HB 125-ALCOHOLIC BEVERAGE CONTROL BOARD    3:30:25 PM CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 125, "An Act moving the Alcoholic Beverage Control Board to the Department of Commerce, Community, and Economic Development and relating to duties of that department; and providing for an effective date." 3:30:48 PM SUE STANCLIFF, Special Assistant, Office of the Commissioner, Department of Public Safety (DPS), stated that the committee requested an explanation on the fiscal note. The Alcoholic Beverage Control Board (ABC Board) would be transferred from the Department of Public Safety (DPS) to the Department of Commerce, Community & Economic Development (DCCED), and the funding which is agency receipts is transferred to the DCCED. She advised that there is not any carryover or administrative costs necessary to transfer. The DPS essentially removes the ABC Board from its budget. She asked to read a written statement into the record, which she read, as follows: As you all probably know, the Division of Legislative Finance is automating the fiscal note process this year to provide improved error checking on the initial fiscal note submission. Legislative Finance is working with the Governor's Legislative Office of Management and Budget (OMB) on this process. Ultimately this new system and the coordination between government branches and agencies will result in an improved process. The initial fiscal noted by the Department of Public Safety dated 2/8/11 showed an appropriation required in FY 12 as $429.8, that is $429,000, and showed and showed an increase of $74.7 thousand in FY 13 through FY 17. Although those were the amounts shown on the expenditures and revenues section of the fiscal note, the analysis explained that those were costs that the ABC Board expected to incur if they are to relocate to the Department of Commerce, Community & Economic Development. As noted in the analysis, the bulk of that increase was based on an estimate provided by DCCED. There was no increase of any kind that would have gone to the Department of Public Safety (DPS) in any circumstances. We prepared the fiscal note based on advice from OMB about the proper form of the fiscal note. In particular, it was OMB's understanding that for the new fiscal note process, both DPS and DCCED fiscal notes needed to reflect the increased cost even though only DCCED would have actually had a request for additional funding. After the fiscal note was submitted the director for Administrative Services contacted Legislative Finance fiscal analysts and questioned why DPS would have a positive note when we simply should have simply had a negative fiscal note reflecting the ABC Board leaving DPS. In ensuing conversations between all parties it was determined that there had been a misunderstanding of how DPS fiscal notes should have been shown. DPS then submitted a corrected fiscal note dated 2/15/11, which accurately reflects the impact to DPS if HB 125 passes in its current form, namely that all costs and staff associated with the ABC Board will be transferred from DPS to DCCED. The fiscal note now reflects there is a negative fiscal impact to DPS because those costs will no longer be reflected in the department's budget. We apologize for any confusion that may have resulted from this process. MS. STANCLIFF related her understanding that staff at OMB has discussed this situation with Representative Hawker. She deferred to the DCCED to discuss the respective fiscal note. She said she hopes this alleviates concerns over the DPS fiscal note and explains that accurately. 3:35:00 PM JOELLEN HANRAHAN, Director, Division of Administrative Services, Department of Commerce, Community & Economic Development (DCCED) agreed with Ms. Stancliff's sentiments. She explained the fiscal note process has been confusing and the department is working under shorter timelines to try to get fiscal notes processed. She referred to the DCCED's fiscal note. She clarified that DPS's fiscal note shows a negative impact and DCCED's fiscal note shows a positive amount to move the ABC Board to commerce. The DCCED's fiscal note also shows an increased cost of $247,500 which reflects a one-time technology information cost to move the database to the DCCED. It also lists an ongoing cost to cover the administrative support within the DCCED. MS. HANRAHAN elaborated that the fee increase for the information technology (IT), which is the bulk of the cost increase, was determined by the DPS and DCCED's technical teams. The IT teams reviewed whether the ABC Board's data system was compatible with the DCCED's system. The IT determined some issues since the DPS system operates differently than the DCCED's system. The DPS system includes its own firewall that isolates it from the state's system. Additionally, the DPS uses an active directory system which is also not integrated into the state's system. She related that the DB systems are technical. She likened it to removing the 7th floor of a 15 story building, but everything within the walls and the foundation supports the IT function. Thus, all the equipment must be reconfigured since the DCCED and DPS's support foundations are different. However, if the 7th floor was relocated to the 9th floor in the same building, the system would be easier to reconfigure. MS. HANRAHAN stated that if the ABC Board was on the same state system it would cost less to integrate the ABC Board to the DCCED. The additional cost is to replace some of the equipment that the applications use since the equipment will not be moved. The DCCED has overhead costs for the commissioner's office and the administrative services are primarily inter-agency funded. The department uses an approved allocation plan that is based on weighted positions and efforts. This plan allocates the commissioner's office and the administrative services' costs to the agencies, whereas the DPS is primarily general funded so most of their costs are not allocated. One small ongoing cost is the allocated cost for fiscal, budget, IT, human resources, and statewide support from the agency, including accounting, travel processing. 3:41:57 PM REPRESENTATIVE SADDLER inquired as to whether some automation would occur as a result of the auto-pay functions. He asked why the costs never seem to decrease despite the efficiencies gained. MS. HANRAHAN answered that the cost allocation plan would be adjusted over time based on changes in the organization and in the levels of effort needed. The current projected costs reflect the FY 12 costs, but level of effort will become more stable once the board is more established in the DCCED. CHAIR OLSON conferred with the sponsor and related there are no additional fiscal notes to consider. 3:43:33 PM REPRESENTATIVE SADDLER made a motion to adopt Amendment 1, labeled 27-LS0378\M.2, Gardner, 2/7/11, which read as follows: Page 1, line 3, following ";": Insert "relating to the exercise of peace officer  powers granted by the Alcoholic Beverage Control  Board;" Page 2, following line 6: Insert a new bill section to read:  "* Sec. 3. AS 04.06.110 is amended to read: Sec. 04.06.110. Peace officer powers. The director and the persons employed for the administration and enforcement of this title may, with the concurrence of the commissioner of public safety, exercise the powers of peace officers when those powers are specifically granted by the board. Powers granted by the board under this section may be exercised only when necessary for the enforcement of the criminally punishable provisions of this title, regulations of the board, and other criminally punishable laws and regulations, including investigation of violations of laws against prostitution and promoting prostitution described in AS 11.66.100 - 11.66.130 and laws against gambling, promoting gambling, and related offenses described in AS 11.66.200 - 11.66.280. Unless authorized by a  search warrant described in AS 12.35.010 - 12.35.120,  nothing in this section authorizes the use of magnetic  card keys or identification cards to access private  clubs." Renumber the following bill sections accordingly. CHAIR OLSON objected for the purpose of discussion. 3:44:02 PM REPRESENTATIVE SADDLER referred to page 1, line 3, of Amendment 1, which is additional language necessary for the title change. He referred to page 2, line 6, which removes the requirement for key cards. He said he heard from managers of clubs and patriotic organizations that they needed to obtain identification or key cards. He related that the clubs should not have to provide the cards and this language would remove that requirement. REPRESENTATIVE SADDLER made a motion to conceptually amend Amendment 1, on line 18 after "of" insert "metal keys," and on line 19, after "card keys" insert ",". This would remove the requirement for private clubs to have magnetic card keys or metal keys unless authorized by a search warrant described in AS 12.35.010 - 12.35.120, he stated. There being no objection, the conceptual amendment to Amendment 1 was adopted. CHAIR OLSON removed his objection to Amendment 1. There being no further objection, Amendment 1, as amended, was adopted. 3:46:11 PM REPRESENTATIVE HOLMES moved to report HB 125, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, the CSHB 125(L&C) was reported from the House Labor and Commerce Standing Committee.