Legislature(1993 - 1994)
03/09/1993 01:00 PM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 143: MARINE FUEL TAX REVENUE SHARING Chairman Olberg reconvened the meeting at 1:36 p.m. with Representative Williams joining the committee, and SSHB 143 was brought forth. REPRESENTATIVE TOOHEY MOVED that the committee substitute for the sponsor substitute for HB 143 (CRA) (CSSSHB 143 (CRA)) be adopted. Without objections, IT WAS SO ORDERED. Number 521 REPRESENTATIVE MACKIE, PRIME SPONSOR OF HB 143, testified addressing a proposed amendment to CSSSHB 143, "It was suggested by Representative Davies in the last meeting that ...the committee wanted to have language in there that the money collected had to be used for harbor facilities, so if I can direct your attention to the amendment which is offered by [Jack] Chenoweth [Legislative Legal Counsel]..." He then described the amendment. (A copy of this amendment may be found in the House Community and Regional Affairs Committee Room, Capitol 110, and after the adjournment of the second session of the 18th Alaska State Legislature, in the Legislative Reference Library.) REPRESENTATIVE DAVIES MOVED that the AMENDMENT be ADOPTED by the committee. Without objections, IT WAS SO ORDERED. Number 540 REPRESENTATIVE MACKIE referred to a letter from the City of Craig which specified the losses they incur. He said, "They expect for FY 93 to generate 61,000 dollars in revenues, they are anticipating the expenditures for (FY) 1993 to be 82,000 (dollars) therefore being 20,000 dollars short... The expenditures are expected to be about 37,000 dollars more to the city in the next year. Based on last year's (1992) taxes that were collected there, the City would expect to receive about 20,000 dollars from that tax money so there would still be a void..." REPRESENTATIVE MACKIE continued, "Depending on each municipality or each location with harbor facilities, they would need to determine themselves whether or not it was in their best interest to assume control of any of these harbors. This would only serve as an incentive for some of them to do it." Number 572 JUD FAGER, ASSEMBLYMAN AND DEPUTY MAYOR, CITY AND BOROUGH OF SITKA, testified via teleconference in support of HB 143 saying, "Marine fuel tax...was originated by the state to help finance harbors and infrastructure, but the state's position of a relinquishing maintenance and infrastructure for harbors... With the state's declining revenues and desire to cut government spending... Who better to run the harbors than the local communities?" Number 593 REPRESENTATIVE BUNDE asked Larry Meyers, Director of the Income and Excise Audit Division, Department of Revenue, "Do you see that this would erode any of the money available?" LARRY MEYERS, DIRECTOR, INCOME AND EXCISE AUDIT DIVISION, DEPARTMENT OF REVENUE, replied, "This will not erode. There is a basic concern that we have as far as the administration and collection. ...Currently we only track at the wholesale level and the bill (HB 143) as presented would attempt to trace the sale of fuel back to the individual locality, and as the forms are now set up and the way we track, we're not capable of doing this." CHAIRMAN OLBERG asked at what point was the fuel tax being charged. MR. MEYERS said, "At the wholesaler level. The first time that it's purchased or transferred coming in within the state." CHAIRMAN OLBERG asked, "A fuel dealer in Craig does not collect any fuel taxes?" REPRESENTATIVE TOOHEY asked, "Do you support this bill (HB 143)?" MR. MEYERS said, "Right now we're in a neutral position." REPRESENTATIVE TOOHEY said, "From what you say, you're losing thousands of dollars by not being able to track the fuel, is that correct?" MR. MEYERS said, "My concern here is trying to make sure we would allocate the amount that was used in that particular area. I'm saying we're not capable of tracking it..." CHAIRMAN OLBERG said, "It seems it would be relatively simple, to determine how many gallons of fuel were sold in Craig, Alaska, for example." Number 654 REPRESENTATIVE MACKIE said, "I was unaware that that's how it operates... I cannot believe that it would be very hard for Fuel Company X to fill out a form that says I collected 100,000 dollars in fuel tax this year within the City of Craig. ...If we're not asking them to do that, if we're not collecting the money as it's being sold...then obviously, we are losing out on a considerable amount of money." CHAIRMAN OLBERG said, "I wonder if, in fact, the tax you're paying when you buy fuel kind of travels up the line to some point where the [Department of] Revenue is keeping track of the fuel at one end of the system or the other." REPRESENTATIVE MACKIE interjected, "Perhaps they don't jive, either." REPRESENTATIVE BUNDE said, "It makes little difference where the tax is actually paid... All you really need to know is how much is that tax and how many gallons were pumped at that particular locale." Number 680 REPRESENTATIVE MACKIE said, "If this was straightened out somehow, this bill (HB 143) might be a considerable revenue enhancer to the state." He added, "Why wouldn't the Department of Revenue ask each fuel company that does business in the state to submit to them a report as to how many actual gallons of marine fuel they sold and how many tax dollars they collected on that fuel. If they're required to charge the tax, they certainly ought to be required to report that to you, community by community or fuel company by fuel company..." MR. MEYERS replied, "The tax is charged at the wholesale level at that one time, that is the reporting requirements. Then it can be moved down the line to dealer by dealer. It is passed with the tax on. ...So you, as the ultimate consumer, you have that additional tax you're paying for, but it's just pulling back up the line...we are not concerned who the ultimate consumer is." TAPE 93-11, SIDE B Number 000 CHAIRMAN OLBERG said, "All we need to know is how many gallons of fuel were sold in that city that year to do the arithmetic." MR. MEYERS said, "That would be a start, yes. ...We're not set up to track that..." REPRESENTATIVE MACKIE asked, "Why wouldn't the Department [of Revenue] be able to change how they do it a little bit and just require any fuel retailer to submit their report... It seems that would be a more accurate, more efficient way to handle the accounting practices." Number 049 MR. MEYERS replied, "In collecting taxes, it has been our experience that if you try to get at the first source when it comes into the state rather than when it filters down, it makes our reporting requirements, ability to monitor, a lot easier if we collect it the first time it comes in the state. As it is right now, motor fuel distributors are required to file on a monthly basis. If we were to go down another level, we would probably increase our paperwork three, four, five-fold times. Each time we rely on someone further on down the stream to report, we have less and less chance of catching them or making sure that there's compliance." REPRESENTATIVE BUNDE pointed out there were a limited number of municipal-owned docks in Alaska and "it's in the municipality's interest" to do any additional accounting. CHAIRMAN OLBERG said, "That's a good point...put the burden of providing the necessary information on the municipality that's going to actually receive the benefit. ...I suspect there's even a tax structure already in place through sales taxes..." He also pointed out the Department of Revenue's fiscal note. (A copy of this fiscal note may be found in the House Community and Regional Affairs Committee Room, Capitol Room 110, and after the adjournment of the second session of the 18th Alaska State Legislature, in the Legislative Reference Library.) Number 117 MR. MEYERS responded to the $40,000 contractual amount on the fiscal note, "It was our intentions in the first year, on page 3 of the fiscal note, would be for a survey to determine how many linear feet of the wharfage. Someone would have to go out there and physically measure this..." REPRESENTATIVE BILL WILLIAMS said, "You'd think you have that information now." CHAIRMAN OLBERG said, "In every case we're talking about a facility that used to be a state facility and is now a city facility. You would think that those figures are on file somewhere from when the dock was built... I think we just saved you 40,000 bucks here." REPRESENTATIVE MACKIE pointed out that on the Department of Transportation's (DOT) list of harbors provided to the committee members, this information had been furnished. (A copy of this fiscal note may be found in the House Community and Regional Affairs Committee Room, Capitol Room 110, and after the adjournment of the second session of the 18th Alaska State Legislature, in the Legislative Reference Library.) "DOT owns these facilities now, they know how many linear feet of dock they have on all these things," he said. Number 165 CHAIRMAN OLBERG said, "Perhaps the fiscal note is erring on the side of not wanting to be too small, possibly, because some of the information may in fact be on file. The cities could certainly bear the burden of collecting the tax information..." REPRESENTATIVE MACKIE said, "These communities that are presently affected by it certainly should make sure that the Department of Revenue has the information about how many feet. Perhaps the Department of Revenue wasn't aware that this information was available." REPRESENTATIVE WILLIAMS asked if another amendment was needed. REPRESENTATIVE MACKIE said, "Because this is state statute, we have to hold one of our agencies responsible, which is the Department of Revenue. However, Revenue can have a regulation. You don't legislate regulations. They can have a regulation that specifies that the municipality shall provide the Department of Revenue with the footage in their community and the information before Revenue cuts them a check... I think it would be somewhat unusual to mandate that responsibility to a municipality when we're talking about state general funds..." Number 245 DAN KECK, MAYOR, SITKA, via teleconference testified, "It's interesting to listen to your concerns of how this would be collected in Sitka. I can't see that this is a problem. We collect sales tax on all fuel that is sold now. So we can go back and check... So if we have this in our duties, we can easily collect the fuel tax." MR. FAGER added, via teleconference, "There's no way to do this on a wholesale level... All the tax would have to be collected at the retail level because that's the only way we would get accurate records. There are several ways, you could repeal the law as it is and we make it a local tax, if you can't figure out how to do it." REPRESENTATIVE MACKIE compared the forced receipts' legislation of several years ago which was "done by regulation" and was working well. Number 291 REPRESENTATIVE BUNDE made a MOTION to MOVE CSSSHB 143, as amended, out of committee with individual recommendations. Without objections, IT WAS SO ORDERED. ADJOURNMENT CHAIRMAN OLBERG adjourned the meeting at 2:10 p.m.
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