CS FOR HOUSE BILL NO. 32(FIN) "An Act providing for the issuance of one business license for multiple lines of business; and providing for reissuance of a business license to make a change on the license." 1:43:56 PM REPRESENTATIVE MIA COSTELLO, SPONSOR, introduced the legislation. She explained that the bill would allow individuals operating multiple businesses who apply for a business license to list several lines under one license. She believed that HB 32 reduced "burdensome government involvement in the licensing process." She supported the issuance of licenses by the Department of Commerce, Community and Economic Development (DCCED) but felt that paying for multiple business licenses was onerous. The legislation allowed for multiple business activities under one license if licensed under the same name. 1:46:05 PM CHARLES GUINCHARD, STAFF, REPRESENTATIVE MIA COSTELLO, provided sectional information. He explained that Section 1 beginning on page 1, line 4 amended existing statute to require one business license for multiple lines of business. He cited page 1, line 12 that authorized the primary and secondary business listings on the license. He referenced Section 2, page 2 that inserted new language which specified that one business license covered multiple lines of business. He noted that Section 3 allowed for two types of changes to a business license. On change permitted an individual to make changes to a business license within the thirty days of issuance. The second type of change allowed any clerical error corrections at any time the license was valid. Lastly, Section 3 specified that if any changes were made to the license the expiration date remained unchanged. He reported that Section 4 added a new definition to statute for "line of business." The existing definition of "business" would work in concert with the definition of "line of business" with the definition of "line of business" meaning a singular activity that a business was engaged in. He cited Section 5, line 18 and offered that the provision referred to transition language and required DCCED to advance measures to implement the legislation. Co-Chair Meyer pointed to the letters of support in the bill packet (copies on file). He asked whether there was any opposition to the bill. Mr. Guinchard replied that when the bill was first introduced any number of lines of business could be listed on a single business license. The provision carried a significantly higher fiscal note and would create problems for DCCED with data base recording. The current version of the bill was amended to record the primary and secondary lines of business, which greatly reduced the fiscal cost. The department had one concern that it would not have the records of businesses running three or more lines of business under one license. He noted that currently 85 businesses would fall under the category. The issue could be addressed through regulations. 1:50:05 PM Senator Olson asked what type of businesses the 85 businesses were and how that would impact revenue. Representative Costello replied that currently over 700 businesses would be affected by the legislation and tended to be small businesses. The 85 businesses with more than three lines of business required professional licenses. Co-Chair Meyer OPENED public testimony. PEGGY-ANN MCCONNOCHIE, NATIONAL FEDERATION OF INDEPENDENT BUSINESS, JUNEAU (via teleconference), spoke in support of the legislation. She thanked Representative Costello for introducing the bill. She related that she was a real estate broker and owner of a consulting business and the legislation affected her negatively as a small business owner. She was required to have a real estate license and another license for teaching real estate classes. She relayed that the National Federation of Independent Business was in strong support of the legislation and she urged the committee to pass the bill. She believed that HB 32 would benefit all small businesses in the state. 1:53:09 PM Co-Chair Meyer CLOSED public testimony. Vice-Chair Fairclough requested to hear from the department. She supported the legislation. SARA CHAMBERS, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, conveyed that the bill streamlined business practices to create a business friendly environment. She expressed concern that the current database captured only two lines of business. The department's data base did not have the capability to track multiple business lines and additional funding via a fiscal note was necessary to address the issue. An individual could have more than two lines of business under the new business license but the state would be unaware of the other businesses, which carried two important impacts for the state. She related that one concern was the inability for the department to track more than two lines of business. The department would not be able to track the professional license of an individual with either three professional licenses or one professional license not claimed as the primary or secondary line of business. She hypothesized a scenario where a person wanted to open a hair stylist and manicure salon and was unaware that professional licenses were required for both activities, the department could not ensure that the professional license was acquired if it could not determine all of the lines of business, which threatened public safety. The department worked to educate the public on the needs for professional licensing but the database acted as an additional failsafe to identify people who believe that a business license was all they needed to do business in the state. She pointed to another concern related to research into the department's licensing database. The department regularly received requests for information from the database to quantify numbers of people engaged in various business activities throughout the state. The information was helpful to the Department of Labor and Workforce Development (DOL) and any industry research. The department would not be able to respond to requests for information because the information would not be accurate. Ms. Chambers proposed that a limited solution could be addressed in regulation. The department could require an individual to list a professional license as primary or secondary. The solution did not address an individual with multiple businesses and professional licenses and the department lost the ability to capture the information. 1:58:07 PM Vice-Chair Fairclough wondered why the department had not devised a solution to the problem. She asked whether the department was confined by hardware issues that would prevent reporting multiple licenses. She queried why DCCED could not "link" multiple business licenses together and issue the others without a fee to the business owner. Ms. Chambers answered that the issue was related to technological capacity. The business licensing database had not been updated for many years. The original fiscal note estimate was approximately $94,000 from the department's information technology (IT) staff in order to capture or link the data. She shared that the department had no philosophical concerns with the bill. The problem was the aging database that prevented DCCED to adequately meet the requirements of the law. Vice-Chair Fairclough relayed that she would be working with Ms. Chambers during the summer addressing licensing issue on the Legislative Budget and Audit Committee (LBA). She supported providing $94,000 to fix the database issue. She shared other problems with the licensing division related to auto leasing companies and tax issues due to inappropriate business licensing. She asked for an example of a line of business. 2:01:35 PM Ms. Chambers pointed to Ms. McConnochie's testimony as an example. Additionally, another example was business licenses issued to a sole proprietor who had a nail salon and wished to perform manicures and hair stylist services and were all listed under the same business name but were three different lines of business but the department could only capture two of the lines. She offered another example of one media services company that included computer services, printing services, tele production services, legal services, and motion picture services under the same business name. The department could only capture two businesses in the database. Vice-Chair Fairclough deduced that if someone opened a business and some of the business activities were regulated separately and qualified as separate lines of a business that the state was piecemealing out annually in order to charge a licensing fee and keep track of professional licensing to protect the public. Ms. Chambers answered that business licensing and professional licensing were regulated separately through statute. She detailed that business licensing employed the NAICS [North American Industry Classification System] code system that had over one thousand codes. The code was utilized for business and labor statistical purposes. Businesses in the state required a business license. A professional licensing required a level of competency with different gateways to become licensed for the thirty-nine different licensing programs that was regulated by the department and twenty licensing boards. A business person would need to pass through the professional licensing gateway prior to doing business in an area that required a professional license. The failsafe mechanism of the database was engaged when someone wanted a license that required a professional license. The department required proof that the person met the requirements of licensure in the profession. She communicated that at times a person mistakenly thought that only a business license was required for a professional service and the department was able to provide proper information on what the requirements were. She noted that not all professionals required a business license and exemplified a nurse that worked at a hospital only required a professional license but a doctor with an independent doctor's office would need both licenses. The departments professional licensing and business licensing worked together. 2:06:41 PM Vice-Chair Fairclough asked whether the technology was available to accomplish the mandates in the legislation and if so, was the legislation attempting to merge professional and business licensing. Ms. Chambers answered that DCCED was currently upgrading the professional licensing system. The department's goal was for the data systems to "talk" together in the future. The fiscal note would allow the application process and the database that supported the application could "capture" all of the codes in the background and gather the information. Vice-Chair Fairclough asked for verification that the bill did not impact professional licensing. Ms. Chambers answered in the affirmative. Ms. Chambers discussed the fiscal note FN2 (CED). The department requested an additional $8,500 in order to make regulatory changes; there was a revenue loss of $37,500 due to lost licensing revenue. Vice-Chair Fairclough asked how the revenue loss will be distributed. Ms. Chambers replied that business licensing operated separately from professional licensing; therefore the revenue loss would only impact business licensing. 2:11:11 PM Vice-Chair Fairclough asked whether the department "used the costs of the department to spread indirect costs over the other [professional licensing] division." Ms. Chambers responded that she would like to do additional research on the issue. She surmised that if the costs of the 85 multiple business lines were spread between professional and business licensing (combine 120,000 licenses) the "impacts would be minimal." CSHB 32(FIN) was HEARD and HELD in committee for further consideration.