Legislature(2015 - 2016)BUTROVICH 205
03/26/2015 09:00 AM Senate STATE AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB35 | |
| SJR15 | |
| SCR4 | |
| SB22 | |
| HB93 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SJR 15 | TELECONFERENCED | |
| += | SCR 4 | TELECONFERENCED | |
| HB 93 | |||
| += | SJR 3 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 35 | TELECONFERENCED | |
| += | SB 22 | TELECONFERENCED | |
SB 22-MOTOR VEHICLE REG. TAX: COLLECTION COSTS
9:17:24 AM
CHAIR STOLTZE announced the consideration of SB 22.
9:17:43 AM
FORREST WOLFE, Staff, Senator Cathy Giessel, Alaska State
Legislature, Juneau, Alaska, read the following sponsor
statement:
Since the inception of the Motor Vehicle Registration
Tax system (MVRT) in 1993, the cost to the state of
collecting these taxes for municipalities have been
reduced considerably or the rate they take off the top
has not. The MVRT program was created not as a revenue
sharing program, but was intended in a sense to piggy-
back on the activities the state was already
conducting in order to produce revenues for
municipalities; with this understanding in mind, the
state should only be collecting the added cost it
incurs from operating the program, not sharing in the
added revenues with which the municipalities receive
from their citizens.
SB 22 proposes to reduce the amount the state collects
from 8 percent to 5.5 percent in order to more
accurately reflect the amount of work and resources
the state provides to municipalities for preforming
this service; this does not impose any new costs or
fees on the state or citizens, it simply reallocates
more of the collected funds to the cities themselves.
By allowing local governments to keep more of their
taxes, this revenue is kept closer to the citizens it
was intended to serve and therefore serves the people
better. With revenue sharing posed to be reduced in
these difficult fiscal times, allowing the
municipalities to retain more of their own revenues
makes sense.
9:19:27 AM
CHAIR STOLTZE asked if MVRT was the municipalities' only "bite
at the apple" for some revenues.
MR. WOLFE answered that he was not sure.
9:20:05 AM
AMY ERICKSON, Director, Division of Motor Vehicles, Anchorage,
Alaska, introduced herself and offered to answer questions.
CHAIR STOLTZE pointed out that SB 22 has a fiscal impact for the
state. He noted that the Division of Motor Vehicles (DMV) faces
deficits as well as the state. He asked if Ms. Erickson had
comments or concerns on SB 22.
MS. ERICKSON answered that SB 22 would not affect DMV's
operations, but the bill would affect the state's general fund.
She asserted that whether the state could afford to forgo
approximately $500,000 a year was a question for the
Legislature. She explained that the MVRT was established in 1978
and amended in 1993 to increase the amount the state retained.
She specified that the state's retention began at 5 percent and
raised to 8 percent in 1993.
SENATOR WIELECHOWSKI asked for an explanation as to how the
registration tax works for the municipalities. He asked to
confirm that the bill would result in more money going to the
municipalities.
MR. WOLFE explained that the state collect's their registration
fee as well as fees for 16 other municipalities.
9:22:41 AM
SENATOR WIELECHOWSKI asked if the bill lowers the registration
fee.
MR. WOLFE answered no. He specified that fees will not be
lowered, but rather the amount the state returns to the
municipalities. He said currently the state charges
municipalities 8 percent as an administrative fee. He specified
that the bill lowers the fee to municipalities to 5.5 percent.
He detailed that the reduction will be more in line with DMV's
actual administrative costs.
SENATOR WIELECHOWSKI asked to clarify that state receives 8
percent for managing the municipalities' license registration
taxes.
MR. WOLFE answered that the bill applies to vehicle registration
taxes, not license registration.
9:24:20 AM
SENATOR WIELECHOWSKI asked how the municipalities get their
money.
MR. WOLFE answered that the state had separate agreements with
each municipality. He detailed that vehicle registration fees
were collected for each municipality, less the state's 8 percent
fee.
SENATOR WIELECHOWSKI asked Ms. Erickson for an explanation as to
how the registration fees go to the municipalities and how the
bill increases money to the municipalities.
9:26:01 AM
MS. ERICKSON specified as follows:
For example, in the Municipality of Anchorage, my
vehicle is 8 years old and the MVRT applied by the
Municipality of Anchorage is $70, so I pay my $100
registration fee for the state and the $70 fee that
goes to the municipality; of that $70, 8 percent is
retained by the state and the rest is refunded to the
community. Of the 17 communities, they each have their
own established motor vehicle tax, so it would range
from $16, for example, to $70 for Anchorage and Mat-
Su.
CHAIR STOLTZE summarized that the bill does not change the fees,
the change is directed at the percentage for the transacted cost
for being the tax collector.
SENATOR WIELECHOWSKI asked if the municipalities were doing
additional work for the registration fees. He opined that the
state seems to be doing the bulk of the work and the
municipalities are completely not involved.
MS. ERICKSON answered true. She explained that the state
administers the program for each of the 17 municipalities.
SENATOR MCGUIRE noted that the state does a similar program with
school district appropriations. She added that administrative
fees often can erode the base of the dollars that people are
trying to collect for whatever their purposes.
SENATOR WIELECHOWSKI asked how the bill impacts the Anchorage
property tax cap.
9:29:34 AM
DANIEL MOORE, City Treasurer, Municipality of Anchorage,
Anchorage, Alaska, replied that the auto registration tax is a
payment in lieu of property tax. He explained that every dollar
collected in auto registration tax for the municipality is a
dollar decrease in the amount of property tax that is needed. He
said Anchorage increased its rate schedule in 2012, resulting in
increased auto tax registration revenues of $5 million to $6
million; that meant $5 million to $6 million less was needed
from property taxes.
MR. MOORE detailed that the 8 percent fee, which has not changed
since 1993, provides for DMV's administrative costs. He
explained that prior to the tax increase in 2012, the
municipality paid 45 percent of DMV's entire program cost, a
percentage that matched Anchorage having 45 percent of the
state's vehicles. He revealed that today the municipality pays
59 percent of all MVRT costs, but Anchorage still has 45 percent
of the state's vehicles. He remarked that Anchorage pays double
the amount for administration fees while not getting any
additional services. He asserted that Anchorage's MVRT increase
has been a windfall to DMV with an added $500,000 per year.
He explained that the bill corrects the situation by lowering
the administrative fee from 8 percent to 5.5 percent. He
specified that DMV would retain approximately $1 million, an
amount the division used to retain, and the $500,000 would be
spread across the state; Anchorage will annually recover
$300,000 and Mat-Su will recover $100,000. He said the 16 or 17
communities will basically receive a 3 percent increase in their
net revenues from DMV, resulting in more money to provide local
services or to reduce property taxes.
9:32:51 AM
CHAIR STOLTZE asserted that previous testimony had clearly
established that the state was overly gouging the recipient of
vehicle title or registration. He declared that his
constituents' hearts would not be warmed that the municipalities
are getting the money rather than the state. He asked if
consideration was ever given towards reducing the MVRT by giving
the money back to the people.
MR. WOLFE replied that he had no comment.
CHAIR STOLTZE asked if Mr. Wolfe had a philosophy about where
the money belongs.
MR. WOLFE replied that he did not feel comfortable commenting at
that time.
CHAIR STOLTZE asked Mr. Moore to comment.
9:34:23 AM
MR. MOORE explained that the difference between the city and the
state is that Anchorage has a tax-cap set by charter. When
Anchorage gets any type of tax, by charter the tax must be taken
into account within the municipality's cap, the result means
less money is being charged for property taxes. He noted that
one good thing about the MVRT is that a broader base of people
are paying than property taxes.
CHAIR STOLTZE replied that he understood the government aspect
and how it worked for government. He noted that he was concerned
for the people who were paying the MVRT. He asserted that people
did not care which government entity the tax goes to. He stated
that the crux of the bill will be the fiscal issue and the
referral to the Senate Finance Committee was appropriate. He
inquired if the committee members had reviewed the bill's fiscal
note. He confirmed that there would be a revenue shift from the
state to the municipalities. He asked if there was any other
public testimony on SB 22.
9:37:08 AM
SENATOR COGHILL commented that he would like to associate
himself with Chair Stoltze's remarks on the individuals in
Alaska and noted his appreciation. He conceded that the bill was
a finance issue.
He moved to report SB 22 from committee with individual
recommendations and the attached fiscal note.
9:37:28 AM
CHAIR STOLTZE announced that seeing no objection, SB 22 moved
out of the Senate State Affairs Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB93 Explanation of Changes.pdf |
SSTA 3/26/2015 9:00:00 AM |
HB 93 |
| HB93 Sectional Analysis (sponsor).pdf |
SSTA 3/26/2015 9:00:00 AM |
HB 93 |
| HB93 Sponsor Statement for SSTA.pdf |
SSTA 3/26/2015 9:00:00 AM |
HB 93 |
| HB93 Support Document - Email Kyle Brown 2-3-15.pdf |
SSTA 3/26/2015 9:00:00 AM |
HB 93 |
| SJR15 Opposition Document - Email Terry Russell 3-18-15.pdf |
SSTA 3/26/2015 9:00:00 AM |
SJR 15 |
| SJR15 Support Document - Email Mike Coons 3-26-15.pdf |
SSTA 3/26/2015 9:00:00 AM |
SJR 15 |
| SJR15 Support Document - Fax Stuart Thompson 3-25-15.pdf |
SSTA 3/26/2015 9:00:00 AM |
SJR 15 |
| SCR4 Support Document - Email Mike Coons 3-25-15.pdf |
SSTA 3/26/2015 9:00:00 AM |
SCR 4 |
| HB35 Support Document - Prepared Testimony Chuck Volanti 3-26-15.pdf |
SSTA 3/26/2015 9:00:00 AM |
HB 35 |