HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE February 3, 1994 1:00 p.m. MEMBERS PRESENT Representative Harley Olberg, Chairman Representative Con Bunde Representative John Davies Representative Cynthia Toohey Representative Ed Willis Representative Jerry Sanders, Vice Chair Representative Bill Williams OTHER LEGISLATORS PRESENT Senator George Jacko Representative Pete Kott MEMBERS ABSENT None COMMITTEE CALENDAR SB 42: "An Act relating to municipal taxation of alcoholic beverages." CSSB 42 (CRA) AM(EFD FLD) PASSED FROM COMMITTEE WITH A DO PASS RECOMMENDATION *HB 322: "An Act relating to the regulation of alcohol in state parks, recreation areas, and historic sites." PASSED FROM COMMITTEE WITH A DO PASS RECOMMENDATION HB 397: "An Act relating to the power to levy property taxes in second class cities and to combine a property tax and incorporation question." SSHB PASSED FROM COMMITTEE WITH A DO PASS RECOMMENDATION WITNESS REGISTER SENATOR GEORGE JACKO Alaska State Legislature State Capitol, Room 125 Juneau, AK 99801-1182 Phone: 465-4942 Position Statement: Sponsor of CSSB 42 (CRA) AM(EFD FLD) JAMES L. FISK, JR. Diamond Jim's P.O. Box 2068 Kodiak, AK 99615 Phone: 486-7088 Position Statement: Opposed to CSSB 42 (CRA) AM(EFD FLD) ALICE JOHNSTONE 213 Shotgun Alley Sitka, AK 99835 Phone: 747-3931 Position Statement: Supports CSSB 42 (CRA) AM(EFD FLD) GARRY LANGILLE, President Kodiak Island Liquor License Association 512 Marine Way Kodiak, AK 99615 Phone: 486-2700 Position Statement: Opposed to CSSB 42 (CRA) AM(EFD FLD) TIM TROLL, City Administrator City of Sand Point 1600 A Street, #103 Anchorage, AK 99501 Phone: 274-7555 Position Statement: Supported CSSB 42 (CRA) AM(EFD FLD) KENT SWISHER, Executive Director Alaska Municipal League 217 Second Street, Suite 200 Juneau, AK 99801 Phone: 586-1325 Position Statement: Supported CSSB 42 (CRA) AM(EFD FLD) BRYCE EDGMON, Legislative Staff Senator George Jacko State Capitol, Room 125 Juneau, AK 99801-1182 Phone: 465-4942 Position Statement: Staff to Sponsor of CSSB 42 (CRA) AM (EFD FLD) REPRESENTATIVE PETE KOTT Alaska State Legislature State Capitol, Room 409 Juneau, Alaska 99801-1182 Phone: 465-3777 Position Statement: Sponsor of HB 322 PETER PANARESE, Chief, Field Operations Division of Parks and Outdoor Recreation Department of Natural Resources P.O. Box 107001 Anchorage, AK 99510-7001 Phone: 762-2603 Position Statement: Supported HB 322 PREVIOUS ACTION BILL: SB 42 SHORT TITLE: LOCAL SALES TAX ON ALCOHOLIC BEVERAGES SPONSOR(S): SENATOR(S) JACKO JRN-DATE JRN-PG ACTION 01/11/93 26 (S) PREFILE RELEASED 1/8/93 01/11/93 26 (S) READ THE FIRST TIME\REFERRAL(S) 01/11/93 26 (S) CRA, LABOR & COMMERCE, FINANCE 02/25/93 (S) CRA AT 9:00 AM BUTRVICH RM 205 02/25/93 (S) MINUTE(CRA) 03/02/93 (S) CRA AT 9:00 AM BUTRVICH RM 205 03/04/93 (S) MINUTE(CRA) 03/09/93 (S) CRA AT 9:00 AM BUTRVICH RM 205 03/09/93 (S) MINUTE(CRA) 03/10/93 706 (S) CRA RPT CS 1DP 3NR SAME TITLE 03/10/93 706 (S) ZERO FN TO SB & CS (DCRA) 03/16/93 (S) L&C AT 1:45 PM FAHRENKAMP RM 203 03/16/93 (S) MINUTE(L&C) 03/16/93 (S) MINUTE(L&C) 03/18/93 844 (S) L&C RPT 5NR (CRA)CS 03/18/93 844 (S) PREVIOUS ZERO FN (DCRA) 03/25/93 942 (S) FIN RPT 5DP (CRA)CS 03/25/93 942 (S) PREVIOUS ZERO FN (DCRA) 03/25/93 (S) FIN AT 09:00 AM SENATE FIN 518 03/25/93 (S) MINUTE(FIN) 03/29/93 (S) MINUTE(RLS) 04/05/93 1104 (S) RULES 3CAL 1NR 4/5/93 04/05/93 1105 (S) READ THE SECOND TIME 04/05/93 1105 (S) CRA CS ADOPTED Y11 N9 04/05/93 1106 (S) AM NO 1 ADOPTED Y11 N9 04/05/93 1106 (S) COSPONSOR WITHDRAWN: LINCOLN 04/05/93 1106 (S) ADVANCED TO THIRD READING UNAN CONSENT 04/05/93 1106 (S) READ THE THIRD TIME CSSB 42(CRA) AM 04/05/93 1107 (S) PASSED Y18 N2 04/05/93 1107 (S) EFFECTIVE DATE SAME AS PASSAGE 04/05/93 1107 (S) TAYLOR NOTICE OF RECON 04/06/93 1207 (S) RECON TAKEN UP-IN THIRD READING 04/06/93 1208 (S) HELD ON RECON TO 4/7/93 04/07/93 1253 (S) PASSED ON RECON Y11 N9 04/07/93 1254 (S) EFFECTIVE DATE FAILED Y12 N8 04/07/93 1259 (S) TRANSMITTED TO(H)CSSB42 (CRA)AM(EFDFLD) 04/08/93 1101 (H) READ THE FIRST TIME/REFERRAL(S) 04/08/93 1101 (H) CRA, STATE AFFAIRS, JUDICIARY, FINANCE 02/03/94 (H) CRA AT 01:00 PM CAPITOL 124 02/04/94 2253 (H) REFERRED TO STATE AFFAIRS BILL: HB 322 SHORT TITLE: REGULATION OF ALCOHOL IN STATE PARKS SPONSOR(S): REPRESENTATIVE(S) KOTT, Green JRN-DATE JRN-PG ACTION 01/03/94 2011 (H) PREFILE RELEASED 01/10/94 2011 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2011 (H) CRA, RESOURCES, HES 01/14/94 2083 (H) COSPONSOR(S): GREEN 02/03/94 (H) CRA AT 01:00 PM CAPITOL 124 BILL: HB 397 SHORT TITLE: TAXING POWER OF SECOND CLASS CITIES SPONSOR(S): REPRESENTATIVE(S) OLBERG JRN-DATE JRN-PG ACTION 01/26/94 2153 (H) READ THE FIRST TIME/REFERRAL(S) 01/26/94 2153 (H) COMMUNITY & REGIONAL AFFAIRS, FINANCE 02/01/94 (H) CRA AT 01:00 PM CAPITOL 124 02/01/94 (H) MINUTE(CRA) 02/02/94 2218 (H) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS 02/02/94 2218 (H) CRA, FINANCE ACTION NARRATIVE TAPE 94-5, SIDE A Number 001 CHAIRMAN HARLEY OLBERG called the meeting to order at 1:04 p.m. He noted for the record Representatives Willis, Toohey and Sanders were present and noted that a quorum was present. SB 42 - LOCAL SALES TAX ON ALCOHOLIC BEVERAGES SENATOR GEORGE JACKO, SPONSOR OF CSSB 42 (CRA) AM(EFD FLD), read his Sponsor Statement aloud. (A copy of his Sponsor Statement is on file.) He added, "It allows local municipalities to have an election to decide whether or not they want to tax alcohol at a higher level than they tax other items in the communities. It is a local option measure. The legislation does have the support of the Alaska Municipal League, as well as the Southwest Alaska Municipal Conference and the Department of Community and Regional Affairs, also." Number 074 JIM FISK, DIAMOND JIM'S, KODIAK, testified in opposition to CSSB 42 (CRA) AM(EFD FLD) via teleconference saying, "We in Kodiak, are already taxed six percent on our sale of alcohol or any other goods up to $500 on each sale. Therefore, the alcohol industry pays more than their share of taxes in this community. We feel that if you were to give the municipalities that authority, it would begin to change like the wind... Let's leave it to the state, let's leave it to the Alcoholic Beverage Control Board to manage it, and if you want to impose a tax that's reasonable for everybody, irregardless of the size of the municipality, please do so. Do not, I say emphatically, do not, allow the municipalities to manipulate water, sewer or alcohol." Number 124 ALICE JOHNSTONE, SITKA, testified in favor of CSSB 42 (CRA) AM(EFD FLD) via teleconference saying, "Alcohol's the number one health problem in our state. The industry does not pay the tax. This is a sales tax and people who use the alcohol, you and I, and our neighbors will pay this tax." GARRY LANGILLE, PRESIDENT, KODIAK ISLAND LIQUOR LICENSE ASSOCIATION, testified via teleconference saying, "We represent 24 businesses on the island...we employ over 350 people directly. We have been experiencing a general decline in business over the last number of years in consumption, which is in line with the national and state average. We have at the same time faced large increases in expenses and taxation and costs, such as liability insurance, which have not been proportional to other industries, and we certainly do not need more taxation. Our first concern is that we believe that alcohol is a state regulatory responsibility and should only be dealt with at the state level. We will have the possibility of one municipality adding an additional tax, another not. Also, at the municipal level, we are already disproportional to other businesses in taxation. We pay, for instance, $1250 for a liquor licensing fee..., $1150 comes back to the municipality now. We also, here on Kodiak Island, have a six percent sales tax which has a $500 cap. Many (of the others) car dealerships, bulk fuel, etc. avoid much of that taxation. We have to face the tax on all our sales. It must be also pointed out that the tax has an effect on one of the largest growth industry potentials in our State of Alaska, which is tourism. My experience has been that a person who has an alcoholic problem is more affected by education and peer pressure than cost... medical cost on society, etc. are held in our laps. It's easier to find that it's someone else's responsibility or someone else's cost or someone else's fault, not our own. We all know the medical costs of obesity and high blood pressure. Where is the thought of taxation on sugar, salt and coffee... Let's face up and take our own responsibilities for our own actions..." Number 237 TIM TROLL, CITY ADMINISTRATOR, CITY OF SAND POINT, testified via teleconference, in favor of CSSB 42 (CRA) AM(EDF FLD) saying, "We have two bars in Sand Point and one liquor store, and we have found that probably a disproportionate number of our police calls, emergency medical calls are all directly related to alcohol. Right now we do levy a two percent sales tax, generally across the board, but I think we would like to have the option available to us as a local community to actually tax the substance that does seem to cause most of our public safety problems. This would really not so much be a tax on alcohol...certainly, if the community is voting in favor of this, they are voting basically to tax themselves at a higher rate for alcohol. ...those people in the industry who are concerned...about whether it's a fair or not fair tax will have their opportunity to make that point in any sort of referendum on the sales tax issue." Number 348 KENT SWISHER, ALASKA MUNICIPAL LEAGUE testified in support of CSSB 42 (CRA) AM(EDF FLD) saying, "It is a viable revenue source. It is appropriately linked to what is one of the larger probable causes of problems and larger causes of police services..." CHAIRMAN OLBERG noted that Representative Davies joined the meeting at 1:16 p.m. and Representative Bunde joined the meeting at 1:17 p.m. REPRESENTATIVE CYNTHIA TOOHEY asked, "Is it normal for municipalities to dedicate a tax to a specific (purpose)?" MR. SWISHER replied, "Normally, these would be regarded as a general fund revenue source and would not be committed to a specific function within the general fund, such as police service or something of that nature. However, we're simply aware of the utilization of services stemming from alcohol consumption..." Number 374 REPRESENTATIVE TOOHEY continued, "Are there other municipalities that have imposed a higher tax on alcohol?" MR. SWISHER said, "There are, to the best of my recollection, some 18 Alaska municipalities that levy a local sales tax now, while they don't differentiate between alcohol and other products. Each of them does define it's own base, to what shall the tax apply...so to that extent, that kind of judgment has been made." CHAIRMAN OLBERG noted that Representative Williams had joined the meeting at 1:25 p.m. Number 412 REPRESENTATIVE JOHN DAVIES asked, "Can you show me how a vote of the people is required?" BRYCE EDGMON, LEGISLATIVE STAFF, SENATOR GEORGE JACKO, testified saying, "I've worked with the bill drafter on this, Mr. Ford from Legal Services, and that is a question that hasn't been proposed before, but he assures me that will occur before this would have to be implemented. But that is an obvious question that has never been posed before." REPRESENTATIVE DAVIES said, "I'm presuming that it must somehow be in some other portion of statute." MR. EDGMON offered to retrieve that information. Number 436 REPRESENTATIVE JERRY SANDERS asked, "Do I understand that this could possibly apply to the municipality of Anchorage?" MR. EDGMON said yes and, "We had amended the bill last year in committee to apply to only communities under 2,500. It got amended on the floor of the Senate to include all communities." REPRESENTATIVE SANDERS continued, "I think it's a lot better for these smaller communities, the ones I know of, to vote themselves dry, and I would think in a vote to go dry, this would force some of the people in order to get the money for the community to vote to keep it wet." SENATOR JACKO said, "Having lived in small communities all my life, I really couldn't conceive of that happening. It just doesn't seem like a likely scenario to me, but to the extent that local communities do have the ability to tax alcohol right now, this would allow it at a higher sales rate. You may be able to have a say, two percent higher sales tax on alcohol if this bill would pass. If you didn't, you could still raise five percent, or whatever, if you raised everything." CHAIRMAN OLBERG pointed out, "You could in theory raise everything and exempt food. There are all kinds of different things you can do. ...dry is good, but dry doesn't happen." Number 474 REPRESENTATIVE ED WILLIS asked, "What municipalities are allowed to do this. Are we saying any one of them can?" CHAIRMAN OLBERG said any. REPRESENTATIVE WILLIS continued, "Would this tend to override home rule charters?" CHAIRMAN OLBERG said, "I don't believe it would. There's a provision for a sales tax and this simply liberalizes that provision, is my observation." MR. EDGMON said, "A broad definition of municipality would encompass a home rule community or borough." Number 489 REPRESENTATIVE DAVIES said, "I support the observation. I think that this is framed under the work `may' and not `shall' and so it's left up to the discretion of each community to decide whether or not they want to do this. Presumably if we get the statement back that it requires a vote of the folks to approve that. So it just allows the municipalities the flexibility." Number 500 MR. EDGMON said, "I just talked to the bill drafter and he assured me that the provision was inherent in Title 29 and it wouldn't appear in the bill itself...AS 29.45.560." Number 513 REPRESENTATIVE BILL WILLIAMS moved that CSSB 42 (CRA) AM(EFD FLD) pass out of committee with individual recommendations. REPRESENTATIVE TOOHEY objected for the purposes of discussion and said, "I support this bill as long as we have that satisfied, because I agree with you that the municipalities should have the right to do it, but I also agree that people in that community proceed the municipality and they should have more right than their municipalities, as the state should have less right than the municipalities. As long as that is satisfied, that it is done by a vote by the people in that community and not by a municipality, then I support this bill," and withdrew her objection. CHAIRMAN OLBERG then stated that with the objection removed, CSSB 42 (CRA) AM(EFD FLD) moved out of committee without objection. HB 322 was brought forth before the committee. HB 322 - REGULATION OF ALCOHOL IN STATE PARKS Number 534 REPRESENTATIVE PETE KOTT, SPONSOR OF HB 322, testified saying, "What this bill is intended on doing is to direct the Department of Natural Resources (DNR) to evaluate whether or not the use of possession of alcohol in a state park or a public facility, such as a historic site is compatible with public peace, health and safety of the occupants that are also at that park. We're really not doing very much. Right now the department has the authority via regulations and has in fact, exercised that authority from time to time." He then referred the committee to AS 29.05. REPRESENTATIVE KOTT continued, "Whereby the department has in fact, prohibited the use of alcohol in several locations actually... So this bill is not a prohibition bill. Site by site specific, they will evaluate the individual parks and historic sites and make a determination. We're asking them to make that determination within a year. It is a very simple bill. We're only codifying and firming up, what I believe the department already has, by regulation and statute. In essence, by amending AS 41.21, we are giving them a little more direction and narrowing the scope of things now." CHAIRMAN OLBERG asked if he had been addressing the CS or the original bill. REPRESENTATIVE KOTT said, "There was a last minute submission by the department and we included one of the items that we completely agreed with. I think that was more of an oversight than anything else. In the original bill, we used just the term alcohol. The point is, we are trying to limit...to alcoholic beverage use...we changed the title to reflect that as well." There was a small discussion as to the statutory definition of alcoholic beverages. PETER PANARESE, CHIEF, FIELD OPERATIONS, DIVISION OF PARKS AND OUTDOOR RECREATION, DIVISION OF NATURAL RESOURCES, testified via teleconference in favor of HB 322. His testimony is difficult to discern on tape. (A copy of his written testimony is on file.) REPRESENTATIVE SANDERS said, "I support Representative Kott's intent with this bill...my only problem...where it says use or possession. In a park if I have a six pack of beer in my motor home in the refrigerator, am I guilty of possession? ...where's it limited?" REPRESENTATIVE KOTT said, "My intent is not to limit to those circumstances the possession of alcohol. If you drive into a state park parking lot in a motor home and you have a bottle of alcohol in your vehicle - this is not the intent, to try and intrude into your vehicle to acquire the alcohol and determine that you're in violation." REPRESENTATIVE BUNDE asked, "Do you not have the enforcement ability at this time if someone is using alcohol illegally that you could arrest them?" MR. PANARESE said, "At this time, many areas of the state parks, people who use beer and drink in conjunction with other recreation activities in areas where there's not prohibition, the situation becomes difficult for us when the person is involved in a group activity and there are alcoholic beverages everywhere and the party is beginning. At that point, we have no ability to intervene. We can't arrest unless we have the scene created." Number 672 REPRESENTATIVE BUNDE said, "What it sounds like is they're asking for the right of prior restraint. `You look suspicious, you look like you might become a drunk, so we're going to run you off.' I'm sorry, but you're asking to put something in state statute here that is going to be interpreted by a lot of different people, and I'm a little concerned that parks people have a little too much power to limit the people's use of their parks now." REPRESENTATIVE TOOHEY asked, "This is only within state parks?" MR. PANARESE said, "...limited to the Alaska State Park system." REPRESENTATIVE DAVIES said, "I'm considering offering an amendment that would insert the word `public' in front of `possession' everywhere," and directed his question towards Mr. Panarese. MR. PANARESE said that amendment would be "acceptable". REPRESENTATIVE DAVIES said, "I would offer this as an amendment then. That everywhere in this bill where it says `use' or `possession' to insert the word `public' prior." REPRESENTATIVE KOTT consented to the proposed amendment. TAPE 94-5, SIDE B Number 000 REPRESENTATIVE TOOHEY asked, "Are there sites or areas within the parks that will allow for a wedding or some type of festivities where you would permit liquor day use." MR. PANARESE said, "That is a common request of state parks and it's one that we accommodate. The wedding party can get a permit from us..." REPRESENTATIVE TOOHEY continued, "So this will not impact that..." MR. PANARESE said, "It's something we can manage and have done for a few years in a reasonable way." Number 028 REPRESENTATIVE BILL WILLIAMS said, "I feel like we're getting more regulations in here and I don't know if it's really needed. I think the State of Alaska is overregulated now as it is." REPRESENTATIVE KOTT said, "I believe there is quite a bit of problem in state parks and historic site recreational areas. It may not be so much in the rural areas, but we have a tremendous problem around the Anchorage area...Big Lake area. There's a lot of vandalism that is done and primarily we're looking at people who are abusing alcohol and what they would consider just having a good time, but it's causing a lot of damage to the parks and services." MR. PANARESE rendered some of his experiences as a ranger with park visitors under the influence of alcohol. He stressed, "The majority of our park visitors don't have a problem with this. It's a tool for us to use to control the behavior of people who are coming to us for the simple purpose of having a large, uncontrolled party with alcohol right in the middle of it. If we can prohibit that use, we go a long way of stopping trouble before it starts." REPRESENTATIVE DAVIES concurred, "I've had complaints called into my office about misuse of parks that relate to alcohol abuse in the Fairbanks area, and I've also personally witnessed a number of situations that I would consider abusive of the `peace'. So I support this as the park rangers having the tools to deal with it." CHAIRMAN OLBERG acknowledged the points brought forth by Representatives Bunde, Williams and Davies. REPRESENTATIVE BUNDE acknowledged the vandalism and drunken driving but cautioned, "Now you're going to have some part time park ranger who's going to be walking among these people deciding which ones will potentially be drunks and should then be run off...and which ones are a group of folks that are going to sit down and have a picnic and drink a six-pack... We are innocent until proven guilty." REPRESENTATIVE KOTT said, "We hardly have the numbers out there, rangers, to do just that. Only two are parks, the rest are what I would consider historical sites. There's a lot of historical value there...there may be some value to placing those off limits to the use of alcohol." CHAIRMAN OLBERG called a brief at ease at 1:59 p.m. The meeting continued at 2:02 p.m. Number 179 REPRESENTATIVE SANDERS moved that the committee substitute be adopted. There were no objections. REPRESENTATIVE DAVIES moved to amend the committee substitute for HB 322 "by inserting the word `public' in front of `possession' everywhere the phrase `use or possession' appears in this bill." There were no objections. REPRESENTATIVE SANDERS moved that the committee substitute for HB 322 as amended be passed from committee with individual recommendations. REPRESENTATIVE BUNDE objected. A role call vote was taken. Representative Bunde and Williams voted not to move the amended CSHB 322 out of committee with individual recommendations. Representatives Sanders, Davies, Toohey, Willis and Olberg voted to move the amended CSHB 322 out of committee. HB 397 - TAXING POWER OF SECOND CLASS CITIES CHAIRMAN OLBERG brought forth SSHB 397 and announced that this sponsor substitute had been read across the floor on February 2, 1994, since the last time this bill had been before the committee. REPRESENTATIVE DAVIES moved that the original bill be brought before the committee as a committee substitute because "in the original bill, there is a requirement for a public vote and I would support the bill if that remained in there." CHAIRMAN OLBERG objected. REPRESENTATIVE WILLIS said, "I concur with Representative Davies' conclusion. I do support the motion before us...to allow the people a chance to vote on it. We're talking about second class cities. As the years go by, the differences between the first and second class cities are beginning to narrow. There's very few differences...and I think one of the strong points for a lot of people that voted to have municipalities implemented, one of the strong reasons they vote for it, is the fact they still feel they have control over the taxation process. And that is by a vote of the people." Number 328 The role was taken on Representative Davies' motion to adopt the original bill as the committee substitute in lieu of the sponsor substitute. Representatives Toohey, Davies, Willis voted yes on the motion. Representatives Bunde, Sanders, Williams, Olberg voted no on the motion. Then Representative Toohey changed her vote. The sponsor substitute remained the bill before the committee. REPRESENTATIVE DAVIES said, "I would just note that this is not a requirement under cities right now, but it is a requirement at this point in time for boroughs...a new sales tax, use tax or increase in the rate of levy of sales tax does not take effect unless ratified by the majority of voters. So this principle does apply in general to boroughs, but apparently not in cities." REPRESENTATIVE BUNDE moved that the sponsor substitute for HB 397 be moved from committee with individual recommendations. REPRESENTATIVE DAVIES objected to the motion. A role call was taken. Representatives Williams, Sanders, Toohey, Bunde and Olberg voted yes. Representatives Willis and Davies voted no. The motion passed. CHAIRMAN OLBERG adjourned the meeting at 2:19 p.m.