Legislature(1995 - 1996)
02/07/1996 01:40 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HOUSE BILL 272
"An Act relating to municipal taxation of motor
vehicles; and providing for an effective date."
Co-Chair Hanley explained that HB 272 would allow
municipalities that impose a motor vehicle registration tax
to increase or decrease the schedule currently set in
statute. Currently, there is no provision to change or
update the fee schedule. The change would relieve the
Legislature of the burden of adjusting rates by legislation.
He continued, a municipality electing to change its rates
would be required to pass an ordinance in support of the
change, and provide written notice of the change to the
Department of Public Safety (DPS) at least one year before
it would take place. The opportunity for change would be
available once every two years.
Co-Chair Hanley pointed out that the municipality would pay
the one time programming cost for the change incurred by the
Department. The Department would collect 8% of the gross as
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a collection fee; a rate increase would result in a larger
base for collection.
Co-Chair Hanley emphasized that HB 272 would put the
responsibility for change where it belongs, with the
municipality. Each municipality should be able to choose
reasonable tax rates suited to its needs and situation. The
local ordinance provision and the democratic process would
sufficiently protect the public from unreasonable tax rates.
SCOTT STERLING, (TESTIFIED VIA TELECONFERENCE), MAT-SU
ASSEMBLY BOROUGH, MAT-SU, testified in support of the
legislation. He noted that HB 272 would provide a good tool
for the municipalities to reform taxes at a local level. He
pointed out that roads, transportation and vehicles impose
major costs both individually and legislatively. He urged
Committee members to give favorable consideration to the
legislation.
Representative Martin mentioned that he was a strong
advocate of local government having the freedom to raise
taxes. He thought that the municipalities should be
responsible for the tax collection. Co-Chair Hanley
explained that would not be an incentive to the State to
increase taxes; the municipality would determine the tax
level. The fees are set in statute at 8% which is
determined by the Legislature. Representative Navarre
pointed out that the fees had been raised from 5% to 8% in
order to reflect the true costs of administering the
program. He informed members that for the municipalities to
administer the program would cost 30%.
JAY DULANY, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
DIVISION OF MOTOR VEHICLES, DEPARTMENT OF PUBLIC SAFETY,
testified in support of the legislation and offered to
answer any questions of the Committee.
PATRICK POURCHOT, LEGISLATIVE DIRECTOR, OFFICE OF THE
GOVERNOR, clarified the Knowles Administration support of
the proposed legislation. He emphasized the importance of
the fiscal note. Mr. Pourchot stated that the Governor has
encouraged municipalities to raise revenues on their own in
order to pay for more services. The Governor has agreed
that the legislation would be the most efficient way to
provide an enhanced revenue source.
TIM ROGERS, (TESTIFIED VIA TELECONFERENCE), LEGISLATIVE
PROGRAM COORDINATOR, MUNICIPALITY OF ANCHORAGE, ANCHORAGE,
echoed the municipalities support for HB 272. He noted that
this legislation has been a municipality priority for the
past couple years. Currently, the cost of road maintenance
for the municipality is primarily covered by property taxes.
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The municipality believes if they can adjust the automobile
tax, some of the burden will be shifted from the property
owner to the user.
Mr. Rogers commented that Anchorage has a serious "junk" and
abandoned vehicle problem which costs the municipality $100
thousand dollars a year to control. He stated that the
proposed legislation would provide the municipalities a more
effective tool to address that concern.
Representative Martin asked how the legislation would effect
the tax cap and if that decision would be presented to the
voters. Mr. Rogers thought that shift would stay within the
tax cap; instead, there would be a shift to the tax burden.
The changes would not require support of the voters but
rather approval of the Assembly.
RICHARD WOODIN, (TESTIFIED VIA TELECONFERENCE), ALASKA
AIRMEN ASSOCIATION, KENAI, spoke in support of the
legislation which would provide a means to reduce personal
property taxes inclusive of boats and airplanes. He
remarked that solution would be "more equitable".
Representative Navarre pointed out that a municipality would
be precluded from implementing the taxes until 1998. Co-
Chair Hanley advised current language in the bill would
provide the Department time to make the necessary changes
for the smooth operation of fee schedules.
BONNIE GOLDEN, (TESTIFIED VIA TELECONFERENCE), KENAI
PENINSULA BOROUGH, KENAI, noted that the Kenai Peninsula
Borough Assembly and administration support HB 272. She
advised that the bill would amend the Alaska Statutes by
adding a new subsection to A.S. 28.10.431. If amended, the
Statutes would provide municipalities the option of revising
the tax schedule as it applies to motor vehicle taxation
within their jurisdiction. Revisions could not be made more
that once every two years. [Copy of testimony on file].
KEVIN RITCHIE, ALASKA MUNICIPAL LEAGUE, ALASKA CONFERENCE OF
MAYORS, JUNEAU, voiced support of the proposed legislation
noting that it was a high priority for both groups he
represented. He offered to answer questions of Committee
members.
Representative Martin asked why the people of the
municipality were not given the opportunity to discuss the
impact of the new taxes. Mr. Ritchie stated that any change
would be made by "ordinance". The ordinance process makes
it difficult to pass a tax which would require receiving a
community consensus on how to best allocate the burden.
Strict allocation of revenue is not usually done on the
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municipal level, although the intent is honored in almost
all cases.
In response to Representative Martin's comment,
Representative Navarre clarified that fees were raised to
reflect the Department's true costs of administering the
program. The service provides a "win/win" situation for all
parties involved and has been negotiated between the
Department and the municipalities for the fair costs of
running the program. Representative Martin argued that it
would be a win/win situation for everyone except the
taxpayer. Representative Navarre stressed that the
Department should set the fee by regulation.
Co-Chair Hanley pointed out the program would be optional.
The language of the legislation would provide that
flexibility if desired by the municipality.
(Tape Change, HFC 96-28, Side 2).
DOYLE HOLMES, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
testified in support of passage of HB 272. He remarked that
it would result in increased revenue to the State. Mr.
Holmes noted that the flat tax passed last year, allowed the
municipality to make that tax a portion of their revenue
source. With passage of the legislation, the Assembly would
then be able to implement the flat tax on automobiles which
would also increase State revenues.
Representative Navarre MOVED that work draft, #9-LS0841\F,
Ford, 1/26/96, be the version before the Committee. There
being NO OBJECTION, it was adopted.
Representative Navarre MOVED to report CS HB 272 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 272 (FIN) was reported out of Committee with a "do
pass" recommendation and with a fiscal note by the
Department of Public Safety and a zero fiscal note by the
Department of Community and Regional Affairs.
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