HB 416-BUSINESS LICENSE FEE ACTING CHAIR KOTT announced that the first order of business would be HOUSE BILL NO. 416, "An Act relating to the amount of the state business license fee." [Before the committee is CSHB 416(EDT).] 3:42:52 PM JIM POUND, Staff to Representative Jay Ramras, Alaska State Legislature, speaking on behalf of the sponsor, reminded the committee that at the prior hearing of HB 416 there were questions regarding whether the misdemeanor language needed to be changed. He explained that it doesn't because the misdemeanor charge primarily is unsworn falsification, which is used throughout the revenue and taxation classification. There was also concern with regard to the receipts from the $100 fee. He related that he has been advised by the subcommittee for the Department of Commerce, Community, & Economic Development (DCCED) that the receipts have been transferred so that the agencies funded by this won't be as strongly impacted. Mr. Pound highlighted that the committee should have before it an amendment regarding the amount of the fee and a transitional provision. He mentioned that the department has a request for an amendment regarding the difference between a civil fine and an infraction. An infraction is criminal while a civil fine isn't. He related that he didn't believe the department had a problem changing [the fine] from $50 to $100 if the license fee is $50. 3:45:11 PM RICK URION, Director, Juneau Office, Division of Corporations, Business, and Professional Licensing, Department of Commerce, Community, & Economic Development (DCCED), related that this morning's national news reported that Alaska is one of the top five states in the nation with business taxes that are attractive to businesses. Mr. Urion then informed the committee that under the current rules, approximately $7.1 million was collected in fiscal year (FY) 06 and distributed in the following amounts to the following agencies: $2.5 million to the Alaska Travel Industry Association (ATIA); $1.1 million to the Office of Trade and Economic Development; $85,000 to the Division of Community Advocacy; $1.4 million to the Division of Corporations, Business, and Professional Licensing; $400,000 to legislative grants; $615,000 to the International Office within the Office of the Governor; and $1.1 million to the Tax Division within the Department of Revenue. Mr. Urion said that the [Division of Corporations, Business, and Professional Licensing] is a self-supporting agency and thus any decreases in revenue generated from business licenses would have to be replaced by general fund revenues. He then noted that he has a proposed amendment for the committee's consideration. 3:48:20 PM MR. URION explained that his proposed amendment addresses the fine such that it changes it from an infraction to a civil penalty. The desire, he explained, is to make it such that those who are operating without a business license are written a citation that they pay. In addition, if HB 416 is passed with a decrease in the business license, an effective date of January 1, 2008, will be required because the division has sold business licenses that will expire December 31, 2007, and rebates would be more costly. Such an effective date will allow the division to offer two-year business licenses next year at whatever price determined. REPRESENTATIVE LYNN inquired as to the purpose of a business license. MR. URION answered that a business license is a tax, a source of revenue. The revenue is utilized to pay for services. REPRESENTATIVE ROKEBERG recalled that the committee had requested the sponsor speak with Mr. Urion in order to develop a transition provision, which doesn't seem to have occurred. He then turned to the $2.5 million in "tourism contract money" that is taken from [the funds received by the division]. Since the state doesn't allow dedicated funds, Representative Rokeberg inquired as to the nexus in the budget for the aforementioned source of revenue and on what it's spent. MR. URION explained that the division merely generates the revenue while the Office of Management & Budget (OMB) specifies where the funds will be utilized. In further response to Representative Rokeberg, Mr. Urion related his belief, with regard to the requested change in the effective date, that the division has adequate regulatory authority to change the procedure in order to utilize a prorated reduction. However, he did note that new regulations would have to be passed. He pointed out that the division will be able to sell a license for $100 plus the specified annual fee, all of which can be set in regulation, for the business licenses that have already been sold and will expire January 1, 2007. 3:53:11 PM REPRESENTATIVE ROKEBERG suggested that unless the aforementioned was done in regulation in advance, the division would be breaking the law unless the language in the bill was changed to provide for such. MR. URION noted his agreement, adding that the legislation should include transitional language allowing the division to establish regulations to set the aforementioned fees. REPRESENTATIVE LEDOUX suggested that the division could, on January 1, 2007, sell a one-year license. MR. URION pointed out that the current law specifies that the division sells two-year licenses. In fact, the division has already sold some two-year licenses. The division, he said, doesn't want to be in a position of having to field requests for rebates as it would cost more than would be saved. 3:54:40 PM REPRESENTATIVE ROKEBERG moved that the committee adopt Amendment 1, labeled 24-LS1555\F.1, Bannister, 3/1/06, which read: Page 1, line 7: Delete "$50" Insert "$100" Page 1, line 10: Delete "$25" Insert "$50" Page 2, following line 2: Insert a new bill section to read: "* Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to read: TRANSITIONAL PROVISION. The annual fee for a business license that is paid in 2006 before July 1, 2006, or before the effective date of this Act, whichever is later, is the rate established under AS 43.70.030(a), as that subsection exists before being amended by sec. 2 of this Act." REPRESENTATIVE LYNN objected and opined that there shouldn't be a tax unless there is a need for it. He further opined that there isn't a need for this tax and when there is an opportunity to reduce taxes it should be taken. Such action will send the message to the small business community that Alaska wants them to be in business. 3:57:36 PM REPRESENTATIVE LYNN, in response to Acting Chair Kott, said that he objected to increasing the business license fee from $25 to $50. REPRESENTATIVE LYNN offered Amendment 1 to Amendment 1 such that the following portion of Amendment 1 would be deleted: Page 1, line 10: Delete "$25" Insert "$50" REPRESENTATIVE LYNN explained that the aforementioned returns CSHB 416(EDT) to its original state in which it establishes a $25 business license on an annual basis while maintaining the fine. There being no objection, Amendment 1 to Amendment 1 was adopted. 3:59:50 PM REPRESENTATIVE ROKEBERG moved that the committee adopt Amendment 2 to Amendment 1 such that the following portion of Amendment 1 would be deleted: Page 1, line 7: Delete "$50" Insert"$100" REPRESENTATIVE LYNN objected, but removed his objection upon explanation that Amendment 2 to Amendment 1 and a further amendment would be cleaner. [There being no further objection, Amendment 2 to Amendment 1 was adopted.] REPRESENTATIVE ROKEBERG moved that the committee adopt Conceptual Amendment 3 [to Amendment 1], which would in the transitional provision of Amendment 1, as amended, insert language following "license" specifying that [the business license] "shall be paid on a pro rata basis as determined by department regulation before December 31, 2007". Additionally, Conceptual Amendment 3 would insert language providing the authority for the department to take up the regulations prior to the effective date of the legislation and would specify an effective date of July 1, 2006. There being no objection, Conceptual Amendment 3 [to Amendment 1] was adopted. ACTING CHAIR KOTT, upon determining there was no objection to Amendment 1, as amended, announced that Amendment 1, as amended, was adopted. REPRESENTATIVE ROKEBERG moved that the committee adopt Amendment 2, a memorandum from the Division of Corporations, Business and Professional Licensing, as follows [original punctuation provided]: *Section 1. AS 43.70.020 is amended by adding a new subsection to read: (e) If a person knowingly engages in a business in the state without having a current license issued under (a) of this section, the department may impose a civil  fine not to exceed $50. In this subsection, "knowingly" has the meaning given AS 11.81.900. REPRESENTATIVE LYNN objected. Representative Lynn moved that the committee adopt an amendment to Amendment 2 such that the civil fine may not to exceed $100. There being no objection, the amendment to Amendment 2 was adopted. REPRESENTATIVE LYNN removed his objection to Amendment 2. There being no further objection, Amendment 2, as amended, was adopted. REPRESENTATIVE ROKEBERG moved to report CSHB 416(EDT), as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 416(L&C) was reported from the House Labor and Commerce Standing Committee. 4:06:06 PM REPRESENTATIVE LYNN moved that the committee rescind its previous action in reporting CSHB 416(L&C) from the House Labor and Commerce Standing Committee. There being no objection, CSHB 416(EDT), as amended, was before the committee. REPRESENTATIVE LYNN moved that the committee adopt a conforming title change to reflect the changes of the earlier amendments. REPRESENTATIVE LEDOUX objected and inquired as to the process of rescinding action. ACTING CHAIR KOTT explained that the committee had only rescinded its action in passing CSHB 416(EDT), as amended, out of committee. REPRESENTATIVE LEDOUX withdrew her objection. 4:09:02 PM REPRESENTATIVE LYNN moved to report CSHB 416(EDT), as amended, out of committee with individual recommendations and the accompanying fiscal notes [and the conforming title change]. There being no objection, CSHB 416(L&C) [and the conforming title change] was reported from the House Labor and Commerce Standing Committee. 4:09:45 PM