HSTA - 02/07/95 HB 44 - GAMING PROCEEDS/DEFINE CHARITABLE ORGNS Number 043 REPRESENTATIVE TERRY MARTIN brought forth to the committee HB 44 with his sponsor statement. The sponsor statement reads: In August of 1994 before the Primary Election, the Anchorage Daily News published an information article disclosing where candidates for the governorship were receiving their financial support. Lawyers became very prominent, as did construction and the oil industries, as well as the fishing industry who flapped its wings to get candidates' attention. Five days later the Voice of the Times brought into focus two other major players who financed political campaigns - unions and state employee groups.  Both articles missed the real Motherload. The newest, most prolific motherload to fill Alaska's campaign coffer is Gam(bl)ing - or more specifically, pull-tab permits. Alaska is the only state that allows political parties and local political districts to maintain gambling permits while also allowing a limitless contributory ability from political units and pull-tab permitees to candidates. The lack of restriction on gambling dollars directed to political campaigns has given those in control over permits an incalculable influence and control over elected officials who are beholden to them for special voting and political generosity. The process is one in which the operators and political district officers decide who will receive the largest gambling receipts, thus gaining the highest level of control. The operators of the permits can and do use the political permits at the most profitable places and at the most prolific times, while the true charitable permitees suffer accordingly.  There should be an outcry of public disdain for this practice in Alaska, but it will not be heard until the facts of gambling's influence are exposed. The gurus of ethics who, for the last ten years have been shouting the virtues of reform of special interest in political campaigns, have developed a scam of the worst kind. It involves political parties posing as charitable organizations in the name of reform. What we have seen guised as a "charity," is nothing less than raw political abuse of influence peddling and powers to corrupt the minds of the innocent for personal gains. This misuse of charity is no longer to be concealed. Rather it should be brought to bear before the public, in its true form, as an instrument of power that attracts the greed of elected officials.  Since the passage of legislation orchestrated through several Spenard lawyer/legislators and gam(bl)ing operators that legalized pull-tabs and licensing (monopolizing) operators under the guise of "reform", we see the industry's growth escalate from an annual gross revenue of $60 million in 1988 to over $227 million in 1993.  When zeroing in on just political permits we see a phenomenal growth of gross revenues in 1989 of $874,958 to $3,978,179 in 1993. There are 13 Democrat organizations, 5 Republican units and the Alaska Independence Party that have pull-tab permits.  Labor organizations also depend on gam(bl)ing activities, especially pull-tabs, to fuel their political machinery. During 1993, 21 labor unions received $4,269,972 in gross revenues through their permits. By holding gaming permits, politicians, political parties and precincts strip millions of dollars away from the true charities.  True charities have a purpose in that they assist those who require aid, whether by training to work, or by clothing and feeding. The gaming process in-turn reduces state expenditures and services. Those who own gaming permits for reasons other than charity control the distribution to political groups and candidates, and end up controlling the legislature in a more sinister way than true advocates of ideologies in a democratic-representative government. This new motherload that fills political coffers must be eliminated. As evident by the 1994 primary and general elections, the amount of political contributions and proceeds originating from charitable gaming (pull-tab) receipts distributed to Alaskan political candidates is overwhelming. House Bill 44 is the vehicle through which to change this problem. I urge your support. REPRESENTATIVE MARTIN believes that politics must be taken out of gaming. Political groups should not be considered charities. He would like to go back to the IRS to define "charity." Number 211 REPRESENTATIVE WILLIS asked Representative Martin who would be eliminated under this bill. He wanted to know what the ramifications would be? REPRESENTATIVE MARTIN said he couldn't tell him what the full ramifications would be, but his intent is simply to get political groups out of gaming. The labor groups are the main ones that create the most problems. Last year there were 19 political groups that signed up for political pull tabs, and it is increasing. In Valdez there was $52,000 raised for payout to political groups. True charities are those who do not use money for candidates. Twenty-one unions had permits for the year 1993. REPRESENTATIVE WILLIS asked just what groups would be eliminated. He wondered if the Elks, Lions and American Legion were involved in this. CHAIR JAMES said, to clarify this issue, that by tying this into the 501-C3 regulations, by who is entitled to get tax exempt status as a nonprofit corporation with Internal Revenue Service for tax purposes, the one prerequisite is that the corporation must not be involved in affecting legislation or political issues. REPRESENTATIVE MARTIN said there is an expansion on that, Section B, F, and G, that need to be put in the amendment, to cover organizations such as the American Legion and VFW. CHAIR JAMES said it would be necessary to carry HB 44 to the next meeting. She also wanted to hear HB 49 because it pertained to the same thing, gambling proceeds. REPRESENTATIVE GENE THERRIAULT said that his bill, HB 49, is identical to Representative Martin's except for certain nonprofits. He supports Representative Martin's bill, which is intended to tighten up the rules on using money from pull-tabs and other gaming proceeds for political candidates. Also, people play pull-tabs without knowing what they are supporting. REPRESENTATIVE ROBINSON said there was a bill passed to determine where the money goes from pull-tabs, and she wondered if this bill affects raffles at schools, clubs and other nonprofit organizations. Political parties use raffles, both Republicans and Democrats, and she sees nothing wrong with that. REPRESENTATIVE MARTIN said most people don't care where their money comes from, but he is trying to take politics out of it. Number 469 REPRESENTATIVE THERRIAULT said that when people chose to play pull- tabs, it is time driven. It is okay to get scholarship funds with raffles and pull-tabs. His bill, HB 49, does not include raffles. ADJOURNMENT CHAIR JAMES held HB 44 over to the next meeting and the meeting adjourned at 10:10 a.m.