SENATE BILL NO. 234 "An Act extending the termination date of the Alcoholic Beverage Control Board; and providing for an effective date." 2:33:07 PM SENATOR KEVIN MEYER explained the legislation. AS 04.06.010 established the Alcoholic Beverage Control Board (ABC Board) and provided for the appointment of members by the governor. The ABC Board consists of five members appointed by the governor and confirmed by a majority of the members of the legislature in joint session. Two members of the board shall be persons actively engaged in the alcoholic beverage industry; at least three members of the board shall represent the general public. SB 234, if enacted, would extend the ABC Board for one year to June 30, 2011. In the opinion of Legislative Audit, the Alcoholic Beverage Control Board (ABC Board) should continue to regulate the manufacture, sale, barter, and possession of alcoholic beverages in Alaska in order to protect the public's health, safety, and welfare. The Board has demonstrated a need for its continued existence by providing protection to the general public through the issuance, renewal, revocation, and suspension of liquor licenses. Protection has also been provided through active investigation of suspected licensing violations and enforcement of the state's alcoholic beverage control laws and regulations. During the review process of the sunset audit, there were questions raised about the decision of the Legislature to move the ABC Board from the Department of Revenue to the Department of Public Safety. These questions should be asked and the issue investigated in depth. This one year extension will give the Legislature time over the interim of 2010 to review the decision and move forward with extending the Board to 2014 as recommended by the Division of Legislative Audit. Senator Olson asked to know more about the difference in the board's department. Senator Meyer responded that the board has demonstrated a need for its continued existence by providing protection to the general public. The responsibilities of the board include the issuance, renewal, suspension of liquor license, and active investigation of suspected license violations and enforcement of the estate's alcohol beverage control laws and regulations. The review process of the sunset audit raised questions about the decision of the legislature to move the Alcohol Beverage Compliance (ABC) board from the Department of Revenue (DOR) to the Department of Public Safety (DPS). He requested additional time to investigate the questions regarding the best home for the ABC board. The original audit recommended board extension to 2014, but he requested an extension of one year. Senator Olson asked why Senator Meyer chose not to extend the board for a longer time period as recommended by Legislative Budget and Audit (LB&A). Senator Meyer informed that the board may shift departments. The extension would not allow the opportunity to move the board among the departments. Co-Chair Stedman mentioned one fiscal note from the Department of Public Safety. 2:37:53 PM SHIRLEY GIFFORD, DIRECTOR, ALCOHOL BEVERAGE COMPLIANCE (via teleconference), expressed awareness of licensee's dissatisfaction with the ABC board. She opined that an extension of the ABC board offers stability. She explained that she made recommended changes. She exemplified the issues. She applauded the efforts of the agents and servers who make the correct decisions. She anticipated that the changes would be well received. She wished to provide an agency that is supportive of licensees. She understood that licensing and enforcement comprised the two aspects of ABC. Without enforcement, laws will be broken. When people are held accountable and responsible then they act accordingly. Co-Chair Stedman noted the four recommendations listed in the audit report. Ms. Gifford explained that one major recommendation was an enforcement plan. The other item concerned a procedural manual. She stated that she had organized a ten year strategic plan. All three items have been approved by the board of directors. She stated that she was grateful to have the audit occur at the beginning of her appointment. She explained that the audit allowed a road map to efficiency for the operation of the agency. 2:43:41 PM Co-Chair Stedman expressed concern about "sting operations" with underage persons sent into a liquor establishment to purchase alcohol. His concern included the risk associated with the licensed premises operator and the effect on his insurance premiums along with potential felony charges for the bartender. Ms. Gifford responded that she was also concerned about the issue. She stated that Representative Ramras had a bill that addressed minors using illegal identification. She stated that law enforcement must retain the focus and priority. She mentioned that she is a member of a committee addressing statistical crime reporting. She was pleased to be included because departments across the state should report Title 4 violations. 2:47:19 PM Co-Chair Stedman clarified several concerns about minors testing the liquor establishment by attempting to purchase liquor as part of a "sting operation." He understood that it was illegal to have an underage minor in a liquor establishment although the ramifications exist only for the business proprietor and the bartender if they sell to the minor. Ms. Gifford responded that Title 4 for AS 41.60.490 covers access of persons under the age of 21 to licensed premises. She continued that Section F of the statute reads that a person under 21 years of age does not violate the section if the person enters or remains on premises licensed under this title at the request of a police officer. She stated that the ABC board is afforded the ability to do these compliance checks. She explained that an increase in compliance checks led to a decrease in violations. Co-Chair Stedman responded that the shifting of the ABC board to the Department of Public Safety has led to increased discomfort among proprietors. Ms. Gifford stated that the compliance check program was not initiated because the ABC board was placed under the Department of Public Safety. The compliance check program occurs across the nation in an effort to combat underage drinking. 2:51:55 PM Co-Chair Hoffman pointed out number 4 and number 3 of the audit recommendation. He referred to the policy stated in number 4 addressing a board vote during a tie breaking situation. Ms. Gifford responded that Alaska statute covers this issue. Ms. Gifford believed that this statute should be changed. She noted that she agrees with the auditors because she is in a position where she has more information than the board. Co-Chair Hoffman mentioned number three and the compliance. He asked if the board records were complete and accurate. Ms. Gifford replied that the record keeping has improved tremendously. 2:55:24 PM Senator Olson asked how a tie might occur with a five member board. Ms. Gifford answered that a tie might occur if a member of the board was absent, as a quorum exists with four people. Senator Thomas asked how long Ms. Gifford had been the director. Ms. Gifford answered that she has been the director since January 5, 2009. Senator Thomas asked about other issues in the audit. He asked if the four agents employed by the ABC board were sufficient. Ms. Gifford answered that she requested additional investigators because of duties including inspections of licensed premises and investigations for violations of the law. She explained that she depends on the state troopers for help. 2:58:01 PM Senator Thomas commented on the audit and the compliance check program. Ms. Gifford responded that the enforcement of the strategic plan adds a mechanism limiting visits to establishments. Senator Thomas asked about mailings to the licensees. He asked about the mailings and the cost to the state. Ms. Gifford was not aware of state mailings, but agreed to respond to Senator Thomas at a later date. 3:00:37 PM Co-Chair Stedman wondered how much time is given to the entity to achieve compliance prior to elimination. PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT DIVISION, LEGISLATIVE AFFAIRS AGENCY offered that the improvements observed in the prior audit occurred under the current executive director. She stated that the major issue for LB&A was establishing quantifiable and objective enforcement goals. Enforcement is a large segment of the ABC board. Compliance checks should not be based on the location of the inspectors. Issues about record retention and data input are smaller issues and do not require reorganization of the board. Co-Chair Stedman asked about the potential extension of the board. He asked if one year was ample time to come into compliance with the audits. Ms. Davidson stated that an extension of one year means that LB&A will revisit the board and provide the committee with a status of the current audit recommendations. 3:03:04 PM SB 234 was HEARD and HELD in Committee for further consideration.