CS FOR SENATE BILL NO. 215(TRA) "An Act relating to licensing common carriers to dispense alcoholic beverages; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. DON SMITH, Staff to Senator Cowdery, testified the intent of this legislation is to streamline the licensing procedure for common carrier licenses, which includes airlines and the Alaska Railroad. He explained this bill consolidates the licensing to a single effective date, as there is currently confusion, especially with Alaska Airlines, which has over 100 licenses, many with different renewal dates. Mr. Smith continued the bill would impose a $700 fee for each of the first ten licenses and $100 for each additional license. He projected this would annually produce approximately $16,000, pointing out this is approximately eight times the amount charged in the State of Virginia. AT EASE 9:15 AM / 9:16 AM [Note: Audio equipment malfunction. Portion of the meeting is not recorded on master tape, but alternate recording is available although of poor quality.] IRV BERTRAM, Associate General Council, Alaska Airlines, testified via teleconference from an off-net site about his legal credentials in Alaska. He stated he oversees the application process for the airlines as well as providing legal advice relating to acquiring and financing aircraft. Mr. Bertram informed that each time an aircraft is added to the company's fleet, the extensive application process of "posting, publishing and then waiting for the approval," must be undertaken. He furthered that the Alcohol Beverage Control (ABC) Board must also undertake a significant amount of work for each license issued or renewed. He noted the licenses are effective for two years, which results in some of the airline's licenses for 102 aircraft expiring each year. He informed the number of licenses required would increase as the company acquires new routes and new aircraft, all of which rotate into the state. He stated the advertising and public comment process is unnecessary for each license as there has never been objection to granting the airlines licenses. Mr. Bertram also expressed the high fee imposed to obtain these licenses are "out of character with the fees that we pay in any other state." As a result, he said the airlines has requested this legislation to streamline the process once a common carrier acquires a standard license for its first vessel, to allow licenses for other vessels owned and operated by that carrier could be easily obtained. He also pointed out this bill reduces the license fees for multiple vessels. Senator Olson noted this legislation would result in reduced revenues for the state. He asked how other states streamline the process of multiple common carrier liquor licenses. Mr. Bertram replied that other states require the carrier to obtain a single license for the company, with copies obtained for each aircraft. He defined this as a fleet license. He listed the cost of the master license in the State of Washington is $750, and the license cost for each aircraft is $5. DOUG GRIFFIN, Director, Alcohol Beverage Control Board, testified via teleconference from Anchorage and agreed the procedure of multiple common carrier liquor licenses in Alaska is more cumbersome and expensive. He stated the biannual license system has generally been successful in allowing renewal every other year, however it does create confusion when multiple licenses are involved. Mr. Griffin explained this legislation would provide licenses for new vessels to be issued on the same cycle. He stressed this would benefit the ABC licensing staff as well as Alaska Airlines and another corporation: West Tours. Mr. Griffin informed this legislation would result in lost revenue to the state of $53,500 every other year. He noted the ABC Board currently generates approximately $1.8 million annually from license fees, penalties and fines. Co-Chair Kelly asked for an explanation of language inserted in Section 2(c) of the Senate Transportation committee substitute on page 2, lines 1 through 5, which reads as follows. Upon request of the common carrier and payment of the proportionate prorated applicable fee, the board shall change the license period of a license for a vehicle, boat, aircraft, or railroad buffet car to allow registration to occur in the biennial period of the balance of the licensee's common carrier licenses. Mr. Griffin detailed the current biannual process whereby each license is renewed every other year. He stated Alaska Airlines has licenses for approximately 12 of its aircraft that expire in even numbered years and the balance expire in odd numbered years. He expressed this causes confusion in tracking which aircraft licenses are in what status. He explained this provision would allow Alaska Airlines to renew the 12 licenses for one year, rather than two, so those licenses would be converted to the same cycle as the majority of the fleet. This, he said, would result in all aircraft due for license renewal in the same year. He furthered, licenses for new aircraft acquired "mid-cycle" would be prorated so that they would eventually become on the same cycle as the remainder of the aircraft. Co-Chair Kelly next referenced the fiscal note, which indicates a revenue reduction of $37,000 rather than the $53,500 the witness stated. Mr. Griffin clarified additional review was conducted after that fiscal note was submitted resulting in the higher amount. He said a revised fiscal note had been submitted. Co-Chair Kelly established the revised fiscal note had not yet been received. Senator Olson asked the reason this process was not adopted when it was discussed a couple years ago. Mr. Griffin responded statutory changes are required and enabling legislation at that time did not complete the legislative process before the end of that legislative session. Co-Chair Donley noted the biannual fee contained in this legislation is $700 and asked if this is the same amount as the existing fee. Mr. Griffin affirmed. Co-Chair Donley asked the date of the last increase. Mr. Griffin responded none of the license fees have increased since approximately 1980. He qualified the fees doubled when the process changed from an annual renewal to biannual, although the overall cost did not increase and there was no net affect on revenue. Co-Chair Kelly commented this legislation "brings us in line with other states" regarding licensing fees, which he noted are "far far less" than Alaska. He noted total license fees in the state of Illinois are $2,000. Mr. Griffin calculated Alaska Airlines currently pays $700 every two years plus a $200 application fee for each aircraft, averaging over $45,000 per year. He noted the $200 application fee would not change under this legislation. Co-Chair Kelly clarified that although all 102 aircraft in the Alaska Airlines fleet does not constantly service Alaska, the state charges licensing fees for every one. JOE SPRAGUE, Director, Alaska Sales, Alaska Airlines, affirmed and detailed the process of aircraft rotating routes through the state, although the number of planes operating in the state at a given time is considerably less than 102. Co-Chair Kelly listed the approximate licensing fees of other states: Arizona, $550; California, $1600; Illinois, $1200; Oregon, $200; Virginia $1800; Washington State $1200. AT EASE 9:33 AM / 9:41 AM Co-Chair Kelly announced the revised fiscal note had arrived and he asked for an explanation of the differences. Mr. Griffin explained a calculation error. Amendment #1: This amendment increases the biennial fee for a common carrier dispensary license from $700 to $1,000 for each of the first ten licenses. This language is on page 1, lines 13 and 14 of the bill. Co-Chair Donley moved for adoption noting inflation has increased although this fee has not since 1980. He expressed, "there would still be considerable savings" to the industry. Senator Green requested comment from the industry. Mr. Sprague relayed that Alaska Airlines has no objection to this amendment. The amendment was ADOPTED without objection. Senator Olson commented other tourism businesses would be affected by this legislation and the amendment and asked if any representatives from the industry or the Alaska Railroad wanted to testify. Co-Chair Kelly established no representatives of these businesses were present. Senator Wilken offered a motion to moved CS SB 215 (FIN) from Committee with a new zero fiscal note from the Department of Revenue. There was no objection and the bill MOVED from Committee.