2003-03-06                     Senate Journal                      Page 0398
SB 112                                                                                            
SENATE BILL NO. 112 BY THE SENATE RULES COMMITTEE                                                   
BY REQUEST OF THE GOVERNOR, entitled:                                                               
                                                                                                    
             "An Act increasing the motor fuel tax and repealing                                   
            the special tax rates on blended fuels; and providing                                  
          for an effective date."                                                                   
                                                                                                    

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was read the first time and referred to the Transportation and Finance                              
Committees.                                                                                         
                                                                                                    
The following fiscal information was published today:                                               
 Fiscal Note No. 1, Department of Revenue                                                           
 Fiscal Note No. 2, zero, Department of Environmental                                               
 Conservation                                                                                       
                                                                                                    
Governor's transmittal letter dated March 5:                                                        
                                                                                                    
Dear President Therriault:                                                                          
                                                                                                    
Under Authority of article III, section 18, of the Alaska Constitution, I                           
am transmitting a bill that would increase the state's highway motor                                
fuel tax rate from 8 cents a gallon to 20 cents a gallon and repeal the                             
special rate for gasohol.                                                                           
                                                                                                    
In order for Alaska's economy to grow and diversify, we must expand                                 
and improve our transportation infrastructure. To do this, we must                                  
adequately fund highway construction and maintenance activities.                                    
Currently, Alaska spends nearly $50 million per year in general funds                               
to match our federal highway capital program and nearly $60 million                                 
dollars per year on maintenance.                                                                    
                                                                                                    
At the current eight cents per gallon, Alaska's highway motor fuel tax                              
rate is now the lowest in the nation. Even after the proposed increase,                             
thirty-eight states would have higher rates, and Alaska's fuel tax would                            
be at the 20 cent national average. In fact, had the tax rate been                                  
indexed for inflation when it was initiated in 1961, it would be nearly                             
2½ times the rate proposed in the bill.                                                             
                                                                                                    
Under existing law, revenue from the motor fuel tax used on roads and                               
highways is deposited in a highway fuel tax account in the general                                  
fund. This fund is available for maintenance and construction of                                    
highway projects and ferries.                                                                       
                                                                                                    
This bill also deletes AS 43.40.010(a)(4) and AS 43.40.010(b)(4),                                   
which provides a special tax rate for blended fuel. Working with                                    
industry and private citizens, Alaska no longer requires the use of                                 
oxygenated fuels to meet air quality standards. However, the U.S.                                   
Environmental Protection Agency requires that the state be able to                                  

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rapidly re-impose a requirement for the use of oxy fuels should air                                 
quality deteriorate. This legislation will not impact the state's ability to                        
do so.                                                                                              
                                                                                                    
This proposal represents a modest, user-pays approach to expanding                                  
and improving our state's transportation infrastructure.                                            
                                                                                                    
I urge your prompt and favorable action on this measure.                                            
                                                                                                    
Sincerely,                                                                                          
/s/                                                                                                 
Frank H. Murkowski                                                                                  
Governor