Legislature(2011 - 2012)BUTROVICH 205
03/27/2012 01:00 PM Senate TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| SB41 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 41 | TELECONFERENCED | |
SB 41-SUSPENDING MOTOR FUEL TAX
1:03:48 PM
SENATOR KOOKESH announced that the first order of business would
be SB 41.
MARC LUIKEN, Commissioner, Department of Transportation & Public
Facilities, (DOTPF) introduced SB 41. He emphasized that SB 41
is a two-year tax suspension, not a tax repeal. He pointed out
that this tax suspension is one of the many efforts that the
governor has put forward to improve the economic health of
Alaskans. Suspension of the motor fuel tax demonstrates a
consistent tax policy from the current administration. It would
provide immediate tax relief to every citizen in every community
across the state. The actual amount of money saved will vary
depending on the type of fuel purchased, but most consumers will
save up to 8 cents per gallon when fueling their boat, plane, or
automobile.
COMMISSIONER LUIKEN related that many Alaskan communities deal
with the highest energy costs in the nation. Relieving the
burden of the motor fuel tax is one step in this
administration's effort to improve Alaskan's daily living
expenses. With rising fuel prices - about $4.26 in Juneau
currently - it is important for every Alaskan to enjoy the
benefit of this tax suspension.
COMMISSIONER LUIKEN continued to say that in 2008 the motor fuel
tax suspension showed great success as fuel prices at the pump
dropped by 8 cents almost immediately. While suspending the
motor fuel tax provides a temporary reduction in the cost of
motor fuel, efforts are being introduced to provide long-term
solutions to Alaska's high energy costs.
COMMISSIONER LUIKEN explained that some people wonder how
suspending the motor fuel tax will impact Alaska's federal
funding for transportation. The state motor fuel tax has no
direct link to federal dollars. Historical data shows that those
states that have suspended or lowered their motor fuel tax saw
no penalty to their federal funding. Therefore, suspending the
motor fuel tax should have no impact on Alaska's federal highway
or airport funding. Federal fuel tax, also paid at the pump,
contributes to the federal highway trust fund. These funds are
redistributed back to the states via a formula set forth in
federal bills related to highways and their improvement.
He continued to say the surface transportation bill, which is
currently being debated in Congress, as well as the Federal
Aviation Reauthorization Act, which was passed and signed by the
President last month, have nothing to do with whether a state
collects a separate motor fuel tax. There is no federal
requirement for states to collect a gas tax to support
transportation. Additionally, Alaskans fund significantly more
for transportation than is collected in state motor fuel tax
revenue - close to 10 to 12 times more. The average state
funding through general fund for transportation was over $3
million per year for the last ten years. If a tax were to fund
the transportation budget, more than 80 cents per gallon would
be needed. Oil revenues fund the state government, not an 8
cents per gallon tax.
1:08:44 PM
COMMISSIONER LUIKEN referred to a spreadsheet in members'
packets that shows Alaska's general fund contribution to
transportation. There are only four states that contribute more
from their state general funds for transportation than Alaska.
He maintained one could not link the motor fuel tax revenue and
DOTPF's budget. The suspension of the motor fuel tax in 2008 did
not impact DOTFP's budget.
COMMISSIONER LUIKEN emphasized that suspension of the motor fuel
tax will significantly impact Alaska's economy. Rising fuel
prices will continue and added fuel costs will continue to be
passed on to the consumer by industries who ship and transport
goods. Suspending the fuel tax will benefit many of Alaska's
largest industries. The fishing industry will benefit
significantly from the suspension of the tax. United Fishermen
of Alaska indicated a suspension of the gas tax would likely
provide benefit to thousands of commercial fishermen statewide.
Trucking and aviation industries and the consumers that buy the
good those entities deliver will also benefit. Letters of
support have been received by the Alaska Air Carriers
Association, Alaska Airlines, Princess Lines, and the National
Federation of Independent Businesses.
COMMISSIONER LUIKEN concluded that there is no compelling need
to collect a motor fuel tax at this time. While suspension of
the tax will benefit every Alaskan in every community, some may
gain more than others, but it will be meaningful to all as this
money is put back into Alaskan's pockets.
1:11:21 PM
SENATOR MENARD recalled that under two governors the motor fuel
tax was repealed. She inquired if there was any interest now in
completely repealing the tax.
COMMISSIONER LUIKEN replied that he had not heard of that plan.
SENATOR MENARD suggested the possibility of suspending the tax
permanently.
1:12:50 PM
SENATOR EGAN wondered how the commissioner would address the
congressional delegation's concerns regarding the suspension of
the fuel tax.
COMMISSIONER LUIKEN stated that he presented them with the same
information he just presented the committee. He reiterated that
only four states pay more from their general funds than Alaska
does for transportation expenses. He related that fifteen states
contribute no general fund monies to their transportation
expenses. He suggested asking what those states are doing to
support transportation costs. He repeated that there is no
federal requirement for the state to have a motor fuel tax in
order to receive federal funding.
1:14:07 PM
SENATOR HUGGINS said he would not have supported an 8 cent fuel
tax. He suggested using rebates instead of a tax.
COMMISSIONER LUIKEN was not familiar with that program.
SENATOR HUGGINS said there used to be a rebate program.
SENATOR EGAN countered that since Alaskans don't pay state tax,
that 8 cents a gallon seems like a good deal. He stated that
driving is a privilege.
COMMISSIONER LUIKEN reiterated that there is no direct
correlation between the 8 cent tax and the DOTPF budget. The tax
does not fund the department's budget, but goes into the general
fund. If it were dedicated, then one could say the tax was a
good deal.
SENATOR EGAN pointed out that funds are not dedicated in Alaska;
however, the intent of the tax is there. He said he was upset
that the school tax was eliminated, as was the state income tax,
and he did not want to eliminate another tax.
COMMISSION LUIKEN noted that the bill suspends the tax and does
not eliminate it.
1:17:40 PM
SENATOR HUGGINS stated he would support repealing the tax.
COMMISSION LUIKEN urged the committee to pass SB 41.
SENATOR MENARD moved to adopt Conceptual Amendment 1: on page 1,
line 7, delete the year 2011 and insert 2012; also, on page 1,
line 7, delete 2013 and insert 2014. On page 2, line 5, delete
2013 and insert 2014.
Seeing no objection, Conceptual Amendment 1 was adopted.
1:19:40 PM
PAUL LANDIS, President, CIRI Alaska Tourism, Sitka, Alaska,
testified in support of SB 41. He stressed that the bill is good
for tourism and other industries, such as marine transport,
aviation, and highway businesses, that rely on tourism dollars.
The bill also helps tourism employees by decreasing their
individual energy costs.
1:20:50 PM
ED SNIFFEN, Assistant Attorney General, Department of Law,
Anchorage, Alaska, testified in support of SB 41. He spoke of
the success of the gas tax suspension in 2008. He thought the
impacts of the suspension in Juneau were delayed, but had a
positive impact, eventually. He referred to a May 2006 report by
the National Bureau of Economic Research that summarized the
effectiveness of the tax in Illinois.
1:23:47 PM
JOHANNA BALES, Deputy Director, Tax Division, Department of
Revenue, answered questions related to SB 41. She described the
process of claiming a refund for gas used for off-road purposes.
She noted that 8 cents a gallon for highway use and 5 cents for
marine use is a big deal for many Alaskans.
SENATOR MENARD said she thought a successful guiding business
might apply for a rebate. She gave an example of how the gas tax
would be calculated. She reiterated her idea to repeal the gas
tax.
1:26:46 PM
COMMISSION LUIKEN agreed that the people who apply for a rebate
consider it a benefit. He suggested that suspension is a first
step.
SENATOR HUGGINS said aviation fuel is taxed at 4.7 cents per
gallon. He opined that this issue was a political football the
last time it was worked on.
SENATOR MENARD asked if the tax was 5 cents for marine use.
MS. BALES clarified that the highway fuel tax is 8 cents, the
marine fuel tax is 5 cents, the aviation fuel tax is 4.7 cents,
and the jet fuel tax is 3.2 cents per gallon.
1:28:39 PM
SENATOR KOOKESH stated that SB 41 would be held in committee.
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