SENATE CS FOR CS FOR HOUSE BILL NO. 234(L&C) "An Act relocating the Alcoholic Beverage Control Board from the Department of Revenue to the Department of Public Safety; extending the termination date of the Alcoholic Beverage Control Board; relating to the sale of beer manufactured at a brewpub; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken informed that Representative Lesil McGuire sponsors this legislation. He noted that the Committee would be entertaining a committee substitute that would allow brewpubs to brew their beer off-site and to sell their beer in quantities of not more than five gallons a day. In addition, he specified that the forthcoming committee substitute would extend the Alcoholic Beverage Control (ABC) Board for one year, and would address other issues raised in the "Department of Revenue Alcoholic Beverage Control Board Sunset Review" audit (copy on file), dated November 29, 2002 that was conducted by the Division of Legislative Audit. Co-Chair Green moved to adopt the committee substitute for HB 234, Version 23-LS0862\E as the working document. Senator Taylor objected for explanation. HEATH HILYARD, Staff to Representative Lesil McGuire, the bill's sponsor, explained that the Version "E" committee substitute would transfer the ABC Board from the Department of Revenue to the Department of Public Safety. SFC 03 # 105, Side A 10:23 AM Mr. Hiyard furthered that, in addition to shifting the ABC Board to the Department of Public Safety, Version "E" also eliminates accompanying language beginning on line eight of Section 1. The revised language in Version "E" reads as follows. Section 1. AS04.06.010 is amended to read: Sec. 04.06.010. Establishment of board. There is established in the Department of Public Safety the [THE] Alcoholic Beverage Control Board [IS ESTABLISHED] as a regulatory and quasi-judicial agency. The Board is in the Department of Public Safety [REVENUE, BUT FOR ADMINISTRATIVW PURPOSES ONLY]. New Text Underlined [DELETED TEXT BRACKETED] Mr. Hiyard stated that "but for Administrative purposes only." would be deleted in order to provide the Commissioner and the Department with expanded discretionary ability regarding the oversight of the activities and investigations of the ABC Board. He noted that [unspecified] changes in Section 2 of the bill have been discussed in other committee hearings and are acceptable to the sponsor. He expressed that Representative McGuire would defer to the judgment of the Committee, her position on the committee substitute and any proposed amendments. He stated that the sponsor supports the reauthorization of the ABC Board and correcting the disparities between brewpubs. Co-Chair Wilken understood that, with the exception of one item in the bill that "is not important at this time," the Version "E" committee substitute would return the bill's language regarding the ABC Board to that as originally proposed by Governor Frank Murkowski. WILLIAM TANDESKE, Commissioner, Department of Public Safety, stated that this is correct. He noted that the Commissioner of the Department of Revenue initiated the proposal by inquiring as to whether the Department of Public Safety could assume responsibility of the ABC Board as part of the new Administration's endeavor to realign functions within State departments. He stated that he had responded affirmatively to the request as, he stated, in his 26- years of experience as an Alaska State Trooper, he understood the Department of Public Safety's involvement in alcohol and Title IV issues. He stated that during discussions regarding how to make the transfer of the ABC Board to his Department as productive as possible, concerns arose regarding language in Title IV. Mr. Tandeske referenced concerns and recommendations of the Alaska Criminal Justice Assessment Commission in a May 2000 report [not provided] are identified on page 22 of the Audit. The Commission, he noted, recommended that the criminal investigation function of the Board be transferred to the Department of Public Safety and, in addition, suggested that the Board membership be increased from five members to seven as a result of the Commission's concern that "historically …. at least one other member of the board has created a majority for alcohol dispenser interest because of past experience in the industry" as the result of two industry members sitting on the Board as required by the AS 04.06.020 mandate that two board members must be actively engaged in the alcoholic beverage industry. He stated that the Commission suggested that the two new members be non-industry members: one of which should represent the public health or medical community and the other to represent the law enforcement community in order to "better protect the public interest." Commissioner Tandeske communicated that it is the "Administration's desire to instill two State cabinet members on the Board by specifying that the Commissioners of the Department of Public Safety and the Department of Revenue be members of the Board "as well." Commissioner Tandeske agreed with findings on pages nine and nineteen of the Audit, that criminal investigations regarding such things as prostitution and gambling, are best served by the law enforcement agency rather than "a four-person team of alcohol law investigators." Commissioner Tandeske continued that the third issue addressed in this legislation pertains to the nine State classified employees who support the ABC Board. He stated that by clarifying that these employees, who would be members of the Department of Public Safety and thereby obligated to adhere to Department policy standards, would enhance these employees' ability to properly function within the Department and assure that they would be able to access such things as important and pertinent Department case management and tracking records. Co-Chair Wilken asked regarding the omission of language in the committee substitute specifying that the Commissioners of the Department of Public Safety and the Department of Revenue could appoint a designee to represent them on the ABC Board. Commissioner Tandeske voiced that incorporating language regarding the ability to appoint a designee would be "a good idea." He informed that the Commissioner of the Department of Revenue requested this language. Co-Chair Wilken clarified however, that this language is not included in Version E. Amendment #1: This conceptual amendment inserts "or the Commissioner's designee" into Section 2, line 13 of the Version "E" committee substitute. The revised language would read as follows. Sec. 2. AS 04.06.020 is amended to read: Sec. 04.06.020. Appointment and qualifications. The board consists of seven [FIVE] members. Five members shall be appointed by the governor, one member shall be the commissioner of public safety or commissioner's designee, and one member shall be the commissioner of revenue or commissioner's designee… New Text Underlined [DELETED TEXT BRACKETED] Co-Chair Wilken moved for the adoption of Amendment #1. Senator Taylor objected. He voiced that while he supports the concept of transferring the ABC Board to the Department of Public Safety and addressing the issue of brewpubs, he disagreed with the language specifying that the two members being added to the ABC Board would be the Commissioners of the Department of Public Safety and the Department of Revenue. He declared that this is not an Audit recommendation and "appears to be just a takeover by the two Commissioners or their designees of the five-member Board"…and then shifting it to a four-member majority and "totaling changing policy and regulation." Co-Chair Wilken moved and asked unanimous consent to withdraw Amendment #1 in order to further discuss the point raised by Senator Taylor regarding the ABC Board. He noted that the proposed changes to the Board are included in Sections 2 through 5 of the Version "E" committee substitute. There being no objection, Amendment #1 was WITHDRAWN. Commissioner Tandeske declared that this is not an attempt by the Commissioners to "take over the Board any more than having a mandatory two-industry members self-regulating their industry is any more of an option for a takeover of policy and industry." He continued that rather it "could be characterized as a check and balance" measure. Senator Taylor asked whether this proposal has been discussed with the industry or organizations that are being regulated. DOUG GRIFFIN, Director, Alcoholic Beverage Control Board, Department of Revenue, testified via teleconference from an offnet site and informed the Committee that the addition of the Commissioners of Department of Public Safety and Department of Revenue has not been discussed with the Board. Senator Taylor reiterated his concern. He argued that a bill of this nature, being presented toward the end of this Legislative session, is disconcerting. Amendment #2: This amendment deletes Sections 2 through 5 of the Version "E" committee substitute, beginning on page 1, line 10 and continuing through page 2, line 27. This language reads as follows. Sec. 2. AS 04.06.020 is amended to read: Sec. 04.06.020. Appointment and qualifications. The board consists of seven [FIVE] members. Five members shall be appointed by the governor, one member shall be the commissioner of public safety, and one member shall be the commissioner of revenue. All members except for the commissioner of public safety and the commissioner of revenue shall be [AND] confirmed by a majority of the members of the legislature in joint session. Except for the commissioner of public safety and the commissioner of revenue, a [A] member of the board may not hold any other state or federal office, either elective or appointive. Two members of the board shall be persons actively engaged in the alcoholic beverage industry, except that no member may hold a wholesale license or be an officer, agent, or employee of a wholesale alcoholic beverage enterprise. No three members of the board may be engaged in the same business, occupation, or profession. At least three members of the board shall represent the general public. A board member representing the general public or an immediate family member of a board member representing the general public may not have any financial interest in the alcoholic beverage industry. In this section, "immediate family member" means a spouse, child, or parent. Sec. 3. AS 04.06.030(a) is amended to read: (a) Except for the commissioners of public safety and revenue, members [MEMBERS] of the board shall be appointed for overlapping terms of three years. Sec. 4. AS 04.06.040 is amended to read: Sec. 04.06.040. Per diem and expenses. Members of the board do not receive a salary, but are entitled to per diem and travel expenses authorized by law for other boards and commissions. This section does not apply to a member of the board who is the commissioner of public safety or the commissioner of revenue. Sec. 5. AS 04.06.060 is amended to read: Sec.04.06.060. Quorum and majority. Four [THREE] members of the board constitute a quorum for the conduct of business, except that a majority of the whole membership of the board must approve all applications for new licenses, and all renewals, transfers, suspensions, and revocations of existing licenses. If a majority of the board is present, and voting, the director, with the consent of the members present, may cast a tie-breaking vote. New Text Underlined [DELETED TEXT BRACKETED] Senator Taylor moved Amendment #2. He objected to his motion for purposes of discussion Co-Chair Wilken also objected. Senator Taylor avowed that the Version "E" committee substitute "is a major policy change." He opined that increasing the Board from five to seven members and changing the quorum requirements from three members to four members would serve to "stack the Board." He noted that the ABC Board has served the State well for 42-years. He questioned whether this "major policy shift" was the intent of the sponsor, as he asserted that, were it the intent, an "extensive" discussion would have transpired. Continuing, he declared that were the Commissioners appointed to the Board as non-voting members he could accept the language; however, he continued that appointing the Commissioners to the Board as voting members whose terms do not expire as opposed to the three-year rotation required of other members, is "a big policy call" to which, he continued, the industry should be able to respond. He suggested that the bill be held for further consideration during the following year's Legislative session, rather than being addressed during this Legislative session, "at the last minute." Mr. Griffin commented that, in addition to the issues that have been discussed, the bill would provide a one-year extension of the Board. This, he noted, would allow the Board to "get back to work," and "address some of the issues raised in the Audit" as well as providing "a short window" of time for the Board to adjust being transitioned from the Department of Revenue to the Department of Public Safety. He qualified that the Board would prefer a longer extension period; however, he noted that the Board would abide by the will of the Legislature and Governor Murkowski's Administration. Co-Chair Wilken noted that an Amendment is on the table, and he ordered the bill SET ASIDE. [Note: This bill was heard again later in the meeting.] RECESS TO THE CALL OF THE CHAIR: 10:39 AM / 12:45 PM SENATE CS FOR CS FOR HOUSE BILL NO. 234(L&C) "An Act relocating the Alcoholic Beverage Control Board from the Department of Revenue to the Department of Public Safety; extending the termination date of the Alcoholic Beverage Control Board; relating to the sale of beer manufactured at a brewpub; and providing for an effective date." The bill was again before the Committee. Co-Chair Wilken moved to withdraw the motion to adopt the Version "E" committee substitute. There being no objection, the motion was withdrawn. Senator Bunde moved to report the Senate Labor and Commerce committee substitute for HB 234, Version 23-LS0862\C from Committee with individual recommendations and accompanying fiscal notes. There being no objection, SCS CS HB 234(L&C) was REPORTED from Committee with zero fiscal note #1 from the Department of Revenue and indeterminate fiscal note #2 from the Department of Public Safety. RECESS TO THE CALL OF THE CHAIR: 12:47 PM / 7:49 PM