Legislature(2003 - 2004)
04/28/2003 02:30 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 156 An Act increasing the motor fuel tax and repealing the special tax rates on blended fuels; and providing for an effective date. Vice-Chair Meyer MOVED to adopt work draft #23-GH1118\Q, Kurtz, 4/25/03, as the version of the bill before the Committee. Representative Croft OBJECTED. He asked about the missing exemptions. Co-Chair Williams replied that the difference represented the tax credits for the timber industry and fish waste. Representative Croft noted that it would get rid of the contingent effect on the constitutional amendment for the permanent fund. Co-Chair Williams advised that was the Governor's original bill. Representative Croft WITHDREW his OBJECTION. There being NO further OBJECTION, it was adopted. ROBYNN WILSON, (TESTIFIED VIA TELECONFERENCE), DEPARTMENT OF REVENUE, ANCHORAGE, offered to answer questions of the Committee. LANDA BAILY, SPECIAL ASSISTANT TO THE COMMISSIONER, DEPARTMENT OF REVENUE, noted that she had reviewed the committee substitute with Commissioner Corbus and that the Department does support the proposed bill. The bill would levy a twenty-cent per gallon tax on motor fuel. She added that this bill is a significant part of the Governor's package to address the current fiscal gap. Representative Croft MOVED to ADOPT Amendment #1. Co-Chair Williams OBJECTED. Representative Croft explained that the amendment would ask that the State appropriate the statutory amount for road maintenance assistance to the municipalities. The municipalities have over 40% of the roads in their maintenance jurisdiction. Currently, the State has been under-funding the statutory amount dedicated to roads at 10% funding. He acknowledged that Amendment #1 is a complicated amendment. The concept of the amendment gives less for municipal assistance for roads than the statute requires, reducing the amount of tax collected by that percentage. Representative Croft pointed out that this concern is usually addressed in the dedicated funds section. He reiterated that the concept is simple, if money is appropriated in the prior fiscal year, the amount in statute, the full amount for revenue sharing and road maintenance, and then collected for full tax. If less has been received, then that would be the percentage collected for that tax. Representative Stoltze asked if these funds would only go to organized governments or would rural areas also be able to collect. Representative Croft responded that there is a formula regarding the square miles of roads maintained by the municipality in the districts and that determination is made per road mile. JOHN MACKINNON, DEPUTY COMMISSIONER, DEPARTMENT OF TRANSPORTATION & PUBLIC FACILITIES, understood that formula was handled by the Department of Commerce & Economic Development. He noted that he had listened to testimony given by Kevin Ritchie, Alaska Municipal League (AML). He had given a good explanation for funds added for road maintenance. In the original Intermodal Surface Transportation Efficiency Act (ISTEA) crafted in Congress in 1991, Senator Ted Stevens placed a provision, 1-18-E, allowing only Alaska and Puerto Rico to use federal highway funds for community roads. In 1991, there was no federal highway trust fund dollars and that changed to the State being awarded $72 million dollars. There is a tremendous amount of highway dollars floating in the municipalities. Mr. MacKinnon reminded members that the proposed legislation was a measure to reduce the fiscal gap. He added that the Department of Transportation & Public Facilities sees this as a user fee. Representative Stoltze noted that the amendment contained a pro rata distribution for the more densely populated urban areas. He questioned the equity of the issue distribution. Representative Croft explained that it would limit the amount and if enough had not been received, then they would not collect the full amount of the tax. Nothing would be changed regarding the distribution by road miles. Representative Stoltze voiced his concern that the amendment would only benefit downtown Anchorage. Ms. Bailey pointed out the fluctuating amount indicated in the amendment. She stated that the original intent of the Governor was to address the fiscal gap and that the proposed legislation was an important piece of that package. A roll call vote was taken on the motion. IN FAVOR: Joule, Moses, Croft OPPOSED: Meyer, Stolze, Chenault, Foster, Williams Representative Whitaker, Representative Hawker and Co-Chair Harris were not present for the vote. The MOTION FAILED (3-5). Representative Croft MOVED to adopt Amendment #2, #23- GH1118\Q.2, Kurtz, 4/28/03. (Copy on File). Co-Chair Williams OBJECTED. Representative Croft explained that Amendment #2 would attempt an alternative approach. The amendment was recommended by the AML. It attempts to put together a fund that would place a portion of that money into assistance for the municipalities. Ms. Bailey stated the amendment seeks to place a structure in statute that would be counter to the Governor's original intent. Representative Croft argued that would depend on what the Governor's original intent was. Representative Croft noted that if it were to go for maintenance of a road, then it would be more compatible with the Governor's plan. The amendment diverts from the general fund specifically to road maintenance. He believed that would be what most Alaskans would want with the increase. A roll call vote was taken on the motion to adopt Amendment #2. IN FAVOR: Moses, Croft, Joule OPPOSED: Meyer, Stoltze, Chenault, Foster, Williams Representative Whitaker, Representative Hawker and Co-Chair Harris were not present for the vote. The MOTION FAILED (3-8). Co-Chair Williams MOVED to adopt Amendment #3, #23- GH118\Q.4, Kurtz, 4/28/03. (Copy on File). Representative Joule OBJECTED for the purpose of discussion. KEVIN JARDELL, ASSISTANT COMMISSIONER, DEPARTMENT OF ADMINISTRATION, explained Amendment #3, which is a technical amendment that identifies how the State purchases its fuel from resale to gasoline. Currently, when a reseller purchases fuel from a wholesaler, it pays the gas tax to the wholesaler. When the State purchases from the reseller, they can purchase the fuel without paying the gas tax. At that point, the reseller, under statute, can recoup the gas tax that it has paid from the Department of Revenue. Only a reseller of fuel can do that. One of the benefits of the new contract is that a State agency that has a high use of fuel, can go to any gas station, purchase that fuel with a State credit card and the reseller does not have to worry about going through the process of recouping the tax from the State. The credit card company pays the reseller the cost of the tax and the fuel. Under Amendment #3, the credit card company could go and recoup the tax it has paid. It would allow the full benefit, use of credit cards and expands where the State can purchase fuel given the benefit of not paying the tax. Representative Joule asked how "local government" would be defined. Mr. Jardell responded that local government agencies would go through certain levels. Ms. Wilson added that the statute identifies official use. The amendment would not change whether a government agency could receive a refund or not. It does not change the tax structure and would simplify paper work to make it whole. Representative Stoltze asked at what level would State government be defined. He stated for the record that he would not vote for a personal exemption. Mr. Jardell responded that it would only apply to State business as it now does. He reiterated that it would not apply to personal use. MIKE BARNHILL, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW, advised that the amendment would not change existing law. When on official business and using fuel, that person would be exempt. In response to comments made by Co-Chair Harris, Mr. Barnhill pointed out that the definition of motor fuel in current statute excludes purchases by State, local and federal government agencies for official use. Representative Foster asked if it would affect diesel fuel. Mr. Barnhill replied that it would. In response to queries by Representative Foster, Ms. Wilson explained that off-road vehicles and big equipment not used in conjunction with vehicle license, currently amounts to a net $.02 cents. Representative Joule asked if that would apply to the De Long transportation system, also known as the Haul Road. Ms. Wilson replied that the off-road refund would be available if the vehicle is not licensed to be used on public ways. Representative Joule WITHDREW his OBJECTION to Amendment #3. There being NO further OBJECTION, it was adopted. Representative Joule MOVED to ADOPT Amendment #4, #23- GH1118\H.2, Kurtz, 4/14/03. (Copy on File). Co-Chair Williams OBJECTED. Representative Joule explained the amendment, which provide for those areas not connected to road systems, continue to pay at the current rate. He emphasized that rural communities are already paying "huge" prices for fuel. Ms. Bailey inquired the effect of the amendment on the revenue derived from tax. Ms. Wilson responded that she did not know the numbers that would be foregone by the amendment. Wholesalers pay the tax in the State and they are not required to tell where the fuel is sold. She could not provide that information at this time. Ms. Bailey maintained that given the fact that Ms. Wilson was unable to access the net effect, it would be better for the Committee to pass the bill amended with only Amendment #3. She believed that Amendment #4 would have detrimental effects on the Governor's long-term plan. Co-Chair Williams encouraged Representative Joule to work with the Administration regarding his concern. A roll call vote was taken on the motion. IN FAVOR: Moses, Joule OPPOSED: Stoltze, Chenault, Foster, Meyer, Harris, Williams Representative Whitaker, Representative Hawker and Representative Croft were not present for the vote. The MOTION FAILED (2-6). Representative Foster commented that within his district, there are airports instead of roads. There are 50 runways that serve the population. The Department of Transportation & Public Facilities spends $10 million dollars a year in the Northern Region. He claimed that was a good return on their money and that the money on the gas tax would be helping out those area runways and keeping them open for emergencies. Representative Foster supported the 3% increase to keep airports open and roads working. Village areas do not spend much on keeping their infrastructure in tact and it is crucial to keep runways open. He acknowledged that everyone must pay a little to help up with the expenses. Co-Chair Harris asked Representative Foster how much he paid for fuel in his area. Representative Foster responded that cost fluctuates between $1.75 and $4.00 dollars per gallon. Co-Chair Williams stated that HB 156 would be HELD in Committee for further consideration.