Legislature(1993 - 1994)
02/08/1994 08:00 AM House STA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 328 - BIENNIAL VEHICLE REGISTRATION Number 046 REPRESENTATIVE TERRY MARTIN, sponsor of HB 328, began with an overview of the committee substitute to HB 328. He thanked the Department of Finance and the Department of Environmental Conservation (DEC) for their contributions to the revised version of HB 328. There is now a savings of $300,000 dollars to the general fund which will be made up by fees. Changes include the date, the addition of picking up stalled or trashed vehicles, and the DEC will be the major enforcer of emissions control. Cities do not like the idea of collecting their own taxes, however, it will add to the efficiency of the registration process. REPRESENTATIVE MARTIN noted Anchorage as an example. JANE BUTLER, representing REPRESENTATIVE KOTT, explained the changes to HB 328. Sections 1-5 have no changes. Section 6 adds a motor vehicle pollution fee, while deleting the annual Motor Vehicle Registration Tax (MVRT). The MVRT will be transferred to municipalities. Sections 7-11 have no changes. Section 12 is corrected on page 6(15) to have no increase in fee. Section 13 allows the Division of Motor Vehicles (DMV) to collect the emission control program fee, which will be transferred to the DEC. Section 14 allows fees to be paid with a credit card. Section 15 is a conforming amendment to Section 16 having the municipalities impose the tax instead of the DMV. Section 16 changes the title from the DMV to the municipalities. The fee schedule is the same, but the reference to the DMV to collect the tax is deleted, page 8(c). Section 18 refers to the DEC administering the emission control program. DEC is to determine enforcement, regulation, and price of the program. Section 18(f) establishes a motor vehicle emissions control account in the general fund which the Environmental Protection Agency is in favor of. Section 19 deletes AS 28.10.108(b) by request of the DMV because it is no longer applicable to the current registration process. AS 28.10.431 will be repealed and a new statute will be enacted with the municipalities to cover the tax collection change. Section 20 allows the registration fee to be collected at the time of registration or renewal. Section 20(b) begins a start up fee on July 1, 1994, through December 1, 1994, which will cost $2 for six months before the biennial process begins. This fee will provide DEC with a start up fund to implement the emissions program. DEC's fee for biennial registration, which is yet to be determined, will begin on January 1, 1995. Number 208 REP. FRAN ULMER inquired if the transfer of the tax to the municipalities would really be more efficient. The increase of paperwork was as concern. Number 225 MS. BUTLER could not answer the question and deferred it to REPRESENTATIVE MARTIN to answer in later testimony. Number 237 CHAIR VEZEY noted the direction of HB 328 was to remove the DMV from the collection of municipal property taxes. He asked if the possibility of collecting taxes on a biennial basis was explored. MS. BUTLER believed not. The main accomplishment of HB 328 was to separate the DMV from the MVRT. Number 250 CHAIR VEZEY asked if the vehicle registration fees remained unchanged and if they still are one and one-half times the current rate. He noted the change to allow the DMV to collect a $2 emissions fee for the rest of the calendar year. MS. BUTLER replied the fee begins July 1, 1994. Number 257 CHAIR VEZEY emphasized the July 1, 1994, start up date and the effective date in Section 22 would be nullified without a two-thirds vote by both houses. Number 261 MS. BUTLER stated the DEC expects the administration costs for the emission control program will be covered by a fee of approximately $8 every two years. Number 263 CHAIR VEZEY questioned why the tax rate for vehicles is included in HB 328, if the DMV is getting out of collecting taxes. MS. BUTLER replied the original information was located in AS 28 which is under DMV. The information is being repealed from AS 28 to be in AS 29 under a municipalities statute. Number 299 CHAIR VEZEY asked who would be collecting the taxes under Section 16. MS. BUTLER responded the municipalities would be. Number 304 CHAIR VEZEY stated he understood why a state would need a statute if it needed to collect taxes, however, he did not understand why the legislature would need to be involved in the Anchorage municipality. Number 310 REPRESENTATIVE GARY DAVIS asked MS. BUTLER which of the fees or taxes are new to the municipality of Anchorage. Number 313 MS. BUTLER noted the MVRT under Section 16 is exactly the same as what is currently being charged. REPRESENTATIVE G. DAVIS believed Section 16 would be new. MS. BUTLER pointed out to REPRESENTATIVE G. DAVIS that the MVRT has always been collected. REPRESENTATIVE PETE KOTT stated there may be reason to remove Section 16 from HB 328 since there is not a fee change. REPRESENTATIVE BETTYE DAVIS requested the testimony of REPRESENTATIVE MARTIN on HB 328. Number 341 REPRESENTATIVE ULMER highlighted the principle purposes of HB 328 to REPRESENTATIVE MARTIN. She then questioned what the true efficiency would be of giving the MVRT back to the municipalities and wondered if it would be a duplication of the current state process. Number 359 REPRESENTATIVE MARTIN replied in the past individuals received and filled out a property tax statement. The DMV then began collecting taxes for the city. He believed this was done to make the people believe they were paying less in property taxes by having the state take care of it. The fees are included because the Alaska Constitution states only the Legislature has the power to tax and it shall never be surrendered; meaning the state has the power on all levels to impose taxes. The degree of taxation is included in Title 29 for municipalities. REPRESENTATIVE MARTIN noted the MVRT has become a burden to the state and just last year the DMV wanted to increase the fees to 35 percent. The cities, however, did not want to give them more money for collecting the fee. He felt the one form the city will provide would be more efficient than the transporting process from the state to the city. REPRESENTATIVE MARTIN emphasized Section 16 was included to show the changes occurring and his major concern with HB 328 was to decrease the lines at the DMV. REPRESENTATIVE B. DAVIS inquired if this process would provide the $300,000 savings. Number 423 REPRESENTATIVE MARTIN replied yes, and noted the DEC will be able to decrease the general fund allocation to about $260,000 and also collect fees on those who default on getting their registration. Decals are going to be provided to ease in the enforcement of inspection and registration control. Number 439 CHAIR VEZEY asked REPRESENTATIVE MARTIN if he believed Section 16 was needed to grant Anchorage the authority to takeover the MVRT. Number 442 REPRESENTATIVE MARTIN responded Anchorage already has the authority and it is for technical purposes to return it to Title 29. CHAIR VEZEY asked if the legislature structures property taxes for municipalities. REPRESENTATIVE MARTIN clarified the legislature allows the cities certain authority. Number 452 CHAIR VEZEY noted the legislature does not structure sales taxes. Number 453 REPRESENTATIVE MARTIN replied the authority (to structure taxes) is in Title 29. Number 454 CHAIR VEZEY wondered why the cities needed more authority than that given in Title 29 to do property taxes. Number 455 REPRESENTATIVE MARTIN answered past legislatures decided the MVRT would be the tax for various vehicles and experts believe it should now be in Title 29. Number 461 CHAIR VEZEY introduced JUANITA HENSLEY as the next witness. Number 474 JUANITA HENSLEY, representing the DMV, testified in favor of HB 328. MS. HENSLEY stated the DMV has been collecting 5-6 million dollars for 10 municipalities, eight percent of which is being kept to cover administrative costs. HB 328 will account for a 4.9 million dollar loss to the general fund which will be further increased without the eight percent collection. Section 16 of HB 328 will provide a set fee for the municipalities to collect the MVRT. Currently, the municipalities are set into a tax base when they agree to have the DMV collect their taxes. Therefore, without DMV available for collection, Section 16 will provide the municipalities with tax base guidelines. MS. HENSLEY proposed Section 16 be deleted and the authority be placed back with the municipalities under Title 29, but do not establish a set tax base structure. The municipalities could set it where they like. DMV is in favor of biennial vehicle registration to cut down on their lines and improve efficiency. Number 510 CHAIR VEZEY asked if it would be feasible to change the tax collection to a biennial period. Number 518 MS. HENSLEY did not know if there was a constitutional problem with collecting on a two year tax base, in which case, moving out of the state and eligibility for rebates would have to be a consideration. Number 522 CHAIR VEZEY noted people do not receive a rebate after buying an annual license and moving out of state after six months. Number 524 MS. HENSLEY replied there is a difference between an annual registration and an actual tax the state is collecting for the cities. Number 525 CHAIR VEZEY clarified the state is collecting the tax now and people who are living in Alaska only part of the year are not being rebated. Number 527 MS. HENSLEY agreed with CHAIR VEZEY. Number 528 CHAIR VEZEY was not aware of any constitutional problems with biennial tax collection. Number 530 REPRESENTATIVE ULMER questioned how the DMV felt towards the collection of the municipalities taxes and if this process was a stable situation as long as the fees to cover the administrative cost are being collected. Number 532 MS. HENSLEY replied the DMV has a neutral opinion. DMV is one of the revenue generators for the state, as it collects over 29 million dollars for the general fund. REPRESENTATIVE ULMER requested an overview of the fiscal note. Number 540 MS. HENSLEY noted the loss incurred with the change from two times the current rate to one and one-half times. The fee will be reduced from $70 to $53 every two years which will amount to a loss of $4.6 million. The MVRT will also lose the collection of fees for one year due to the expanded two year base. This factor will amount to about $4.9 million in lost funds to the state. An additional $2.75 million will be lost to the municipalities in the original version of HB 328. The revised version of HB 328 which takes the MVRT from the DMV and places it back on the municipalities will total the states losses at $4.9 million. Number 559 REPRESENTATIVE ULMER could not understand why state revenues were being released when the state has a great deficit. Efficiency is great, however, a revenue neutral bill should be considered. MS. HENSLEY added the credit card cost would be another cost with an operational fee of approximately $225,000 a year. CHAIR VEZEY asked to point out the credit card cost in the bill. Number 569 MS. HENSLEY noted page 3, line 22, Section 9(3). The cost is paid to the credit card companies. Number 576 CHAIR VEZEY inquired of the DMV's position on the use of credit cards. Number 578 MS. HENSLEY welcomed credit card use to cut down on NSF checks and the extra work they create. Number 582 REPRESENTATIVE KOTT reaffirmed MS. HENSLEY'S opinion. The extra payment on top of the reduction in fees may "dig a deeper hole" REPRESENTATIVE KOTT stated. Number 586 MS. HENSLEY urged the use of credit cards to ease those people who dislike using checks or money orders. A credit card system will provide an easier move to higher technology using touch-tone phones to renew registrations and ATM machines to acquire driving records. Drivers license reinstatements can also be quite expensive and the use of a credit card would ease payments for the customer. The reduction of fees, MS. HENSLEY believes, does not have to happen and the current rate times two could remain in place, thereby, the state would only incur the credit card cost. Number 614 CHAIR VEZEY asked if the credit card cost would be less than the current cost of pursuing bad debt receipts. Number 619 MS. HENSLEY replied no. The action taken on bad checks received is to place holds on registrations, titles, and drivers licenses. The credit card fee would have to be appropriated because the DMV budget could not absorb it. Number 623 CHAIR VEZEY related to the reason of increased efficiencies as a justification for the credit card cost. Number 627 MS. HENSLEY agreed. REPRESENTATIVE HARLEY OLBERG stated the credit card fees would be deducted from the revenues generated by the fees from the bank in which it is deposited. Therefore, no appropriation should be necessary. CHAIR VEZEY believed the state would probably not see the money unless it was accounted for. Number 635 REPRESENTATIVE G. DAVIS questioned if an extra charge could already be on the credit card and if the credit card company would collect it. Number 641 REPRESENTATIVE OLBERG answered an extra charge cannot be charged for a service or product because the payment is made by credit card. As the transaction takes place the bank will skim its discount off the transaction and there will be no exchange of money between the State of Alaska and the bank. CHAIR VEZEY asked REPRESENTATIVE OLBERG if he was referring to federal law and whether it was still legal to offer cash discounts as opposed to credit card charges. REPRESENTATIVE OLBERG replied yes. Number 649 Seeing no more testimony, CHAIR VEZEY asked REPRESENTATIVE KOTT if he would like to continue working on HB 328. Number 651 REPRESENTATIVE KOTT replied it would be a good idea to look HB 328 over again as the committee substitute was just received. The reduction in fees is a concern and the need for Section 16 will be examined. Number 663 CHAIR VEZEY announced HB 328 would be held over for review and would be rescheduled in the future.
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