HB 416-BUSINESS LICENSE FEE 4:08:01 PM REPRESENTATIVE KOTT announced that the next order of business would be HOUSE BILL NO. 416, "An Act relating to the amount of the state business license fee." 4:09:02 PM REPRESENTATIVE JAY RAMRAS, Alaska State Legislature, sponsor, began by noting that he has maintained a business license in state for 20 years. He pointed out that the increase in business license fees was an attempt to cover budget deficits; however, this increase has hurt small businesses. He opined that $100 per year for a business license is "remarkably high." He noted that the federal government would like to cultivate Internet sales, and therefore does not tax them. He opined that changing the license fee back to $25, or amending the bill to make the fee $50, would encourage small businesses in the state. 4:11:14 PM REPRESENTATIVE ROKEBERG noted that a previous effort was made to maintain a lower business license fee. REPRESENTATIVE CRAWFORD commented that a "fee" is intended to cover the program operating costs; however, the current business license fee is much higher than the actual cost of the program. Therefore, he said, this should be considered a tax rather than a fee. He expressed his support of decreasing the cost of a business license. REPRESENTATIVE GUTTENBERG asked if the sponsor had considered a maximum [business license] fee for individuals operating multiple businesses. REPRESENTATIVE RAMRAS replied that this was considered in a previous committee hearing. He also pointed out that [the business license fee] became a source of revenue two years ago, prior to which the revenue was the same as it would be, were HB 416 to pass. He opined that most business owners "grimace" when purchasing a license, adding that [the current business license fee] inhibits many small businesses from opening. 4:14:19 PM REPRESENTATIVE KOTT asked if a $50 fine [for operating without a license] is sufficient. REPRESENTATIVE RAMRAS replied that, according to the Department of Commerce, Community, & Economic Development, a fine has never been collected for [operating without a license]. REPRESENTATIVE KOTT asked if there is a provision in the current statutes which would allow the department to levy a fine. JIM POUND, Staff to Representative Jay Ramras, Alaska State Legislature, replied that currently, this is a misdemeanor, which is "more trouble than it's worth" to pursue. This legislation would make this an infraction, which is comparable to a traffic violation. REPRESENTATIVE KOTT asked if the current statutory provision would be deleted. He pointed out that in Section 1 of Version F allows a fine of $50; however, if the current statute says this is a misdemeanor, this should be changed. 4:15:47 PM MR. POUND replied that according to the department, this is a misdemeanor. He mentioned that he has not reviewed the current statute. 4:16:21 PM REPRESENTATIVE KOTT pointed out that HB 416 has a further referral to the House Finance Committee, and suggested that this be looked into prior to the next hearing. The committee took an at-ease from 4:17 p.m. to 4:19 p.m. 4:19:14 PM REPRESENTATIVE ROKEBERG commented that lost revenue must be compensated for in another area. REPRESENTATIVE KOTT agreed. He also noted that a number of businesses are operating without a license, and if the $50 fine was in place, this amount of revenue would compensate for the loss created by lowering the business license fee. 4:20:12 PM REPRESENTATIVE LYNN remarked that he was "amazed" that the business owners who maintain a business license are "the dumb ones"; however, the business owners who do not maintain a license "skate" by. He expressed strong support for the bill, although it may be "unprecedented" to "roll back" a tax. However, he offered his belief that this should be done whenever possible. REPRESENTATIVE KOTT said that, as a small business owner, he has a conflict of interest. REPRESENTATIVE ROKEBERG objected. He stated that he also maintains a state business license, and therefore has a conflict of interest. REPRESENTATIVE LEDOUX inquired as to how this would impact the individuals who recently paid $200 for a business license. She asked if there is a refund provision in the bill. REPRESENTATIVE RAMRAS replied that there is not. REPRESENTATIVE ROKEBERG expressed the need for a transitional period. REPRESENTATIVE KOTT commented that it's the "luck of the draw." REPRESENTATIVE ROKEBERG said that he is "in the same predicament." REPRESENTATIVE RAMRAS pointed out that he is also in this predicament. REPRESENTATIVE KOTT said that a transitional period would be difficult for the division to manage. REPRESENTATIVE ROKEBERG surmised that business licenses are given based on the calendar year rather than the fiscal year. He opined that this would "complicate matters" more, as this would affect multiple fiscal years. He opined that a possible solution would be a refund to be prorated based on a December 31, 2006 effective date. REPRESENTATIVE LEDOUX suggested that a credit may be given, which may be applied to the next business license application. REPRESENTATIVE ROKEBERG replied that this "would be one way to do it." 4:24:19 PM REPRESENTATIVE KOTT closed public testimony. REPRESENTATIVE ROKEBERG commented that the transition period needs to be addressed. REPRESENTATIVE RAMRAS said that while an effective date was not considered, a December 31, 2006, effective date would be appropriate. He added that generating credits and rebates would place an added burden on the department, which is not the intent of the bill. REPRESENTATIVE ROKEBERG inquired as to the business owners who have paid past this date. REPRESENTATIVE RAMRAS said that, to his knowledge, it is only two years per license. 4:26:33 PM REPRESENTATIVE ROKEBERG opined that this is a "tough luck amendment." He clarified that while the business owners would not have to pay [the higher license fee], they would not receive a refund of the fee which was already paid. REPRESENTATIVE RAMRAS replied yes. The committee took an at-ease from 4:27 p.m. to 4:29 p.m. REPRESENTATIVE ROKEBERG requested that the bill be held in order to receive further information regarding the transitional language. REPRESENTATIVE KOTT stated his intent to hold the bill until the next committee hearing.