03/19/2013 01:30 PM House FINANCE

HOUSE BILL NO. 19                                                                                                             
                                                                                                                                
     "An   Act   relating   to   permanent   motor   vehicle                                                                    
     registration;  relating  to  the registration  fee  for                                                                    
     noncommercial  trailers and  to the  motor vehicle  tax                                                                    
    for trailers; and providing for an effective date."                                                                         
                                                                                                                                
1:55:36 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  noted  that  he  had  the  Department  of                                                                    
Administration  (DOA)   online.  He  reminded   that  public                                                                    
testimony  had been  taken on  the bill  in a  prior finance                                                                    
meeting.  He  imagined  that  most  people  appreciated  the                                                                    
notion of  permanent registration. He  anticipated questions                                                                    
about the  fiscal note.  He asked staff  to provide  a brief                                                                    
overview of the legislation.                                                                                                    
                                                                                                                                
DARRELL   BREESE,   STAFF,  REPRESENTATIVE   BILL   STOLTZE,                                                                    
explained  that HB  19 allowed  for permanent  registration,                                                                    
offered  through the  Division of  Motor Vehicles  (DMV) for                                                                    
non-commercial  motor vehicles  older than  eight years  and                                                                    
non-commercial   trailers  older   than  eight   years.  The                                                                    
permanent  registration would  cost $25  in addition  to the                                                                    
regular biannual  registration. The owner of  the vehicle or                                                                    
trailer had  a choice to  pay biannual registration  fees as                                                                    
established in  statute or to  select the  permanent vehicle                                                                    
or trailer  registration. He pointed out  that the permanent                                                                    
registration for  vehicles or trailers  was nontransferable.                                                                    
If  a  vehicle or  trailer  was  sold,  the new  owner  must                                                                    
register with DMV.                                                                                                              
                                                                                                                                
Co-Chair  Stoltze pointed  out the  "opt-out" provision  for                                                                    
the municipalities.                                                                                                             
                                                                                                                                
Mr.  Breeze added  that the  bill  offered municipalities  a                                                                    
provision to establish their  own motor vehicle registration                                                                    
tax  rate for  vehicles  that  were permanently  registered.                                                                    
Currently municipalities had the option  based on the age of                                                                    
the vehicles, but HB 19  allowed municipalities to adopt, by                                                                    
ordinance passed by city council or a local assembly.                                                                           
                                                                                                                                
Co-Chair  Stoltze   added  that  the   municipalities  could                                                                    
collect the portion  of the registration fee  that the state                                                                    
provided  to  local governments.  He  wished  to provide  an                                                                    
option for  the public to  avoid government fees.  He stated                                                                    
that he himself  had an older boat trailer  and pickup truck                                                                    
and was  impacted by  the legislation.  He wished  to detail                                                                    
the fiscal note.                                                                                                                
                                                                                                                                
AMY  ERICKSON, DIVISION  OF  MOTOR  VEHICLES, DEPARTMENT  OF                                                                    
ADMINISTRATION, was available to answer questions.                                                                              
                                                                                                                                
2:00:20 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki  asked why the DMV  collected on the                                                                    
behalf  of some  municipalities. Ms.  Erickson did  not have                                                                    
the history.                                                                                                                    
                                                                                                                                
Co-Chair Stoltze commented on  the assumptions stated on the                                                                    
fiscal  note. He  noted that  the  department projected  the                                                                    
fiscal  impact   or  revenue   loss  based   on  predictions                                                                    
regarding choice  of permanent  registration. He  added that                                                                    
the permanent  registration might  not benefit  those people                                                                    
who chose  to leave Alaska  to relocate to another  state or                                                                    
country.                                                                                                                        
                                                                                                                                
2:02:40 PM                                                                                                                    
                                                                                                                                
Representative  Gara   asked  to  combine   his  legislation                                                                    
related  to permanent  licensing registration   for  hunting                                                                    
and fishing.                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze answered  that he  had concerns  about the                                                                    
fish and  game fund and  the effect  that a combined  act of                                                                    
legislation  would have,  although  he was  amenable to  the                                                                    
concept.                                                                                                                        
                                                                                                                                
Representative  Gara  stated  that  his bill,  HB  157,  was                                                                    
written to avoid any impact on the fish and game fund.                                                                          
                                                                                                                                
2:03:48 PM                                                                                                                    
                                                                                                                                
Vice-Chair   Neuman   expressed   concern   about   two-year                                                                    
registration for  DMV, which was implemented  to help reduce                                                                    
division costs.  Since DMV brought  in more money  than they                                                                    
needed, he suggested  legislation to reintroduce single-year                                                                    
registration.                                                                                                                   
                                                                                                                                
Co-Chair Stoltze  stated that  the department  was unwilling                                                                    
to  provide information  regarding  the fiscal  impact of  a                                                                    
return to a single-year registration.                                                                                           
                                                                                                                                
Representative Wilson asked about  the loss of revenue shown                                                                    
in  the  fiscal  note.  She  asked  if  the  division  would                                                                    
continue to  operate with a  surplus if HB 19  were enacted.                                                                    
Ms. Erickson replied yes.                                                                                                       
                                                                                                                                
Co-Chair  Stoltze   pointed  out  the   short-term  positive                                                                    
earnings  in the  division's near  future, as  documented in                                                                    
the  fiscal note.  He  asked to  know  the exact  short-term                                                                    
impact on the department.                                                                                                       
                                                                                                                                
Ms.  Erickson  replied  that the  department  anticipated  a                                                                    
surplus greater  than $6,000,000  in 2014  and approximately                                                                    
$7,000,500  in  2015. The  calculations  were  based on  the                                                                    
number of  vehicles. The  department estimated  that 478,000                                                                    
motor  vehicles  and  115,000  trailers  were  eligible  for                                                                    
permanent registration.                                                                                                         
                                                                                                                                
2:06:05 PM                                                                                                                    
                                                                                                                                
Representative Gara asked if  the projection became negative                                                                    
over time.                                                                                                                      
                                                                                                                                
Ms.  Erickson   responded  that  most   vehicles  registered                                                                    
biannually would  no longer bring  revenue. The  increase of                                                                    
$25  for the  permanent  registration led  to the  projected                                                                    
surplus,  but  after  2015  the   revenues  were  no  longer                                                                    
available to the division.                                                                                                      
                                                                                                                                
2:06:50 PM                                                                                                                    
                                                                                                                                
Representative Gara asked for an  estimate of annual loss to                                                                    
the division or communities.                                                                                                    
                                                                                                                                
Ms.  Erickson  stated that  the  revenue  loss impacted  the                                                                    
state  rather than  DMV. She  clarified  that once  vehicles                                                                    
were   permanently  registered,   the  revenue   loss  would                                                                    
compound.                                                                                                                       
                                                                                                                                
Co-Chair Stoltze clarified that  the projections were merely                                                                    
speculations.                                                                                                                   
                                                                                                                                
2:07:34 PM                                                                                                                    
                                                                                                                                
Vice-Chair Neuman  questioned the  assumption of  the fiscal                                                                    
note. He  supposed that  some people  might learn  about the                                                                    
option and choose  to register a vehicle  that was otherwise                                                                    
ignored, leading to further revenue for the state.                                                                              
                                                                                                                                
Co-Chair Stoltze agreed that speculations were merely that.                                                                     
                                                                                                                                
Representative  Munoz  asked  about the  percentage  of  the                                                                    
permanent fee  that was to  be shared with  communities. She                                                                    
asked if the formula would remain consistent.                                                                                   
                                                                                                                                
Mr.  Breese responded  that the  permanent registration  fee                                                                    
went  directly to  DMV and  thus the  state. The  cities and                                                                    
municipalities that had motor  vehicle registration tax were                                                                    
those  that  were  passed  and  approved  by  each  separate                                                                    
community.   The  permanent   registration   fee  would   be                                                                    
appropriated as the legislature chose.                                                                                          
                                                                                                                                
Co-Chair Stolze  agreed and  clarified that  the legislature                                                                    
appropriated funds through  the constitutional appropriation                                                                    
process.                                                                                                                        
                                                                                                                                
Representative  Munoz asked  the  estimated  savings to  the                                                                    
individual for the average life of a car.                                                                                       
                                                                                                                                
Mr.  Breese  stated  that  the   savings  was  difficult  to                                                                    
estimate. He noted  that the average age of  vehicles in the                                                                    
state   was  13   years  old.   Five   years  of   permanent                                                                    
registration  was  calculated  in  an  estimate  making  the                                                                    
savings difficult to discern.                                                                                                   
                                                                                                                                
Co-Chair Stoltze opined that government  gets its tax out of                                                                    
the vehicle at some point.                                                                                                      
                                                                                                                                
2:11:06 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:13:22 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative  Kawasaki MOVED  Amendment  1  to be  written                                                                    
properly for the floor.                                                                                                         
                                                                                                                                
     Page 1, line 2, following "trailers;":                                                                                     
     Insert   "providing   that  permanent   motor   vehicle                                                                    
     registration  may not  be  considered when  determining                                                                    
     the eligibility  of an individual for  a permanent fund                                                                    
     dividend;"                                                                                                                 
                                                                                                                                
     Page 5, following line 2:                                                                                                  
     Insert a new bill section to read:                                                                                         
      "* Sec. 8. AS 43.23.015(a) is amended to read:                                                                            
     (a)   The  commissioner shall  adopt regulations  under                                                                    
     AS 44.62    (Administrative   Procedures    Act)   [THE                                                                  
     ADMINISTRATIVE    PROCEDURE    ACT   (AS 44.62)]    for                                                                    
     determining   the   eligibility  of   individuals   for                                                                    
     permanent fund dividends.  The commissioner may require                                                                    
     an individual to provide proof  of eligibility, and the                                                                    
     commissioner may  use other information  available from                                                                    
     other state  departments or  agencies to  determine the                                                                    
     eligibility  of an  individual. The  commissioner shall                                                                    
     consider all relevant  circumstances in determining the                                                                    
     eligibility    of   an    individual.   However,    the                                                                  
     commissioner  may  not  consider   the  issuance  of  a                                                                  
     permanent    motor     vehicle    registration    under                                                                  
     AS 28.10.155   as   a   factor   in   determining   the                                                                  
     eligibility of  an individual, and the  residency of an                                                                  
     individual's  spouse may  not be  the principal  factor                                                                    
     relied  on [UPON]  by the  commissioner in  determining                                                                  
     the residency of the individual."                                                                                          
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative    Kawasaki   discussed    policy   regarding                                                                    
qualification  for the  Permanent  Fund  Dividend (PFD).  He                                                                    
stated that  establishing residency  for the PFD  used proof                                                                    
of  home  ownership,  employment  records,  school  records,                                                                    
voter registration,  motor vehicle registration  records and                                                                    
licenses  for  items  or  activities  such  as  hunting  and                                                                    
fishing.  He wanted  to ensure  that the  bill was  not used                                                                    
exclusively to  determine or establish residency.  He wanted                                                                    
to  ensure that  the  person did  have  a permanent  vehicle                                                                    
registration. He planned to amend  his amendment in the near                                                                    
future to allow the registration  to be used for eligibility                                                                    
for the PFD.                                                                                                                    
                                                                                                                                
2:14:46 PM                                                                                                                    
                                                                                                                                
Representative   Wilson   pointed   out   that   a   vehicle                                                                    
registration was  considered proof  of Alaskan  residence in                                                                    
the PFD application process.                                                                                                    
                                                                                                                                
Representative  Gara  explained  that  some  people  applied                                                                    
dishonestly  for  the  PFD.   The  commissioner  utilized  a                                                                    
vehicle  registration when  determining residency,  but with                                                                    
HB 19, a  person might pay $25 one time  and continue to use                                                                    
the documentation  to prove  that they  were eligible  for a                                                                    
PFD.                                                                                                                            
                                                                                                                                
Co-Chair  Stoltze countered  that a  negative trigger  often                                                                    
provided a red flag.                                                                                                            
                                                                                                                                
Representative Kawasaki WITHDREW his amendment.                                                                                 
                                                                                                                                
Representative Costello detailed the  fiscal note. She noted                                                                    
the change in revenues for FY  14 - FY 19, which illustrated                                                                    
a  fiscal  impact  of  $100,100   for  FY  14  for  database                                                                    
upgrades. The fiscal note also  illustrated changes in state                                                                    
revenues for  FY 14 as an  increase of $5,346,000, in  FY 15                                                                    
an increase of $5,982,000, FY  16 a decrease of $17,836,000,                                                                    
FY  17  a decrease  of  $20,128,000,  FY  18 a  decrease  of                                                                    
$20,128,000 and FY 19 projected a decrease of $22,420,000.                                                                      
                                                                                                                                
Co-Chair Stoltze clarified that  the fiscal note projections                                                                    
were purely speculative.                                                                                                        
                                                                                                                                
2:19:03 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Neuman  MOVED  to REPORT  CSHB  19(TRA)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative Kawasaki OBJECTED                                                                                                
                                                                                                                                
Representative   Kawasaki  noted   that   the  bill   packet                                                                    
contained collections  for communities with a  motor vehicle                                                                    
registration  tax.  He  pointed out  that  some  communities                                                                    
would feel a significant impact  from the revenue losses. He                                                                    
WITHDREW his OBJECTION.                                                                                                         
                                                                                                                                
CSHB  19  (TRA)  was  REPORTED out  of  committee  with  "no                                                                    
recommendation"  and  with  one  new fiscal  note  from  the                                                                    
Department of Administration.                                                                                                   
                                                                                                                                
2:20:35 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:23:03 PM                                                                                                                    
RECONVENED