17  After: in Delete all material Insert: the general fund. Page 2, line 26  After: of Delete: $40 Insert: $34.50 Page 4, line 31  After: 17 Delete: 2006 Insert: 2007 Page 5, line 4  After: 17 Delete: 2006 Insert: 2007 Page 5, line 14  After: 17 Delete: 2006 Insert: 2007 Page 5, line 19  After: 17 Delete: 2006 Insert: 2007 *Legislative Legal will do any and all other conforming and technical amendments. KACI SCHROEDER-HOTCH, STAFF, REPRESENTATIVE BILL THOMAS, discussed the changes made by the amendment. Representative Doogan OBJECTED for the purpose of discussion. Representative Doogan asked about the effect of changing the 2006 to 2007 throughout the bill. Ms. Schreoder-Hotch stated 2007 was the most recent date that the tax was in place for Juneau and Ketchikan. Representative Doogan WITHDREW his OBJECTON. There being no further OBJECTION, Conceptual Amendment 1 was ADOPTED. Co-Chair Hawker noted for the record that a conforming title amendment would be needed due to the passage of the conceptual amendment to the conceptual amendment. Representative Gara clarified that the head tax was being reduced from $46.50 to 34.50, and that each of the first 4 parts of call would receive $8, or the difference between the local tax and $8. Mr. Eckland responded that the state tax would be set at $34.50; with a deduct of $7 when the vessel stopped in Ketchikan, and $8 dollars when the vessel stopped in Juneau. Representative Gara understood that in the case of Juneau and Ketchikan, the state would collect $19.50, but for the next 5 ports the state would remit $8 per passenger. Overall, all ports would receive a total of $8 per passenger. 12:54:39 AM Representative Gara reiterated that he did not support the reduction of the head tax. There being no further OBJECTION, Conceptual Amendment 1, to Conceptual Amendment 1, was ADOPTED. 12:56:47 AM Representative Austerman offered Conceptual Amendment 2, to Conceptual Amendment 1, as amended: Page 2, lines11 through 17: Delete all material Renumber the following sections accordingly Make conforming title amendment as necessary Co-Chair Stoltze OBJECTED for the purpose of discussion. Representative Austerman explained that under the current law, the funds from gambling money went into the cruise passenger fund, he felt that the fund should continue to do so in order to support development around the state. He noted that the funds should be used particularly for the development of ports. Representative Fairclough asked if the current amount of the cruise passenger fund was available. Mr. Eckland believed it was between $5 and 6 million per year. 12:59:57 AM Representative Doogan thought that the affect of Conceptual Amendment 1, to Conceptual Amendment 1, changed the language to state that the funds would go to the general fund, and that Conceptual Amendment 2, would put the funds into the commercial passenger vessel tax fund. Representative Foster queried the need for a change in which fund the money was distributed into. 1:01:11 AM Mr. Eckland stated that the gambling funds were general fund revenues and could be used for any lawful purpose determined by the legislature. He believed the intent of the amendment was to leave the current law in place. Representative Austerman stated that the current law dictated that the proceeds from the tax on the gambling operations aboard commercial passenger vessels in the state marine waters should be deposited in a special commercial vessel passenger account in the general fund. Representative Foster understood that the funds could not be dedicated and that the law was a reminder that the funds were to be used for infrastructure related to cruise ships. Co-Chair Stoltze WITHDREW his OBJECTION. There being no further OBJECTION, Conceptual Amendment 2 was ADOPTED. 1:03:54 AM Vice-Chair Thomas stated that the impact of tourism was equal for all communities and that parity should be the end result for all ports throughout the state. He pointed out to the committee that the effective date would not allow for the funds to fulfill the capital budget needs for this year. He urged the reexamination of the legislation in 2015 in order to distinguish its success. He said that the regional impact fund was important for developing ports, but that the fund was now empty. 1:07:07 AM Co-Chair Hawker wanted to pass the legislation out with a forthcoming fiscal note. He sensed that the loss of revenue would be neutral. He declared that with the return of the $34.50 tax, the revenue reduction illustrated on the first fiscal note to accompany the original bill should be honored. Mr. Eckland argued that more money would be distributed, which changed the original fiscal note. CHRIS POAG, ASSISTANT ATTORNEY GENERAL, COMMERCIAL/FAIR BUSINESS SECTION, DEPARTMENT OF LAW, stated that the fiscal note would remain the same with the total of $22 million. 1:08:39 AM AT EASE 1:23:05 AM RECONVENED Representative Austerman MOVED to RESCIND the action on Conceptual Amendment 2. There being no OBJECTION it was so ordered. Representative Austerman MOVED to ADOPT Conceptual Amendment 3: Page 2, line 14 following "in" Delete all material Insert "the large passenger vessel gaming and gambling tax account", which is established as a sub account of the fund established in AS 43.52.230(a) Co-Chair Stoltze OBJECTED for the purpose of discussion. Co-Chair Stoltze WITHDREW his OBJECTION. Representative Doogan pointed out to the committee that the word "the" needed to be added to the amendment to read: "the large passenger vessel gaming and gambling tax account", which is established as a sub account of the fund established in AS 43.52.230(a). Representative Fairclough asked if in the work draft amendment offered by Representative Thomas, page 2, line 14, the word "commercial" should be maintained or should it be changed to "large", which was reflected in the Conceptual Amendment 3 offered by Representative Austerman. Mr. Poag stated that the gambling tax proceeds specifically used the term "large passenger vessel". In naming the sub account the department used language that was similar to language found in tax statute. There being no further OBJECTION, Conceptual Amendment 3 was ADOPTED. 1:27:20 AM Vice-Chair Thomas MOVED to REPORT CS SB 312(FIN), 26- LS1633\P, as amended, out of committee with individual recommendations and the accompanying fiscal notes. Co-Chair Hawker OBJECTED for the purpose of discussion. HCS CSSB 312(FIN) was REPORTED out of Committee with "no recommendation" and attached new fiscal impact note by the Department of Revenue and previously published fiscal note: FN2 (CED).