ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 14, 2001
3:20 p.m.
MEMBERS PRESENT
Representative Lisa Murkowski, Chair
Representative Andrew Halcro, Vice Chair
Representative Kevin Meyer
Representative Pete Kott
Representative Norman Rokeberg
Representative Harry Crawford
Representative Joe Hayes
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 121
"An Act relating to the issuance of qualified charitable gift
annuities."
- MOVED CSHB 121(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 80
"An Act relating to the hours during which sale of alcohol and
entry on licensed premises is allowed; and providing for an
effective date."
- HEARD AND HELD
HOUSE BILL NO. 106
"An Act relating to the authorizations for state financial
institutions; relating to confidential financial records of
depositors and customers of certain financial institutions;
relating to the Alaska Banking Code, Mutual Savings Bank Act,
Alaska Small Loans Act, and Alaska Credit Union Act; and
providing for an effective date."
- BILL HEARING POSTPONED
PREVIOUS ACTION
BILL: HB 121
SHORT TITLE:CHARITABLE GIFT ANNUITIES
SPONSOR(S): REPRESENTATIVE(S)MURKOWSKI
Jrn-Date Jrn-Page Action
02/09/01 0281 (H) READ THE FIRST TIME -
REFERRALS
02/09/01 0281 (H) L&C, JUD
02/14/01 0328 (H) COSPONSOR(S): STEVENS
03/14/01 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 80
SHORT TITLE:LEGAL HOURS FOR SALE OF ALCOHOL
SPONSOR(S): REPRESENTATIVE(S)OGAN
Jrn-Date Jrn-Page Action
01/19/01 0129 (H) READ THE FIRST TIME -
REFERRALS
01/19/01 0129 (H) L&C, FIN
03/14/01 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
FRANK MINTON, Vice President
American Council of Gift Annuities
No address provided
POSITION STATEMENT: Testified on HB 121.
JEROME SELBY
Providence Alaska Foundation
Providence Medical Center
3200 Providence Drive
Anchorage, Alaska 99508
POSITION STATEMENT: Testified on HB 121.
JON CALDER
Providence Alaska Foundation
Providence Medical Center
3200 Providence Drive
Anchorage, Alaska 99508
POSITION STATEMENT: Testified on HB 121.
CLAUDIA BIEBER
Alaska Native Heritage Center
8800 Heritage Center Drive
Anchorage, Alaska 99506
POSITION STATEMENT: Testified in favor of HB 121.
GLORIA GLOVER, Chief Financial Examiner
Division of Insurance
Department of Community & Economic Development
3601 C Street
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 121.
DAVID STANCLIFF, Staff
to Representative Scott Ogan
Alaska State Legislature
Capitol Building, Room 108
Juneau, Alaska 99801
POSITION STATEMENT: Introduced HB 80 on behalf of the sponsor.
MIKE LOHMAN, Owner
Wasilla Bar
P.O. Box 874907
Wasilla, Alaska 99687
POSITION STATEMENT: Spoke on HB 80.
JOAN DIAMOND, Public Health Representative
5700 Rabbit Creek Road
Anchorage, Alaska 99506
POSITION STATEMENT: Spoke in support of HB 80.
MARTI GREESON, Executive Director
Mothers Against Drunk Driving (MADD)
550 West 7th Avenue, Number 540
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 80.
DOUG GRIFFIN, Director
Alcohol Beverage Control Board (ABC Board)
550 West 7th Avenue, Number 540
Anchorage, Alaska 99503
POSITION STATEMENT: Provided information on the fiscal note for
HB 80.
CINDY CASHEN, Member
Mothers Against Drunk Drivers (MADD)
Juneau Chapter
2114th Street 102
Juneau, Alaska 99801
POSITION STATEMENT: Testified in favor of HB 80.
MATT FELIX, Director
National Council on Alcoholism (NCA)
Juneau Chapter
3970 North Douglas
Juneau, Alaska 99801
POSITION STATEMENT: Testified in favor of HB 80.
ACTION NARRATIVE
TAPE 01-32, SIDE A
Number 0001
CHAIR LISA MURKOWSKI called the House Labor and Commerce
Standing Committee meeting to order at 3:20 p.m. Those present
at the call to order included Representatives Hayes, Crawford,
Kott, and Murkowski. Representatives Halcro, Meyer, and
Rokeberg entered as the meeting was in progress.
HB 121-CHARITABLE GIFT ANNUITIES
Number 0165
CHAIR MURKOWSKI announced that the committee would first hear
HOUSE BILL NO. 121, "An Act relating to the issuance of
qualified charitable gift annuities."
CHAIR MURKOWSKI, speaking as the sponsor HB 121, explained that
the bill adopts language used in 30 states regarding qualified
charitable gift annuities. This legislation makes it clear that
[charitable gift annuities] are not "insurance business," but
are exempt from regulation by the Division of Insurance. There
are certain notice requirements that have to take place in order
to be a qualified charitable gift annuity organization; one is
notifying the division that the organization has a qualified
charitable gift annuity plan.
Number 0243
CHAIR MURKOWSKI said [notification] has to be given within 90
days of issuing the first qualified gift annuity. [The
legislature] is saying that even though the Division of
Insurance is not doing the regulating, [the division] still
needs to know who is operating a qualified gift plan in the
state.
CHAIR MURKOWSKI referred to an article from the newspaper about
Providence Health Systems' operating a gift annuities program.
This is a contractual relationship between the donor and the
charitable institution; an agreement is reached in which an
amount is gifted to an [institution] and the charity will give
the [institution] a fixed annuity over a lifetime period. Based
on age and whether payout begins now or is deferred, the amount
received will vary somewhat, she explained.
Number 0361
CHAIR MURKOWSKI referred to a handout that describes how
charitable gift annuities work. She said Jerome Selby from
Providence Alaska Foundation had contacted her and indicated
that there are several entities in the state operating these
plans; what "they" are seeking through this legislation is
recognition of how exemptions are treated through the Division
of Insurance.
Number 0539
FRANK MINTON, Vice President, American Council of Gift
Annuities, via teleconference, said he is a volunteer for this
organization, and is president of Plan Giving Services, a
consulting firm that works with charities regarding gift
annuities.
MR. MINTON said the American Council of Gift Annuities concerns
itself with charities that issue gift annuities throughout the
United States. In this role, he worked with the National
Association of Insurance Commissioners in the adoption of the
model exemption Act, which was subsequently circulated amongst
the states. To date about 30 states have adopted some version
of the Act. It enables charities to offer gift annuities with
the assurance that it is approved by the state. It allows the
state to protect its consumers by having only charities that
have been in existence a certain number of years, and have a
certain amount of unrestricted assets to issue gift annuities,
and it doesn't impose burdensome requirements on the charity.
Number 0635
MR. MINTON said there were a few states, before this
circulation, that had adopted more heavy regulations; there are
a handful of states, like Alaska, that have not yet addressed
the subject of gift annuities. Several of those are also
considering the model exemption Act.
CHAIR MURKOWSKI referred to the consumer protection aspect of
the bill. To be a qualified charitable gift annuity
organization under HB 121, an organization has to have a minimum
of $300,000 in unrestricted cash or cash equivalents, and must
have been in continuous operation for the last three years. She
asked if these are standard requirements within the industry
that all charitable gift annuities [organizations] have to meet.
Number 0724
MR. MINTON responded that charities have been offering gift
annuities for over 100 years. Default on a charitable gift is
almost unheard of, he said, and he had no firsthand knowledge of
any charity that has ever failed to fulfill its obligations.
The practice of nearly all charities is to keep the entire
contribution in reserve, and to make the gift annuity payment;
then use for charitable purposes, whatever is left (indisc.).
He said charities further provide (indisc.) by keeping the
contribution in reserve to back the payment. Consumers are
further protected because the charity's assets back the
annuities. He remarked that this is one of the reasons for
requiring the charity to have the minimum amount of unrestricted
assets.
MR. MINTON illustrated with an example. He said if someone
contributed $10,000 for a gift annuity with Providence Alaska
Foundation, and for whatever reason the entire $10,000 (indisc.)
from making the payment, then Providence would still be
obligated to continue making those payments, backed by all of
its assets. The annuitant (indisc.) the general creditor of the
Providence Alaska Foundation.
Number 0874
REPRESENTATIVE ROKEBERG asked why $300,000 in unrestricted cash
or cash equivalents is required.
MR. MINTON stated that the purpose is so there is a certain
amount of unencumbered assets to assure that the charity would
be able to make the payments in the event that the reserves are
exhausted.
MR. MINTON referred to page 1, AS 21.03.021, lines 11-12 of the
bill. He noted that it says "aiding and strengthening
educational institutions". He pointed out that the issuers of
gift annuities are not just educational institutions, but are
other types of charities as well, like hospital institutions
such as Providence Alaska Foundation. He suggested changing the
word "educational institutions" to "charitable organizations" so
there isn't an implied restriction.
Number 1028
JEROME SELBY, Providence Alaska Foundation, Providence Medical
Center, said Providence supports the bill and would like to see
it adopted because it would do two major things for Alaska.
First, it gives a "light of day" test to charitable gift
annuities so that things are above board and there is
registration with the state. Second, it gives people confidence
that when working with an organization, in effect, they know
whether it is a legitimate organization because it has the
state's seal of approval.
MR. SELBY said while "we" are asking to be regulated, "we're"
willing to do this because it's an appropriate level of
regulation; it isn't onerous and unreasonable.
Number 1164
REPRESENTATIVE ROKEBERG asked Mr. Selby if he could point the
committee to [where it refers to the] regulation in the bill,
because it seems to him that the bill refers to the "type size"
of a warning. He asked what other steps constitute regulation.
MR. SELBY said in order for an organization to offer the
annuities legitimately, it has to notify the state Division of
Insurance that it is in the business of offering charitable gift
annuities. It has to pass the scrutiny level that an
organization is a "501C3." The check by the state is very
minimal, but the process of getting registered in the state has
value, he remarked.
Number 1245
REPRESENTATIVE ROKEBERG said: Unless there is a[n] authority to
create regulation or something, or there is an existing
regulatory scheme in place that the Division of Insurance does,
... other than the fact that if the division saw fit to see if
their notice provisions were in conformance with the statute,
there is no regulation. He asked Mr. Selby if he would change
his advertising or marketing of annuities to reflect a state
approval if this bill passes.
Number 1285
MR. SELBY responded in a negative way. He said that is not what
"we" are seeking. He explained that it would require everyone
to make the disclosure statement.
REPRESENTATIVE ROKEBERG asked Mr. Selby if more traditional
annuities are bought after the assets are conveyed to the
charitable organization.
MR. SELBY referred the question to Jon Calder of Providence
Alaska Foundation.
JON CALDER, Providence Alaska Foundation, Providence Medical
Center, via teleconference, responded that Providence manages
and invests the asset after fulfilling the fiduciary
responsibilities. He reiterated that the purpose [of the bill]
is to ensure that [entities] are qualified to do this, and have
notified the insurance commissioner when it is started.
MR. CALDER mentioned that he had spoken with Robert Lowe from
the insurance commission, that "they" fully agree with this and
the Charitable Gift Annuities Exemption Model Act ("Model Act"),
and that the "Super Model Act" has been approved by the National
Association of Insurance Commissioners [NAIC]. It is one of the
first things to say that a charitable gift annuity is not really
commercial insurance; it's for the purpose of having a donor
make a gift and then realize income from that gift.
Number 1423
MR. MINTON added that there are some charities across the
country that do reinsure, meaning that upon receiving a
contribution for a gift annuity it takes a portion of it and
buys an annuity from a licensed insurance company that will
cover the obligation. Having done so, [that company] feels the
freedom to spend what is left for charitable purposes. The
overwhelming majority of charities like Providence self-insure,
meaning they reserve the money and keep it in reserve to make
the payments from that reserve.
REPRESENTATIVE ROKEBERG asked Mr. Calder if he retains any
actuarial consultants to establish these programs.
MR. CALDER responded that Providence's charitable gift annuities
go by the rules and regulations of the American Council on Gift
Annuities that set the actuarial rate and also govern the
formula that is used. He said when he has a gift annuity,
Providence Health System goes to the bank and invests the money
by making all of the fiduciary responsibilities to the donor;
only after this is the money spent.
Number 1547
MR. MINTON said charities do not issue variable annuities like
an insurance company; these are all fixed pure-life annuities.
He noted that the gift-annuity rate offered by charities is
substantially lower than commercial rates; therefore, gift
annuities don't really compete with commercial annuities, but
are used by people who want to make a gift. In the process of
making the gift, [the organization] gets a deduction, in
addition to the life payments.
REPRESENTATIVE ROKEBERG commented that [the annuity] could be at
net present value or a calculation that one would actually have
a higher rate of return, because of the tax deduction, depending
on [a company's] bracket and how it works out.
MR. MINTON replied that typically, if a donor gave $10,000, the
charitable deduction might be in the range of $4,000, varying on
the age of the annuitant and the annuity rate. But somewhere in
the range of 40 or 50 percent of the amount contributed would be
a charitable deduction. The donor has the satisfaction of
making a gift, and is getting a payment lower than what it would
get from an insurance company. But it is still getting a
payment and a deduction, he explained.
Number 1640
CLAUDIA BIEBER, Alaska Native Heritage Center, via
teleconference, said [the center] is a developing organization,
and the charitable gift annuities program is a viable part of
long-term financial development sustainability for the nonprofit
community in Alaska. She spoke in support of the bill.
Number 1679
GLORIA GLOVER, Chief Financial Examiner, Division of Insurance,
Department of Community & Economic Development, via
teleconference, stated that this bill provides language allowing
certain charitable organizations to issue certain kinds of
annuities without regulation by the Division of Insurance. She
said organizations issuing annuities that do not meet the
definition of a qualified charitable gift annuity must have a
certificate of authority to operate in Alaska.
MS. GLOVER noted that the Division of Insurance is proposing a
bill that includes the charitable gift annuity language from the
model bill. She went on to describe the differences. House
Bill 121 places the majority of the language in Section 3 of
[Title] 21, whereas the [Division of Insurance's] bill places
language in Section 89, for miscellaneous provisions. She added
that HB 121 addresses the conflict of the exclusion in AS
21.03.021 for the educational institutions, while the [Division
of Insurance's] bill does not.
MS. GLOVER remarked that she is concerned with the proposed
change to AS 21.03.021 [page 1, line 11 of the bill], changing
"educational institution" to "charitable organizations". She
explained that it is [the Division of Insurance's] view that the
educational institution would continue to be exempt from all
insurance regulations, including the charitable gift annuity
provision. Therefore, the change may create a problem in
enforcing the bill.
Number 1786
CHAIR MURKOWSKI stated that she was not certain why expanding
the bill to reference charitable organizations would cause
problems.
MS. GLOVER replied that the current language in AS 21.03.021 is
clear that it exempts educational institutions completely from
Title 21. She said she does not think the language in line 8
would add the requirement for charitable organizations to meet
the new notice requirements that HB 121 includes. She thought
[educational institutions] would be exempt from even HB 121.
MS. GLOVER continued on pointing out other differences [between
HB 121 and the Division of Insurance's bill,] soon to be
introduced. One is that HB 121 includes the confidentiality
provision that is not in the model. It makes confidential any
information received by the division or any penalty that might
come out of these provisions.
CHAIR MURKOWSKI asked if Ms. Glover sees that as problematic for
the division.
MS. GLOVER responded that she has concerns about the
confidentiality that prevents [the] penalty provision, because
the other provisions appear to be public information anyway.
Number 1927
MS. GLOVER stated that there has been an amendment proposed for
Section 5, line 17, to make the section more clear as to what
notice is required. The amendment would say that the notice
must confirm compliance with AS 21.03.070 (b) and (c) by
removing the word "comply" and adding the words "[confirm]
compliance". Amendment 1, 22-LS0258\C.1, Bannister, 3/9/01,
read:
Page 4, line 17:
Delete "comply"
Insert "confirm compliance"
REPRESENTATIVE ROKEBERG asked if Ms. Glover had said this would
be without regulation and would certify the authority to
operate.
MS. GLOVER replied that she would agree; this only provides
notice to the Division [of Insurance] about the activities
occurring. She remarked that the division would not agree to
this registration approach.
Number 1994
REPRESENTATIVE ROKEBERG asked if the National Association of
Insurance Commissioners (NAIC) or a provision under the
insurance code would prohibit mentioning any kind of authority.
MS. GLOVER answered that she doesn't know of any prohibition.
REPRESENTATIVE ROKEBERG suggested that [the committee] amend the
bill to say [that an organization] couldn't advertise that it
had been certified by the State of Alaska, to not misinform
investors and donors; then [for the committee] to create a
regulated type of investment vehicle.
CHAIR MURKOWSKI asked Mr. Minton if other states have some kind
of disclosure.
Number 2037
MR. MINTON answered that it is common for states to have
language stating that this is not backed by any guaranteeing
association. He stated the he believes [HB 121] provides for
that as well.
REPRESENTATIVE ROKEBERG stated that this is an unregulated
certification, and he is concerned that any consumer would find
comfort in the fact that this is now regulated, when in fact it
isn't.
CHAIR MURKOWSKI remarked that Representative Rokeberg made a
good point. She added that it is not entirely clear to what
extent the state's notice requirement constitutes anything
beyond notice, versus a registration or certification.
Number 2114
MR. MINTON read to the committee language that most states
require as a disclosure. He noted that it is a statement from
Colorado, but similar language would be found in all states that
have adopted this model Act. He read:
This annuity is not issued by an insurance company nor
regulated by the Colorado Division of Insurance and is
not protected by any state guarantee plan or
protective associations.
CHAIR MURKOWSKI said that is very similar to the disclosure
[language] on page 2, lines 8-11, which reads in part: "not an
insurance policy in this state, is not subject to regulation by
the division, and is not protected by the Alaska Life and Health
Insurance Guarantee Association".
REPRESENTATIVE ROKEBERG clarified that some type of prohibition
in utilizing any type of certification in the form of
advertising to the public is needed. It clearly states [in the
bill] that the contract would say it is not subject to
regulation by the division, he pointed out.
CHAIR MURKOWSKI asked Representative Rokeberg if his point would
be, for instance, that Providence Alaska Foundation, on an
advertisement, wouldn't be able to say, "Certified by the State
of Alaska."
REPRESENTATIVE ROKEBERG answered affirmatively. He asked Ms.
Glover if the director or anybody in her division looked at the
current practice of the sale of annuities, and whether there is
concurrence with the statute now.
Number 2207
MS. GLOVER responded that [the Division of Insurance] has not
taken an active role in reviewing these kinds of annuities. She
explained that whenever it receives questions regarding whether
these can be issued in Alaska, [the Division of Insurance] has
responded that those entities must be licensed as annuity
insurance companies in order to operate here.
REPRESENTATIVE ROKEBERG stated that if [entities] are marketing
and are self-insured, then they are marketing annuities, and
should be conforming with [Alaskan] statutes.
MS. GLOVER responded that she does not disagree.
CHAIR MURKOWSKI, referring to Amendment 1, stated that the
clarifying language that's attached [notifies] the division that
there's been notice to the donor.
REPRESENTATIVE HALCRO made a motion to adopt Amendment 1. There
being no objection, Amendment 1 was adopted.
Number 2294
REPRESENTATIVE ROKEBERG made a motion to adopt conceptual
Amendment 2 that would prohibit [a company from using the state
certification] in marketing or advertising.
REPRESENTATIVE HALCRO suggested prohibiting the use of state
certification as a marketing tool for some kind of a guarantee.
He added that on the other side, the organization should have
the ability to say, "Yes, we are registered with the state."
REPRESENTATIVE ROKEBERG said not in the advertising.
REPRESENTATIVE HALCRO agreed, but said if [an organization] is
going to participate in one of these programs, it will certainly
want some reassurances.
REPRESENTATIVE ROKEBERG remarked that these are not subject to
regulation by [the Division of Insurance]. Also, there
shouldn't be any kind of comfort for the investor that there is
a state regulation, because there isn't any.
REPRESENTATIVE HALCRO replied that he understands, but passing
this legislation basically places an approval stamp stating that
it is all right to do this; the average citizen is going to want
some kind of reassurance that this is all right.
REPRESENTATIVE ROKEBERG remarked that [the committee] shouldn't
pass the bill, then.
Number 2374
CHAIR MURKOWSKI asked Mr. Selby if this were passed, would
[Providence Medical Center] change advertising to indicate
registration with the state.
MR. SELBY answered that [Providence Medical Center] wouldn't
change what it was doing; it already has the disclaimer language
that states that it is not regulated by the State of Alaska. He
remarked that Representative Rokeberg has a legitimate concern
that somehow folks might try to imply that they are backed by
the State of Alaska. That's counter to the purpose of exempting
these folks out in the first place, he said.
CHAIR MURKOWSKI remarked that she appreciates what
Representative Rokeberg is saying and thinks that it is fair to
have some type of prohibition on the advertising component.
This is [just] a registration process with the [Division of
Insurance].
TAPE 01-32, SIDE B
Number 2481
CHAIR MURKOWSKI announced that there being no objection [to
conceptual Amendment 2], it was adopted.
Number 2466
REPRESENTATIVE ROKEBERG made a motion to adopt conceptual
Amendment 3 striking "may not be smaller" and inserting the
words "shall be larger" [from Section. 3, line 13].
CHAIR MURKOWSKI asked if he just wants it to be apparent.
REPRESENTATIVE ROKEBERG agreed that he just wants it to be
apparent. He said it should be bold, so people make sure to
read it.
REPRESENTATIVE HALCRO stated that in his business there are
certain requirements; for instance when using logos, it has to
be a [certain] percentage [size] so the logo is visible and is
standard. He suggested that it could be applied, for example,
to say it has to constitute at least 5 percent of the total ad
space.
CHAIR MURKOWSKI remarked that this doesn't refer to an
advertising context, but to the document.
REPRESENTATIVE HALCRO clarified that it depends on how big the
document is; it probably needs to be a decent-sized type.
CHAIR MURKOWSKI asked Ms. Glover if [the Division of Insurance]
has a standard for disclosure requirements.
Number 2351
MS. GLOVER answered that [the Division of Insurance] does review
and approve policy language; however, she is not aware of any
standard requirements for notices.
CHAIR MURKOWSKI said she has no problem with the language
stating "shall be larger and in bold type," instead of "may not
be smaller".
Number 2255
REPRESENTATIVE KOTT asked Providence [Medical Center] what is
currently being done.
MR. CALDER responded that the notice in their documents is the
same type size as the rest of the document. He said he would be
happy, however, to have it larger and in bolder type.
Number 2146
CHAIR MURKOWSKI announced that there being no objection to
conceptual Amendment 3, it was adopted.
Number 2134
REPRESENTATIVE CRAWFORD made a motion to adopt conceptual
Amendment 4. He referred to AS 21.03.070, subsection (b), which
reads:
When entering into an agreement for a qualified
charitable gift annuity, the charitable organization
shall disclose to the donor in writing in the
agreement that a qualified charitable gift annuity is
not an insurance policy in this state, is not subject
to regulation by the division, and is not protected by
the Alaska Life Health Insurance Guaranty Association
established under [AS 21.79.040].
REPRESENTATIVE CRAWFORD stated that [a charitable gift annuity]
is not protected or under oversight by anybody, and Colorado's
language states this as well. He added that this might be a
good disclosure [for Alaska to use].
CHAIR MURKOWSKI said it was her understanding, when Mr. Minton
read the Colorado language, that it mirrored this.
CHAIR MURKOWSKI clarified that [a charitable gift annuity] may
not be protected by the Alaska Life and Health Insurance
Guaranty, but there is an underlying assumption [in the Colorado
language] that it could be protected by something. She
suggested that the committee take that language and adapt it to
Alaska. She asked Mr. Minton if he would agree.
MR. MINTON replied that he thinks substantively it is the same
and that the existing language [in subsection (b)] could be a
little more inclusive.
CHAIR MURKOWSKI asked Mr. Minton if subsection (b) is the NAIC
language.
MR. MINTON responded that it is the paragraph from the NAIC
model statute. He remarked that the state is adopting this
model statute to come up with its own disclosure language. He
added that he had read Colorado's language but that all of the
disclosure language is substantially the same and only varies a
little bit from state to state.
Number 1968
MS. GLOVER stated that the [NAIC] model says:
The charitable organization shall disclose to the
donor in writing in that annuity agreement that a
qualified charitable gift annuity is not insurance
under the laws of this state and is not subject to
regulation by the insurance commissioner or protected
by an insurance guaranty association.
CHAIR MURKOWSKI remarked that it is pretty much what is said in
subsection (b). She asked Mr. Selby and Mr. Calder if they had
any comment on this.
MR. SELBY replied no, that he thinks it is fine. He stated that
he would agree that if it stated, "regulation by the division",
some folks might not understand that it's the Alaska Division of
Insurance. He suggested that it would be clearer if it said
"regulation by the Alaska Division of Insurance". He added that
the statement "not protected by the Alaska Life Health Insurance
Guaranty Association established under [AS 21.79.040]" leaves
open the question of whether there is anything else that covers
it, and he suggested that the committee use lateral language or
say that it's not protected by any insurance guaranty, including
the Alaska Life Health Insurance Guaranty Association
established under AS 21.79.040. He noted that this would not
change the intent of the disclosure statement.
CHAIR MURKOWSKI suggested that if it were to say, on line 10,
"is not protected by any insurance guaranty including the Alaska
Health", it would be clear that there "isn't anything out
there."
REPRESENTATIVE ROKEBERG said he thinks that the bill states that
it just has to meet the requirements of [subsection (b)], it
doesn't have to give them verbatim.
REPRESENTATIVE HALCRO asked Ms. Glover whether there is anybody
that people could turn to if there were a dispute.
MS. GLOVER answered that with the way this is written in the
exemption, [the Division of Insurance] would not have authority
to look into any kind of problems.
Number 1723
CHAIR MURKOWSKI announced that there being no objection to
Conceptual Amendment 4, "making more clear subsection (b) under
[AS.21.03.070]," it was adopted.
Number 1719
REPRESENTATIVE KOTT referred to page 3, lines 9-10, which talks
about confidentiality of the information received by [the
Division of Insurance]. He remarked that his only concern is if
under [subsection (d) on page 2, a person] had issued his or her
first annuity and as a potential annuitant wanted to find out if
this was really legitimate, [the person's] only recourse would
be to go to the [the Division of Insurance]. But, under this
provision, [the Division of Insurance] could not provide any
information. He asked if this is standard confidentiality
language built into the NIAC model Act.
MS. GLOVER responded that there is not a confidentiality
provision in the model. He agreed that [the Division of
Insurance] would not be able to provide any information
regarding the notice on these types of entities.
Number 1654
REPRESENTATIVE HALCRO asked Ms. Glover if there isn't enough
information provided upfront before somebody gets involved.
MS. GLOVER replied that she would have no problem providing the
information to [the Division of Insurance].
CHAIR MURKOWSKI stated that the point behind the confidentiality
provision was that what one didn't want a case in which someone
gives $10,000 to one organization, and then a second
organization, looking for donors, can call up the Division of
Insurance and get the donor's name and number, and come knocking
on that person's door for more information.
CHAIR MURKOWSKI stated that she is concerned with having
information subject to disclosure. She added that by having all
of the information in "DRG" confidential, the consumer can't get
the information about the charitable organization that has been
registered or filed with the Division [of Insurance].
REPRESENTATIVE KOTT stated that he doesn't see where the
charitable organization would have to provide a person's name to
the division because it is not part of the requirement of the
bill.
REPRESENTATIVE ROKEBERG stated that he agrees and thinks that
[the committee] could delete [subsection (h), page 3, lines 9-
10].
Number 1546
CHAIR MURKOWSKI asked Mr. Minton if he had any comments on the
confidentiality clause.
MR. MINTON responded that he thinks it is appropriate for the
[Division of Insurance] to disclose to a donor that a given
charity has issued its annuities. He added that he does not see
this paragraph prohibiting that kind of disclosure.
Number 1513
REPRESENTATIVE KOTT responded that he thinks it does [prohibit
that kind of disclosure]. He made a motion to adopt conceptual
Amendment 5, to delete page 3, lines 9-10 [subsection (h)].
REPRESENTATIVE ROKEBERG objected and said if the [Division of
Insurance] had imposed a civil penalty for the failure to
properly notice, [the division] couldn't tell anybody what
little activity "they" are doing.
Number 1477
REPRESENTATIVE ROKEBERG withdrew his objection.
REPRESENTATIVE HALCRO added that he didn't know what kind of
liability the state would have if the division had information
about a particular charity that was operating questionably, and
didn't provide that to consumers.
Number 1440
CHAIR MURKOWSKI announced that with no further objection,
conceptual Amendment 5 was adopted.
Number 1431
REPRESENTATIVE KOTT made a motion to adopt a conceptual
amendment by deleting "educational institutions" on page 1,
lines 11-12, and substituting "charitable organizations".
CHAIR MURKOWSKI remarked that when Mr. Minton had brought that
up with her it seemed to make sense; however, Ms. Glover has
caused her to question what the impact would be. She suggested
that this be looked at when [the bill] comes before the House
Judiciary Standing Committee.
[Therefore, the amendment was not addressed further.]
Number 1337
REPRESENTATIVE KOTT made a motion to move HB 121 as amended from
committee with individual recommendations and the attached zero
fiscal note. There being no objection, CSHB 121(L&C) moved from
the House Labor and Commerce Standing Committee.
HB 80-LEGAL HOURS FOR SALE OF ALCOHOL
Number 1280
CHAIR MURKOWSKI announced that the committee would next consider
HOUSE BILL NO. 80, "An Act relating to the hours during which
sale of alcohol and entry on licensed premises is allowed; and
providing for an effective date."
Number 1261
DAVID STANCLIFF, Staff to Representative Scott Ogan, Alaska
State Legislature, presented HB 80 on behalf of the sponsor. He
said there had been discussion about making the hours in the
bill compatible with those at the Municipality of Anchorage and
other municipalities statewide to avoid a conflict. There was a
proposed committee substitute ("CS") drafted to accomplish this.
Number 1190
REPRESENTATIVE HALCRO made a motion to adopt the proposed CS for
HB 80, 22-LS0290\C, Ford, 3/8/01, as the work draft. Without
opposition, it was adopted as the work draft.
MR. STANCLIFF said there is a lot of pressure on the legislature
to address some of the problems that come from alcohol. There
are eight measures that have been introduced [this session]. He
said Representative Ogan feels that it is wise to address and
prevent problems with more programs and higher taxes. House
Bill 80 is an effort to achieve that by standardizing bar hours
throughout the state. Most of the major municipalities have
done this, and it has been done nationally. It works, he said.
Number 1127
MR. STANCLIFF explained that when bars start closing at a
reasonable hour, there is a reduction in the problems that
occur, especially on our highways and in bar altercations.
Presently, the Matanuska-Susitna Borough ("Mat-Su"), parts of
the Kenai [Borough], and some of the unorganized areas of the
state still have the ability to stay open until 5 a.m. The
legislature in the past has established hours of closure between
5 [a.m.] and 8 a.m. In the proposed CS, it suggests closing
[bars] at 2 a.m. during the week, and 3 a.m. on the weekends.
MR. STANCLIFF said Representative Ogan's research in riding with
the troopers, talking to law enforcement officers, and
[expressed] in a letter from the Alaska Peace Officers
Association unanimously supports this legislation. Driving
while intoxicated (DWI) and problems with the abuse of alcohol
increase as the hours grow later.
MR. STANCLIFF commented that in the Mat-Su, where [bars are]
open until 5 [a.m.], there is the temptation for people to
migrate from Anchorage to the Mat-Su and drink until closure,
and then head back home. He recalled a recent collision in
which one driver was heading home from a local bar and collided
with another driver; they both happened to be drunk, and one
driver was actually in the northbound lane heading south at
about 5 a.m.
MR. STANCLIFF explained that the City of Seward has closure
hours that are pretty close to 2 a.m. A bar just over that line
can stay open [later] and people are encouraged or persuaded to
go there.
MR. STANCLIFF said Representative Ogan hopes this bill will be
one that can be considered, and that he had tried to hit an hour
range that is in line with what most of the other municipal
areas have done. He mentioned that there are a number of places
around the state that are "dry" and don't sell alcohol in public
at all. Representative Ogan wanted to "throw [it] out there,"
he said, and have the committee consider if it wouldn't be a
step in the right direction to try and alleviate some of the
problems so the industry and public don't continue to suffer.
Number 0937
REPRESENTATIVE HALCRO asked if Representative Ogan thinks [this
bill] is in lieu of doing alcohol taxation and so forth, and
that simply changing the hours that alcohol is served is going
to solve the problem in this state.
MR. STANCLIFF responded in the negative, saying that
[Representative Ogan] realizes that this is going to be an
undertaking involving more than just this measure. He relayed
that Representative Ogan believes that this is something that
has worked in other places, that most of the state has adopted
it, that it is good policy, and that it makes sense to have a
standardized system throughout the state.
REPRESENTATIVE HALCRO commented that this is a "good first
step," and mentioned some recent alcohol-related accidents. He
pointed out that in going through some of the high-profile DWI
[cases], they didn't happen at 2 or 3 in the morning, they
happened between 6 and 10 at night.
REPRESENTATIVE HALCRO said he was a little concerned about the
sponsor statement where it says, "The industry needs to support
this bill or risk more stringent measures." He added that [the
state] needs more stringent measures than just changing the bar
hours.
MR. STANCLIFF said he thought Representative Ogan would agree
with that statement; however, Representative Ogan feels that
doing things that have a positive outcome all add up in time to
less reactive measures that can occur. He said Representative
Ogan had stated his bottom line [since he was not present],
which Mr. Stancliff put in writing. It read: "I will listen to
all of the reasons why 18 hours of public drinking time is not
enough, and what good reasons there are to have bars open later
than 2 a.m. If I am persuaded, I will reconsider this bill."
Number 0774
REPRESENTATIVE MEYER asked Mr. Stancliff to confirm that
Representative Ogan also represents the Wasilla area.
MR. STANCLIFF responded that he represents a small portion.
REPRESENTATIVE MEYER said he admires [Representative Ogan's]
courage. He pointed out that there was a letter from the
Wasilla City Council [in the packet] opposing the legislation.
He said [the council's] argument is that it should be a local
decision, not made by the state.
MR. STANCLIFF responded that Representative Ogan understands and
is a big supporter of local control; however, when a person is
inebriated, he or she doesn't confine the problem to the local
area. The local areas collect the revenue but don't share all
of the expenses caused [by that person], such as [added expenses
to] state troopers, state social workers, and so forth.
Representative Ogan feels that even though that is a strong and
persuasive argument, the costs are statewide.
Number 0655
REPRESENTATIVE MEYER said [the Wasilla City Council] opposed his
own bill that dealt with the distance between bars and churches.
He said he supports this initiative and that these [proposed]
hours are plenty for being open. He noted that Anchorage's bars
open at 10 a.m. and that the bill has [the bars] opening at 8
a.m., which he said seems early. He asked if that was a
compromise, because other communities open at 8 a.m.
MR. STANCLIFF replied that the opening hour wasn't considered
[in the bill]. It is 8 a.m., he said, and communities can elect
to open later.
REPRESENTATIVE MEYER said the Anchorage Assembly had "tinkered"
with the hours, and what the assembly ended up doing was to put
a restriction on the bars that ignored the 3 a.m. closing time.
The [penalized bars] would then have to close at 12 a.m. or 1
a.m. as a penalty. The assembly thought about making the hour
12 a.m., but when Anchorage went from 5 a.m. to 3 a.m., there
was a "rash" of after-hours clubs opening up. He explained that
these cause a lot of expense and other problems, maybe worse
than the bars staying open until 5 a.m., because of the illegal
activities going on such as gambling and prostitution. He said
Anchorage still has that problem, but the assembly was afraid
that by going to 12 a.m., it would just become more of a
problem. He asked if that was considered.
Number 0540
MR. STANCLIFF said it was discussed and it crops up when hours
become fewer. It is a judgment call as to when those hours are
set; if they are set too early, it exacerbates the problem,
which is why Representative Ogan looked at matching up with
Anchorage's hours. This is a more comfortable standard than
what he had originally suggested.
REPRESENTATIVE KOTT commented that he thinks this is a local-
option issue to some extent. He said he doesn't think it will
make much of a difference, no matter when bars are open and
closed. If one is trying to stop problems on the road, he
suggested dropping [the blood alcohol concentration limit] to
.04 and being tough on the bar owners. He said these people
shouldn't be drinking in Anchorage and then going out to Wasilla
and drinking, because the bar owners are to ensure that bar
staff do not serve anybody that looks inebriated, and it is
against the law. He said he doesn't think changing the bar
hours would address the problem, although it might be a small
step in the right direction.
Number 0384
MR. STANCLIFF replied that there is a lot of debate around this
issue and Representative Ogan feels, based on what he has
learned from law enforcement people and others, that this is an
incremental step in the right direction. If one or two lives
are saved, does that make it worth a sweeping policy decision
"down here," he asked. If people soul-search a little, they
would probably respond that it is reasonable. This is a tool
that the committee will have if the bill is kept active and
moves along, he added.
Number 0267
REPRESENTATIVE KOTT asked if there was research or statistical
data available that reflects how many of [Alaska's] fatalities
due to alcohol have occurred between 3 and 5 in the morning. He
said he didn't know if this is really the problem drinking time
when fatalities occur.
MR. STANCLIFF responded that he didn't have hard data to present
today; however, if the committee wanted to see that type of
data, [his office] would try to obtain it. The fact that there
are fewer cars on the highway probably means that a person can
weave around a bit more and get away with it. He said the peace
officers that he spoke with on the Kenai Peninsula, and the ones
that Representative Ogan spoke with, said that after 2 a.m., if
[the officers] elect to pull someone over that has come out of a
bar, there is high likelihood that a DWI will result; it is much
more likely than at 10 p.m. or midnight. He said the people
staying after 2 a.m., quite often, are there for the wrong
reasons.
Number 0032
REPRESENTATIVE HALCRO said Alaska has a tremendous problem with
alcohol, so our numbers might "pale" in comparison with other
states'. He asked if Mr. Stancliff had looked at other states,
and what the most conservative bar-operating hours were.
MR. STANCLIFF responded that he didn't know, but that he did
know that there were some states, Utah being one of them ...
[ends mid-speech due to tape change].
TAPE 01-33, SIDE A
REPRESENTATIVE HALCRO asked if Representative Ogan would be
amenable to changes, because he thinks opening a bar at 8 a.m.
is too early.
MR. STANCLIFF replied that Representative Ogan is not trying to
penalize the industry, those that serve alcohol responsibly, or
those that drink responsibly. He said a number of the
municipalities [open] later than 8 a.m., so the sponsor would
consider it, if it were the committee's desire.
Number 0117
MIKE LOHMAN, Owner, Wasilla Bar, via teleconference, said in
1996 the City of Wasilla and City of Palmer went through a
similar proposal. He said a problem must first be defined to
propose a new law. He said his awareness came from the
newspaper article addressing DWI and the people coming from
Anchorage to the [Mat-Su] valley to drink. He wrote to
Representative Ogan and to some Senators addressing his concerns
on January 29 [2001].
Number 0185
MR. LOHMAN remarked that on February 27, he sent a petition to
Representative Ogan with over 1,500 signatures supporting his
letter of opposition. Today, he has another 500 signatures of
opposition to send. He hasn't heard back from Representative
Ogan, but had heard from Representative Beverly [Masek] and
Senator Rick Halford.
MR. LOHMAN said he was upset that Representative Ogan would make
such a proposal without talking to the liquor establishments,
the city council, the assembly, or the police chief in the
valley for input. Statements of generality without specifics
cause people to react with good intentions, but with poor
results, he remarked.
MR. LOHMAN explained that DWIs have been reduced from the 1996
study due to "our" efforts with good working relationships
between the city, police department, bar owners, cab services,
and the community itself. As long as alcohol is available, DWIs
will occur to some degree. Most alcohol-related accidents are
caused by repeat offenders who will drive no matter what the bar
hours are.
MR. LOHMAN remarked that he had heard of DWI convictions as high
as 12 [for one person. He asked: How can this be? And would
closing bars at 2 a.m. change this? He said there is a problem
with the system, and it isn't that the bars are open after 2
a.m. Information gathered in 1996 from the retired captain of
the vice division of the Alaska Police Department (APD) show
that DWIs don't change relative to bar hours, but are a measure
of enforcement. Mr. Loman said he had some disagreements with
what Representative Ogan found, from the people he had spoken
with.
Number 0330
MR. LOHMAN said restricting hours creates new problems. After-
hours clubs appear, and there are quite a few in Anchorage.
Such establishments give away liquor, and there are gambling,
drugs, and prostitution. There are rumors of an upcoming club
in Wasilla, just due to the fact that the paper reported that
there is a bill being proposed to reduce [bar] operation hours.
MR. LOHMAN asked an officer that he knows quite well why these
clubs are not shut down; the officer said it is very difficult,
there is so much red tape, and even when they are [shut down],
it is strictly a misdemeanor and [after-hour club owners] can
open up the next day. As long as there isn't a major complaint,
the police essentially leave them alone.
MR. LOHMAN pointed out that no one takes responsibility for the
amount of alcohol consumed at house parties, at after-hours
clubs, or in parking lots. Isn't it better to have responsible
bar owners, he asked, and if [bar owners] aren't, then deal with
them, don't make across-the-board laws that have negative
consequences. He said closing at 2 a.m. in Wasilla would create
cab shortage problems. In his bar at 2 a.m. there are
approximately 200 customers; the police will not be able to keep
up with a mass exodus.
Number 0423
MR. LOHMAN reminded the committee that those people are going to
want to "slam down" their last drinks just before last call at 2
a.m. When this happens, [patrons] will not always be drunk as
they walk out the door, but within five to ten minutes they will
be. Drinking after hours in non-controlled environments will
definitely increase, he said. Closing at 5 a.m. provides a
wind-down period. There are cabs, and the police can keep up
with what is actually occurring; the bar owners can handle what
they have to control, which is around 20 to 50 customers at 4:30
a.m.
MR. LOHMAN said there is also the "people's rights issue." He
said he heard some people laughing when it was commented that
people would be in a bar after 2 a.m. He said "we" don't all
work 40 hours a week from 8 a.m. to 5 p.m., and people work
swing and graveyard shifts. To tell those people that they
can't stop in the bar and have a drink after 2 a.m. is what he
characterized as "socialistic at best." As long as [a person]
doesn't hurt someone else, and is responsible for what he or she
does, there is no reason why he or she can't have a drink; if
that person causes a problem, he or she should be dealt with.
MR. LOHMAN emphasized that "we" don't need to change the law,
"we" need to address the offenders so they can't hurt someone
else. It would be too easy for us to reduce bar hours across
the state and turn our heads from the real problem of abuse, at
any hour. He urged the committee to leave the decision of bar
hour closure to local government. He volunteered to work on a
committee to evaluate problems associated with DWIs.
MR. LOHMAN stated that he wouldn't be opposed to a mandatory
blood-alcohol-limit test for every customer who was planning on
driving. He offered to send the committee the letter he had
sent to Representative Ogan, with or without the petitions.
There were other people who wanted to testify today, he relayed,
but they didn't have time. He commented that he found out today
that the committee could be addressed through written testimony.
Number 0668
REPRESENTATIVE HALCRO asked Mr. Lohman where the 1,500
signatures on the petition came from.
MR. LOHMAN said it started at his bar and went all over the
valley to different places. He verified that some people
drinking in his bar were asked to sign the petition. When asked
if he supports an increase in the alcohol tax, he responded
affirmatively; however, the numbers look "a little abusive
possibly," he commented. And, when asked if he supports the
efforts of communities to have jurisdiction to raise their own
individual alcohol taxes, he responded affirmatively.
Number 0732
MR. LOHMAN explained that he would like to see local governments
be able to handle this. He isn't against controlling drunk
driving, and would support any type of legislation to stop it.
He pointed out that there had been some high-profile cases that
occurred, and [the accidents] did not occur between 2 a.m. and 5
a.m. He said there have been some general comments made, which
upset him, that people leave the valley at 5 a.m. and head to
Anchorage, and there are so many drunk drivers that people are
afraid to drive. He said if that were the case, the state
patrol would be out there with roadblocks catching those people,
because they are a "cash cow for the State of Alaska."
MR. LOHMAN reminded the committee that when people come from
Anchorage to drink in the [Mat-Su] valley, they forget that
there are more people going from the valley to Anchorage for
concerts, sporting events, and nightclubs.
Number 0799
REPRESENTATIVE KOTT stated that he was the one who made the
comments earlier that Mr. Lohman was referring to. He asked Mr.
Lohman if there is an impetus within the industry to create a
different level of fine for those bar owners who exceed their
authority in providing alcohol to patrons.
MR. LOHMAN responded affirmatively and said he wouldn't have a
problem with that. He reiterated his earlier comment that bar
staff shouldn't be allowing people to drive when they are
intoxicated. He emphasized that [there is a misconception] that
those driving intoxicated are all coming from a bar, but they
are missing the point. He owns the Wasilla Bar and goes out at
5 a.m. with a garbage can and picks up alcohol containers from
the parking lot that people throw out [car] windows. Those
don't come out of the bar, he said, and once bars are closed at
2 a.m., people are going to be anywhere they can stop and party.
He said the assumption couldn't be made that all drunk drivers
come from a bar.
REPRESENTATIVE KOTT said he is not making that assumption, and
that the bar owners he knows are responsible and have an idea of
how much individuals drink at their bar.
Number 0939
MR. LOHMAN explained that [bar owners] have very stringent
requirements. He couldn't say that no one has ever left
intoxicated because the criteria [bar owners] are given are not
black and white; people can't be forced to take a breathalyzer
test, yet, if something like this were mandatory, it would "take
the monkey off our back." He said "we" have to make certain
that people who leave the bar can walk straight, don't have
slurred words, and can look straight ahead with their eyes.
MR. LOHMAN said his bar turns away people, and he has a
videotape to monitor what is going on. The people leaving his
establishment had better be able to pass the test. His bar has
an evening bar check during which the police officers come in;
[his bar] also calls them if there is a "situation." He said
the police have been dispatched for support, and they work
closely together.
Number 1026
MR. LOHMAN, responding to a question about the number of patrons
in his bar between 4:30 and 5 a.m., said it is between 20 and 50
[people]. On certain occasions like New Year's Eve, there
probably are 200. He pointed out that in Wasilla there was not
one DWI on New Year's Eve, and normally there are 20 to 50.
REPRESENTATIVE HAYES asked if the [Wasilla] community has ever
voted on reducing the bar hours. He also asked how long local
officials are elected for. This is a local-control issue, he
said, and his community voted on it. [Fairbanks's] bars were
reduced to a 3:30 a.m. [closure time]; he said he didn't agree
with that and doesn't agree with this.
MR. LOHMAN replied that [elected officials] are elected every
three years. It was voted on in 1996 in Wasilla by the city
council and was never up for a community vote.
Number 1140
JOAN DIAMOND, Public Health Representative, via teleconference,
said she has been employed for 21 years in public health. She
spoke in strong support of the bill; she is familiar with the
data that comes from Anchorage in particular, and agrees with
what Representative Ogan brought forth regarding the problems
that occur when one bar or package store closes and another one
stays open later.
Number 1186
MS. DIAMOND said the information from Nome and Fairbanks
indicates that this is not just a Southcentral problem, but is
much bigger. The other important piece, she emphasized, is that
the legislature is responsible for protecting the public's best
interest; the responsibility is to the public and to the public
roadways, including decreasing the drinking-and-driving
disabilities.
MS. DIAMOND referred to when the bar hours were reduced in
Anchorage, and said there was a substantial difference from the
emergency room [perspective], where she was a nurse at that
time.
Number 1256
REPRESENTATIVE HALCRO mentioned that Ms. Diamond had done some
fairly substantial work on alcohol and its effects on the
community. He asked if there had been any studies done on the
migration of those out drinking.
MS. DIAMOND responded that she didn't have any at her disposal.
MARTI GREESON, Executive Director, Mothers Against Drunk Driving
(MADD), via teleconference, thanked Representative Ogan for
introducing a very common-sense bill. Over the past five years,
she said, Alaska has ranked no less than third-highest in our
nation for the percentage of traffic deaths caused by alcohol.
MS. GREESON said this is one piece of action that needs to be
taken to make a difference in the devastation that is being
wreaked upon [Alaska]. Locally and nationally, MADD advocates
setting uniform statewide cutoff limits on the sale of alcohol
beverages in order to end the practice of bar-hopping to find
establishments closing later, in order to have one more drink,
with the likelihood of impaired driving as a result.
Number 1349
MS. GREESON remarked that the 8 a.m. opening hour indicates to
her that there is a problem around alcohol and that, sadly,
[Alaska] has a lot of individuals who are not responsible with
alcohol consumption and [subsequent] behavior. She said she is
in support of standardized hours.
REPRESENTATIVE HALCRO referred to the fiscal note and said [this
legislation] would have a fiscal effect on the ABC Board and on
the officers that go out and patrol. He asked Mr. Griffin,
since there is a zero fiscal note, what the actual fiscal note
could be.
DOUG GRIFFIN, Director, Alcohol Beverage Control Board (ABC
Board), via teleconference, said it is a question of the level
of enforcement. [The ABC Board] put a zero fiscal note on there
because "we" are spread so thin now that having shorter bar
hours wouldn't really make a difference. "We" could do a little
more enforcement in [bar] hours, he said, which the language [in
the fiscal note] alluded to.
REPRESENTATIVE HALCRO referred to Mr. Lohman's testimony about
the gray area regarding regulations and standards that apply to
servers. He asked if there is the possibility of clearing up
some of those regulations and making the server-training more
effective if this bill doesn't go anywhere.
REPRESENTATIVE ROKEBERG indicated that there is a Techniques of
Alcohol Management (TAM) bill [coming up].
Number 1504
MR. GRIFFIN replied that the standard is different and the law
talks about not serving a "drunken person." [Bar staff] go by
physical signs, and this is not the same as a .10 or .08 or some
kind of blood-alcohol [test], because a server in a bar doesn't
have sophisticated equipment to measure blood alcohol. The
visual signs are taught in the [TAM] training, but it is a
different standard from what is used for driving under the
influence. He said not everyone in a bar drinking is going to
drive, so service people take that into account, knowing that a
person has another way home, a designated driver, and so forth.
Determining whether someone is drunk is somewhat subjective.
MR. GRIFFIN stated that alcohol training is good and he thinks
it can be improved; it has made a difference and can be worked
on to get people thinking of a bar as a social setting rather
than a place where a legal drug is dispensed. He said "we" are
going to start, as violations happen for "over-service" and
service to underage people, tracking the type of training that
the person involved with the infraction had so "we" can start
having some standards and accountability for the training out
there. He said "we" are going to start looking at the quality
of alcohol-server-training programs.
Number 1664
MR. GRIFFIN, responding to a question about the number of
investigators in the Anchorage area, answered two. He said less
than half of a position is dedicated to making sure that bars
close at the appropriate time. He said "we" don't spend a lot
of time doing it; much of the enforcement is reactive, based on
a complaint. He said "we" rely on the Anchorage Police
Department to do that type of legwork.
MR. GRIFFIN, when asked if a bar owner can serve more than one
drink at a time, responded that he or she can serve two, or a
double, or a mixed drink that has two shots in it.
CINDY CASHEN, Member, Mothers Against Drunk Drivers (MADD)
Juneau Chapter, said she is also a victim of drunk driving. On
April 19, her father Ladd Macauley, and Martin Richards were
killed on the Kenai highway. She thanked Representative Ogan's
office for introducing the bill, and said [MADD] in Anchorage
endorses the bill.
MS. CASHEN said she, too, would like to see a local municipality
be able to do this; however, they haven't and aren't going to do
this. She said in representing the victims across Alaska, those
who can no longer speak because they have been killed by a drunk
driver, and as a victim who lost a family member and loved one,
she would like to see the legislature "step up to the plate" and
say this isn't right and "we" are going to protect you. She
added that she is a recovering alcoholic, and when she was a
practicing alcoholic, "we" went bar-hopping and drove - nothing
was going to stop them. She said she has friends who are still
practicing [alcoholics] and still bar-hop. They do it in Juneau
when there is a bar that is open 15 minutes longer; they will
stand in line in a liquor store that is open 5 minutes later,
she remarked.
Number 1827
MS. CASHEN said understanding the alcoholic mind is a real
mystery, but a person will do anything. If that means getting
in a car and driving 20 to 40 miles [for a drink], that is
normal; however, to a non-alcoholic mind, that is not. That
will continue to happen and lives will be lost if this bill
doesn't pass.
REPRESENTATIVE HAYES said he is at a loss because it sounds as
if whether the bars are open till 5 a.m. or 3 a.m., Ms. Cashen's
friends are still doing the same activities. He said to him, he
doesn't think that the bar hours are the problem. It involves a
bigger issue. He said he understands the alcoholic mind because
he has some family members who are alcoholics.
Number 1911
REPRESENTATIVE HAYES commented that the bars used to be open
until 5 a.m. in Fairbanks, and said he had closed the bars, but
was not drinking. There are other factors. The local community
has officials elected to reflect the views of that local
community, he pointed out, and he has a hard time taking away
that local control. In Fairbanks, this issue was voted on and
the bar hours were restricted to 3:30 a.m., but the community as
a whole had to vote on it.
MS. CASHEN agreed with Representative Hayes and said she sees
his point; however, there is a big difference between the
chronic drunk drinking until 5 a.m. or drinking until 2 a.m. It
is less alcohol consumed, and the chances of drunk driving will
go down. Mothers Against Drunk Drivers doesn't come out with
public policy statements without a lot of investigation. She
said she would be more than happy to provide the committee with
studies to back this up. She remarked that it sounds nice being
able to dance until 5 a.m., but quite a few people who are in
the bars between 2 and 5 a.m. are going to try to drive home.
Number 1986
CHAIR MURKOWSKI asked Ms. Cashen to provide what statistical
information she has to the committee.
REPRESENTATIVE HALCRO asked Ms. Cashen why she feels communities
haven't responded.
MS. CASHEN replied that as with most issues, the bottom line is
money. She surmised that [bar owners] feel that they can make
more money staying open longer.
REPRESENTATIVE MEYER reverted back to the discussion of the
problems with after-hour clubs in Anchorage. He said they are
hard to bust and people have a secret code to get in. At least
in a bar there is some control before a person gets out in a
car; in the after-hours clubs, no one cares. He said that was
probably the main reason, when he was on the [Anchorage]
Assembly, that "we" didn't change the hours even more, from 3
a.m. to 1 a.m. He asked if MADD has considered the effect that
after-hours clubs could have if the bars start closing too
early.
Number 2092
MS. CASHEN said she knows of one [after-hours club] in Juneau,
and [MADD] is planning on contacting the person to see about
working with them to turn it into a good thing. She said all
she sees here is a good thing, and the bottom line [of this
bill] is that it will save lives. Recently there were six
people hit, four of them killed, up on the Chena Highway near
Fairbanks around 5 a.m. this past summer. Bar-hopping does
happen, she remarked, and if this crash didn't occur because of
if it, there will be [some] others.
MS. CASHEN concluded by saying this bill sends a message to
victims across the state. She cautioned that it would break
victim's hearts again if the bill were not to pass.
Number 2147
REPRESENTATIVE MEYER said he doesn't disagree with Ms. Cashen
because he knows when he used to frequent the bars, as long as
they were open, he was going to keep drinking. Luckily, where
he lived they closed at 1 a.m. He said for the responsible
drinker, this is a good law because it is going to say "you have
to stop and go home." For the hard-core alcoholic, however, who
drinks uncontrollably and is going to drive and hurt somebody,
he isn't sure this is going to stop him or her. An alcoholic is
going to go to any extreme to get [alcohol], be it from an
after-hours club, a friend's house, or so forth.
Number 2206
MS. CASHEN agreed and said MADD agrees. Nothing is going to
stop the chronic drunk driver from drinking and driving, but
"we" can do our best to prevent it. Nationally, 80 percent of
the drunk drivers are first-time offenders, she said. A lot of
them make this mistake, but unfortunately a lot of them still
kill. "We" are not dealing with the chronic drunk driver in
this situation insomuch as sending a message that drinking and
driving isn't acceptable, and that bar-hopping needs to stop.
REPRESENTATIVE KOTT asked if MADD has statistical research
showing the number of drunk-driving-related fatalities between 3
and 5 a.m. He also asked if there is any further data available
that would suggest that bar owners were prosecuted for serving
that person to the extent that he or she was over the limit. He
wondered if "we" are tackling the problem at the right end. He
asked Ms. Cashen, if [the legislature] could pass any piece of
legislation dealing with DWI, whether it would be this bill or
one lowering the blood alcohol level to .04. He suggested if
the goal is to get people off the road, [the blood alcohol
concentration limit] should be lowered to .04 or .02 instead.
Number 2276
MS. CASHEN responded that it is a small piece of the puzzle, but
if it saves one life, it is worth it. She said she has seen
statistics - not from MADD, but from the state - about the
number of crashes occurring at certain hours across the state
and on days of the week, which will back up a reason for this
bill. [Alaska] is an "alcoholic state," and there is a lot of
alcohol abuse going on, much of which comes out in drunk
driving. She said this is done in other states, which wouldn't
pass this law if it didn't [work].
Number 2330
MATT FELIX, Director, National Council Alcoholism (NCA), Juneau
Chapter, said the NCA has over 200 chapters nationwide; the
Juneau Chapter was established in 1964. This is his thirtieth
year in the field of alcohol and drug abuse, eight of which were
spent as the state division director. He said he is fairly
familiar with the alcoholism situation in the state, as well as
the government statutes, Title 4, and the dispensation and sale
[of alcohol].
MR. FELIX explained that this is a "slice of the pie," not a
"silver bullet." He said there has been talk about comparing
slices and which one is the best in terms of doing something
about drunk driving and alcoholism in Alaska. He said it is
going to take a package of bills to solve or at least turn this
problem around. He said there is data showing that the less
accessible alcohol is, the fewer problems there are.
MR. FELIX relayed that there is a lot of data showing that
continuous drinking and having access to alcohol over a longer
period of time increases the amount of felonies in a given area
[such as domestic violence]. About 65 to 70 percent of the
felonies in our prison system today are alcohol-related. He
explained that there is a greater percentage of people in prison
on alcohol-related felonies in our state than in any other.
Number 2443
MR. FELIX said this is "deja vous" for him; he came to the state
in the 1970s to head the department of health and social
services with the city [of Juneau]. The first month he was
here, at 3 a.m., a man ran into a boat on Egan Expressway and
killed an individual. All four of the participants in that
accident were intoxicated over the legal limit. A month later,
in 1977, an individual drank to the "wee hours of the morning"
and at 5 a.m. went home and shot his wife and two children. He
said it started a process in Juneau of looking at heavy drinking
and late bar hours, and the response over a period of three or
four years was to [change] bar hours; presently, it is 1 a.m.
during the week, and 3 a.m. on the weekends, he said. "We" feel
that it made a great deal of difference, and the police chief,
after a year of the bar hours [being reduced], moved one officer
from the late-night shift to the day shift because the change
had made such a difference.
Number 2467
MR. FELIX pointed out that alcohol is so cheap in this state
that it is ridiculous, cheaper than soda and milk by volume. He
said there is a .08 [blood-alcohol limit bill] for drunk
driving, and there are a lot of bills [this session]. This is
wonderful seeing some response from the legislature, he
remarked.
TAPE 01-33, SIDE B
Number 2460
MR. FELIX said he teaches a class at the university on alcohol
abuse and its history in the state. In at least the first ten
years of statehood, the Title 4 statutes were undermined; there
are loose laws and a lack of governing of sales of dispensation.
For example, there are a lot of intoxicated people being served
in both bars and liquor stores. He pointed out that Ms.
Cashen's father was killed by a man who staggered into a liquor
store. This happens because there is no enforcement.
MR. FELIX commented that the ABC Board is down to three or four
statewide enforcement officers, and they don't concentrate on
that part, so there is a lack of enforcement. He said in a
community the size [of Juneau], where a lot of the sales tax or
tax income to the local government comes from both on and off
[premises] sales, Title 4 won't be aggressively enforced to
restrict the sale [of alcohol].
MR. FELIX said there are a lot of things historically that
promote drinking in this state or at least allow heavy drinking.
Some of the bills presented this year are trying to patch those
holes, and he thinks [HB 80] is just one of them.
Number 2401
MR. FELIX referred to an earlier question. He stated that the
only piece of data he knows about that addresses late hours is
that there are "a heck of a lot more" arrests for drunk driving
during those late hours in this state than in others. He said
he couldn't think of any other state where drunks are running
into each other and killing each other in the late hours.
Statistically, it takes 200 drunk-driving occurrences to get
caught once, but in this state drunk drivers are running into
one another. He said he doesn't know what the statistical
chances are of that happening, but it has to be into the
thousands.
MR. FELIX stated that bar hours are an important piece of this
package, and he encouraged the committee to move [the
legislation] forward.
REPRESENTATIVE HAYES said it still boils down to, "Juneau made a
choice, Juneau decided that 'we' have a problem in our community
and as a community, your local officials dealt with it."
Fairbanks voted on it as a community to deal with it. Anchorage
had a problem and it was dealt with. It is not the state
legislature's job to micromanage a local community, which is
what local officials are elected for.
Number 2334
MR. FELIX said he would agree on most issues, but not on alcohol
sales and abuse issues. [Alaska] has such an outrageous
situation, and the communities are small and very political.
[Communities] don't have the ability to politically move this
kind of legislation forward. He pointed out that Juneau had
that ability, but doesn't have the political initiative to
enforce Title 4, which refers to the sale and dispensation [of
alcohol].
MR. FELIX explained that [Alaska] is the only state that he
knows of - and he has testified before Congress on this - that
abrogates this particular responsibility to local communities.
It is an ABC and state obligation. At least 48 other states
have realized that the potential for injury caused by alcohol
sales and abuse is so important that the state took it on and
backed the enforcement, and substantiated the statutes that
regulate it.
REPRESENTATIVE HALCRO said in growing up in Alaska, alcohol is
kind of part of the Alaskan "aura." He mentioned some famous
Alaskan bars. He said it has been part of Alaska's brief
history and culture, more of an attitude up here. He asked Mr.
Felix if people feel that the effects of alcohol are just part
of the Alaskan [experience].
Number 2254
MR. FELIX responded "absolutely." The frontier attitude in
Alaska is one of the major factors to Alaskans' overindulgence
and the consequences resulting from that. He said that attitude
came and is substantiated by our lack of doing something about
the problem over the years as a state. Historically, "we" made
some big mistakes and are going to live with them for a number
of years around this problem. When [Alaska] was a territory,
the federal government issued a tremendous number of [liquor]
licenses, and when [Alaska] became a state, "we" grandfathered
those licenses in during the first 10 to 15 years of our
history. "We" passed licenses out at a very rapid rate, and at
relatively no cost.
MR. FELIX said [Alaska] has an overabundance of sales and
accessibility, and an extremely strong liquor lobby during the
first 20 years of the state's history, keeping the price low
through the lack of taxation. The four main distributors out of
Seattle take hundreds of millions of dollars out of this state,
selling by volume, not by cost. [Consequently, Alaska] is left
with the problems.
Number 2229
MR. FELIX stated that our statutes, attitudes, and mistreatment
of this problem over the years have allowed it.
REPRESENTATIVE HALCRO commented that he believes in local
control, but the state has not put enough resources behind
enforcement. He referred to the ABC Board and said there are
two inspectors in Anchorage and three inspectors statewide
[overseeing] 1,400 liquor licenses. He asked how liquor laws in
this state can be enforced if there are [only] three people
tasked with doing the job. He said it is impossible. The
approach needs to be comprehensive, and this [legislation] is
part of the puzzle, unless the state wants to get tough and
start funding additional enforcement officers.
Number 2146
MR. FELIX agreed and said enforcement is prevention; when there
is proper enforcement in any given area, there is a reduction in
drunk driving, domestic violence, and alcohol-related felonies.
There is a neutered ABC enforcement [Board] in this state, which
was done over a long period of time. Without enforcement at the
state level and without the political involvement of local
politics, there is a situation in which if a person owns a bar
or liquor store, the chances of that person getting caught for
selling to underage kids are probably "nil." Therefore, a person
will take that chance, because it is profitable.
MR. FELIX said one of the [ABC Board] officers was finally
placed in Southeast Alaska. In one night, this person went to
13 liquor stores and made 13 arrests. This says that those bars
and liquor stores have been serving after hours, and serving
kids for a long period of time, lacking the enforcement.
Number 2066
MR. FELIX explained that the state addressed the problem a
number of years ago by saying, "Well, if we're not going to fund
enforcement at the state level, let's give the cities some money
and ... demand that they enforce these laws." He said the
wholesale liquor-license fees come to about $2 million a year
and are now funneled to each incorporated municipality with the
explicit purpose of enforcing Title 4. Those fees get mixed
with other kinds of revenue-sharing fees, go into the city
coffers, go to the police departments, and disappear. Everyone
has forgotten over the years that this money was for that
purpose; [the money] has become expected and is part of the
local police department's budget. The obligations tied to those
fees are not followed through on.
MR. FELIX commented that Juneau gets $65,000 [a year], which is
one full-time employee (FTE), and Anchorage gets a couple of
hundred thousand [dollars], based on population. The state
tried for a while to enforce this, but it undermined the ABC
[Board] by lack of funding for enforcement officers. He said
they then tried to "end-run" to fund local governments through
revenue-sharing by funding the wholesale license fees to them;
this, too, was undermined over time.
REPRESENTATIVE HALCRO said it seems that when reading about
crackdowns or undercover sting operations, usually the funding
source is from a grant from the [U.S.] Department of Justice; it
doesn't have anything to do with state and local money.
Number 2019
MR. FELIX commented that "we" pay them twice for doing the same
job. He urged the committee to understand that this bill is an
integral part of a package; it will probably take a lot more
legislation this year, and "we" can "straighten this problem
out." He said [Alaska] by far has the most hideous situation
around alcohol of any state, which he had testified before
Congress about; he was flown back to Washington, D.C., because
they couldn't understand what was happening up here. The per-
capita consumption is off the chart, and the U.S. Senate Health
Committee couldn't believe that a [state's population] could be
drinking this much: 514 drinks for every man, woman, and child
in this state a year. Alaskans drink a gallon more of pure
alcohol, [per capita], than the national average. He said "we"
know it's true because "we" tax it, and almost every ounce is
watched.
Number 1937
REPRESENTATIVE KOTT said the way the statutes are written,
outside of the hours of 5 and 8 a.m., many of the communities
around the state have implemented their own ordinances and
restrict that even further. He said his understanding of this
bill, as it relates to Juneau and Anchorage, means that it does
nothing; he asked Mr. Felix if that was correct.
MR. FELIX responded affirmatively.
REPRESENTATIVE KOTT said as he looks through the list [on the
handout], there are not too many communities that this bill
really would affect. He submitted that those communities that
have restricted hours of operation for serving liquor wouldn't
go the other direction. He said perhaps it would be more
effective to place some restriction on establishments that are
not bars, for them to close earlier than bars. He said he
foresees that some of the problems are with people who come out
of a bar, then go to a package store and buy liquor. If those
establishments were closed one hour prior to the bars, it would
be a much better approach to the problem.
Number 1843
MR. FELIX responded that it is a suggestion that he hadn't
thought about in a while; it addresses the same problem that
this bill addresses, which is the relationship between
availability and the problems it presents. Most research shows
that price and availability are the two major factors in per-
capita consumption. He said [Alaska] has the cheapest and most
available alcohol in the United States.
REPRESENTATIVE KOTT said he thought [the legislature] had the
same debate about price and availability during the tobacco
issue, and that [Alaska] is now number three in the nation for
per-capita consumption, even after the price was adjusted
upwards.
MR. FELIX pointed out that [Alaska] dropped 17 percent among the
"price-sensitive groups, the fixed income, elderly, and the teen
group," in the use of nicotine the first year after the tax [was
implemented], and has stayed down in those groups.
Number 1775
REPRESENTATIVE MEYER asked for clarification that the ABC Board
does not have any enforcement power.
MR. FELIX said, "Oh, yes."
REPRESENTATIVE MEYER explained his understanding that [the ABC
Board] could issue a notice of violation, but needed to have the
police go with them to actually arrest somebody. He asked what
the powers of the ABC Board are.
Number 1758
MR. FELIX said [the powers] are outlined in Title 4, which is a
set of statutes just for the regulation and dispensation of
alcohol. He said [the ABC Board] is limited in actually
arresting and taking someone out of the bar.
REPRESENTATIVE MEYER said the Anchorage Assembly found that
there were bars that would stay open past 3 [a.m.], and the ABC
Board would write a notice of violation; and when the license
came up for renewal every two years, "we" would see these
notices of violation. He said "we" would see what the problem
was and try to deal with it with the establishment rather than
[enacting] a law to penalize all bars. He added that 99 percent
of bars were doing the right thing. He said those that were
trying to stay open past 3 a.m. would be required to close an
hour earlier, which "we" found to be very effective because they
were being hit in the pocketbook and it gave them an incentive
to abide by the law. He said some of them actually went out of
business, which is favorable because "you want the bad ones out
of business, and [want to] keep the good ones in business."
REPRESENTATIVE MEYER said this, then, gets back to a local issue
rather than a state law. He said "we" cannot have enough ABC
Board folks to deal with all of the issues.
Number 1675
MR. FELIX replied that this is one of those situations in which
local control sounds nice, but doesn't work. The communities
that have restricted bar hours did it out of desperation, and it
cost a lot of lives to get to that point. He spoke about the
role that interpersonal relationships play in influencing local
politics.
MR. FELIX said it is not and cannot be effective locally. There
are a lot of communities with licenses that are just too "tight-
knit" and everybody knows everybody. Local control of a lot of
things is a wonderful idea, but when there is a product that has
such a potential [to cause] harm to society, then local control
is not as effective as it should be, and the state needs to step
in for these situations.
REPRESENTATIVE HAYES asked Mr. Stancliff for information on the
number of communities in the state with bar hours that will be
addressed by this bill, and what the package store hours are for
these communities. He said in looking at the [committee handout
that shows bar closure hours], it shows that every big community
but Kenai and Palmer has addressed this under local control. He
asked whether all of the little communities are the problem
then.
MR. FELIX responded that they haven't addressed it
appropriately; for example, in Fairbanks it is still 3 a.m. He
mentioned a young girl who was killed driving to the high
school; the driver who killed her drank until 3 a.m. He said he
thought 2 a.m. would be a much more reasonable hour. He agreed
with Representative Halcro that one of the improvements to the
bill would be to have bars opening at 10 a.m. He said if a
person is drinking at 8 and 9 a.m., with some exceptions, there
is a real problem.
Number 1483
REPRESENTATIVE HAYES stated that the bill says that the bars are
to close at 2:30 a.m. Monday through Friday, and pointed out
that Fairbanks is [already closing at] 2 a.m. [during the week],
and 3:30 a.m. on the weekends. He commented that this bill says
3 a.m. to comply with Anchorage. He stated that the big picture
needs to be looked at. He said if people need to leave the bar
at 3 a.m., then one still runs into the same problem.
MR. FELIX explained that the issue of opening bars later and
closing earlier addresses the availability [of alcohol]. He
said to have a really effective bill, bars and liquor stores
should open at 10 a.m. and close at 2 a.m., which is what most
states do. [HB 80 was held over.]
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
6:10 p.m.