Legislature(1999 - 2000)
01/27/2000 01:05 PM House TRA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 243 - MARINE FUEL TAX FOR HARBOR MAINTENANCE Number 0040 CHAIRMAN HALCRO announced the first and only order of business as House Bill 243, "An Act relating to taxes on motor fuel used in or on boats and watercraft; and providing for an effective date." CHAIRMAN HALCRO explained that the intent of the bill is to allow local municipalities, who have assumed responsibility for the care and maintenance of their harbor, to keep a portion of the existing marine fuel tax. The intent is not to raise the tax; it is simply to designate 3 cents out of the 5 cents back to municipalities in exchange for assuming responsibility of the maintenance and operation of their harbor. Number 0125 JEROME GEORGE, Member, Board of Directors, Seward Boat Owners Association, Inc., testified via teleconference from Anchorage. He noted that the association supports the bill. They have three areas of concern, which are as follows: 1) They want to be sure that the money goes back into the harbor rather than into the local community. Although that concern is addressed in the intent language, he has seen the Governor veto intent language. 2) They want to be sure that the communities who have built their own harbors - not just the communities who have taken over their harbor from the state - are also eligible. 3) They want to be sure that the level of funding going back to the communities is maintained. MR. GEORGE further stated that the levy to the municipalities should be 4 out of 5 cents instead of 3 out of 5 cents. He noted that over the last 13 years 83 percent of the marine fuel tax has been appropriated by the legislature back into capital improvements for harbors. The bill would decrease that number to 60 percent. They are also concerned as to why the state needs to retain 40 percent of those funds for administrative costs, when in the past it has been able to administer the program at 17 percent. MR. GEORGE further stated that five years ago the Department of Transportation & Public Facilities conducted a survey which indicated that - statewide - people genuinely support a tax rebate going back to the communities. The survey also indicated a high level of confidence in raising the tax, if necessary, to dedicate funds back to the harbors. He encouraged the members to pass the bill out of the committee. Number 0467 REPRESENTATIVE BEVERLY MASEK asked Mr. George, How many people are in the Seward Boat Owners Association? MR. GEORGE replied there are nearly 200 members. He noted that he has also talked with other associations concerning the bill. [He did not indicate which associations.] REPRESENTATIVE MASEK asked Mr. George whether he knows how many communities have built their own boat harbor. MR. GEORGE replied that he doesn't know. Number 0532 CHAIRMAN HALCRO pointed out to Mr. George that a proposed amendment would require a community to pass a local ordinance dedicating the revenues to the harbor. That should take care of one of his concerns. MR. GEORGE replied, "Thank you very much." Number 0605 SCOTT JANKE, City Manager, City of Seward, came before the committee to testify. He supports requiring local governments to pass ordinances dedicating funds back to their harbor so that a future council cannot undo that dedication. The City of Seward supports HB 243 and is looking at it from a municipal and statewide direction in terms of responsibility. Municipalities are willing to take over their harbor because they are more accountable to their users on a daily basis, and they think that they can do a better job at managing the harbors in the long run. The harbors around the state are economic engines that drive huge economies, and unless they are maintained, they might not work as well in the future. He cited commercial fishing, charter fishing, tour operators and recreational users all have different needs that change over time. Recently, he noted that the Army Corps of Engineers conducted around 14 feasibility studies on harbor projects across the state. The studies concluded that an investment of $190 million returned $5.7 billion over a 30-year life span - a conservative estimate for a life span of a harbor. MR. JANKE referred to the fiscal note submitted and pointed out that the assumptions made by the Department of Revenue are unlikely to happen in the near future. He specifically referred to the assumption that "all" communities would take advantage of the program set out in the bill. He lastly stated that he would like to see the bill move forward to the House Finance Committee, in the interest of time, where some of the financial issues can be addressed. Number 0870 REPRESENTATIVE ALLEN KEMPLEN asked Mr. Janke, What is the current cost to operate the harbor in Seward? MR. JANKE replied in the $3-million range. He did not have his budget with him. REPRESENTATIVE KEMPLEN asked Mr. Janke, What does the City of Seward typically spend on an annual basis for maintenance projects? MR. JANKE replied the city's entire operating budget goes to maintenance; it does not have a capital improvement budget. He explained that the harbor is run like an enterprise fund, which is like a separate business. He noted that no local tax dollars are put into the harbor, and unfortunately maintenance has been funded at a minimum for a long time at the state level. REPRESENTATIVE KEMPLEN asked Mr. Janke, What are the personnel costs? MR. JANKE replied about half of the budget. REPRESENTATIVE KEMPLEN asked Mr. Janke, What is the anticipated revenue as the result of this bill? MR. JANKE replied, as the bill is currently written, he anticipates about $150,000 a year, which could be utilized for ongoing maintenance projects or revenue bonds. The most important aspect, however, is that the money goes back into the harbor. Mr. Janke noted that the figure is based on the sale of marine fuel in the harbor at 3 cents per gallon. Number 0985 REPRESENTATIVE MASEK asked Mr. Janke whether users pay a fee to utilize the harbor. MR. JANKE replied users pay slip, moorage and wharfage fees. A transient user pays fees based on the size of his/her vessel. He reiterated that no tax dollars are put into the harbor; it is based on user fees. Similarly, a marine fuel tax is a user fee and so the users should be the beneficiary of the fee. Number 1027 REPRESENTATIVE MASEK asked Mr. Janke whether he has seen an increase of usage in the past few years. MR. JANKE replied the boat harbor in Seward is extremely busy. He cited that there are over 600 boat slips and a waiting list of another 600, which people pay to be on annually. Furthermore, the majority of the people who utilize the boat harbor in Seward live in Anchorage, the Mat-Su Valley or Fairbanks. This is not a coastal issue anymore. Number 1076 REPRESENTATIVE MASEK asked Mr. Janke whether a boat slip allows a person to park and return to that same slip. MR. JANKE replied in the affirmative. He further noted that there are transient users who use available space for a span of time and are charged based on the size of their boat. Number 1113 REPRESENTATIVE KEMPLEN asked Mr. Janke whether there could be a reduction in slip fees with the anticipated revenues. MR. JANKE replied the way the bill is currently written that is possible. It's more important, however, that the money be used for maintenance. Right now, he explained that slip fees in the state are relatively low, and they don't cover all of the costs. He reiterated the reason behind the bill is for the revenues to go towards maintenance and improvements in order to deal with the changing needs of the users. Number 1156 REPRESENTATIVE KEMPLEN asked Mr. Janke whether it's possible, as the bill is currently written, for a community to use the revenues to reduce slip fees rather than for operation and maintenance. MR. JANKE replied the way the bill is currently written, yes. Number 1187 CHAIRMAN HALCRO asked Mr. Janke whether an equal amount of money that comes to the state from the tax goes back to the community or harbor for improvements. MR. JANKE replied, "No." The entire 5 cents per gallon of the marine fuel tax goes to the state's general fund. The state does not have a formula for sending that money back to the communities or harbors. As a result, it may be a number of years before a community receives any money from the state as the receipts go towards another harbor or to build a road, for example. The purpose of the bill, he reiterated, is to have a known and continued funding source for the care and maintenance of the harbors. He noted that the state receives around $6.3 million to $6.5 million per year and generally puts back less than that into harbors. On occasion, the state will sell a bond for a big public project, which skews the numbers, but communities cannot rely on the state. Number 1290 CHAIRMAN HALCRO replied then, basically, what a community pays in is not necessarily what it gets back. MR. JANKE replied revenues generated from the tax go back to the department for statewide use; they do not go back to the harbors where they were collected. CHAIRMAN HALCRO asked Mr. Janke whether the revenues could be used to expand the harbor in Seward, since there is a waiting list to get a slip. MR. JANKE replied the way the bill is currently written the funds could be used for any purpose in a harbor, which could include capital projects and revenue bonds. Number 1337 CHAIRMAN HALCRO asked Mr. Janke whether he, as a city manger, has a say in where the money from the Department of Transportation & Public Facilities goes or how it is used. MR. JANKE replied, normally, a project is offered by a community that ultimately ends up on a list at the Department of Transportation & Public Facilities. Number 1369 REPRESENTATIVE MASEK asked Mr. Janke, What is the safety record within the harbor and how does it affect the overall operation of the harbor? MR. JANKE replied the boat harbor in Seward was designed for around 600 boat slips and transient space. He noted that during the summer - at any one period of time - there are more than 900 boats in the harbor, which results in wear and tear and costs maintenance dollars. Yes, with that much traffic there are safety concerns, but the harbor has a good safety record. Number 1427 REPRESENTATIVE MASEK asked Mr. Janke whether he has any additional amendments to help fix the bill. MR. JANKE replied, based on the analysis made by the Department of Revenue, it appears that the bill needs more tweaking to make it work properly. He would like to see a requirement for a municipality to adopt a local ordinance dedicating the funds back to the harbor, thereby protecting the interest of the user groups in the future. Similarly, if a future city council undedicated the funds via an ordinance, then that municipality would no longer qualify for the funds. He would also like to see the harbors, that were built by municipalities, qualify for these funds as well, not just the harbors transferred by the state. Number 1520 REPRESENTATIVE MASEK stated, according to the state's track record in relation to deferred maintenance, this type of bill is a positive measure. She would like to see the amendments adopted and the bill moved forward as quickly as possible. Number 1585 REPRESENTATIVE BILL HUDSON stated the bill seems to return the tax back to its original purpose. He further stated that 3 cents out of 5 cents is an easy buy off for the state because it would continue to accrue costs associated with harbors such as, the approach ways and parking lots. Representative Hudson asked Mr. Janke whether he sees the funds being used to expand or improve parking in Seward. MR. JANKE replied the boat harbor in Seward owns everything below high water. He explained that the parking lots are owned by a parking lot enterprise fund, which is maintained by parking fees. Yes, they are integrated uses, but revenues from the marine fuel tax could not be used for that. Number 1710 CHAIRMAN HALCRO asked Mr. Janke, assuming that the bill passes, why shouldn't the City of Seward get 100 percent of the revenues? MR. JANKE replied he would take 100 percent, but he is astute enough to realize that would not be fair to communities who don't sell or sell enough fuel. He's trying to be a responsible city manager and in realizing that the state has fiscal constraints as well. Number 1766 REPRESENTATIVE KEMPLEN wondered whether there is a reason for a lack of support statements in the bill packet from a number of communities such as, Ketchikan, Sitka, Kodiak, Valdez and Unalaska. MR. JANKE replied, he thinks, the reason is because it's early and the language in the bill isn't finalized. He noted that there is support from the Alaska Municipal Managers' Association, the Alaska Harbormasters' Association, and the Alaska Municipal League. REPRESENTATIVE KEMPLEN asked Mr. Janke whether they can provide letters of support. MR. JANKE replied he believes so. Number 1827 REPRESENTATIVE ALBERT KOOKESH asked Mr. Janke whether the state expended money to upgrade the harbor in Seward to the point that the city would accept it. MR. JANKE replied, yes, the state gave the City of Seward a grant for $3 million to take care of deferred maintenance as part of the transfer. The deferred maintenance costs, however, were closer to $5 million. The same is true for the cities of Kodiak and Homer. He explained that this year there is a bill pending with a list of nine harbors that would do something similar. Number 1894 REPRESENTATIVE KOOKESH said: The purpose of doing that and it's a purpose of the states to say to the municipalities, 'Here's a boat harbor. Here's how much. Here's some more money to bring it up to where -- where we think it's a reasonable amount because the state wanted to get out of having to spend money to take care of that every year.' So, if you come back to me and maybe I'm just reading it wrong and say, 'But we want 100 or 80 percent of the money back that this generates.' I mean someplace along the line some -- you'd make a great politician. I mean -- I -- I the way you reported it back to me that, 'Yeah, we got money, but we got money and we bought the -- the -- bought the float with the state -- the money that the state gave us.' So, I'm a little bit confused about how that process is. MR. JANKE replied the City of Seward has asked for 60 percent of the revenues from the marine fuel tax, not 80 or 100 percent. The City of Seward doesn't want to see the condition of the harbors deteriorate as they did under state ownership. Sure, if the communities don't get the revenues from this tax, then the larger maintenance projects will not get funded and in ten years he will be back asking the state for money, which is what he is hoping to avoid. Number 1966 REPRESENTATIVE KOOKESH replied the state is hoping to avoid that as well. People agree that this is a good bill, but it's important to understand the purpose behind it. It's also important to understand that the amount of money to be transferred has to be reasonable; the state is ultimately responsible for the stewardship of its money. MR. JANKE noted the reason that 2 cents would go to the state is because the state needs to take care of the harbors that don't sell enough fuel or aren't large enough to create an economy. Number 2006 CHAIRMAN HALCRO asked Mr. Janke whether the slip fees and user fees were going to the City of Seward before assuming ownership. MR. JANKE replied the slip fees were [and still are going] to the harbor enterprise fund. He explained that most communities build enterprise funds to handle their harbor, sewer and water [facilities]. CHAIRMAN HALCRO asked Mr. Janke whether the marine fuel tax was the only revenue the state received from the harbors prior to assuming ownership. In other words: Did the state use slip fees for capital projects? MR. JANKE replied, "No." He explained, prior to assuming ownership, the state owned the harbor in Seward but the city operated it. The state did not receive any revenue from the operation other than what was generated from the tax. Number 2080 CHAIRMAN HALCRO stated he had some concerns about the bill when he first read it, but upon further analysis, he now wonders why the state should continue to collect a tax from a harbor that it is no longer responsible for. Number 2107 REPRESENTATIVE KEMPLEN asked Mr. Janke whether a municipality could use the revenues for landside improvements. MR. JANKE replied it depends on how the term "harbor" is defined at the local level. He explained that the City of Seward defines its harbor as everything within the breakwater; uplands are not considered part of the harbor. REPRESENTATIVE KEMPLEN stated it seems that a community could take the revenues and pay for improvements in tourism and fish processing facilities next to the water. MR. JANKE replied the language may need to be tightened in that regard. He agrees that is a possibility. But those types of facilities have never been defined as part of a harbor in the areas that he is familiar with. Number 2183 CHAIRMAN HALCRO stated, if a city decides one year to shift the money from repairing the docks to building a hotdog stand within its harbor and a dock falls into the water, then that city doesn't have anybody to go to but itself. MR. JANKE agreed in the affirmative, and stated that is why he initially discussed the issue of accountability. There is tighter control by the users at the local level creating a relationship that demands accountability. Number 2222 REPRESENTATIVE HUDSON asked Mr. Janke whether the state continues to own the harbor and its facilities in Seward. MR. JANKE replied, "No." He personally negotiated a transfer of the title over to the city in consideration of the $3 million for deferred maintenance. REPRESENTATIVE HUDSON stated the 3 cents out of the 5 cents is really to provide funds to the cities that the state has been providing over the years through grants and appropriations. It truly is a transfer of both the responsibility of ownership and the source of funding, which goes back to the original intent of the marine fuel tax. Number 2270 REPRESENTATIVE MASEK asked Mr. Janke when the Department of Transportation & Public Facilities started initiating the transfer program. MR. JANKE replied the first harbors were transferred last year. He explained that the funding was appropriated in 1998 and the closing took place in February of 1999 for Seward. REPRESENTATIVE MASEK asked Mr. Janke whether he has been working with the Department of Transportation & Public Facilities on the structure of the bill. MR. JANKE replied he has met with the commissioner on numerous occasions. He feels that he is "walking in" with a sense of responsibility to his own user groups and to the state as a whole. Number 2325 REPRESENTATIVE VIC KOHRING said he likes the direction of the bill in that the users are the beneficiaries of the tax. However, there is a wide spectrum of people who own and operate watercraft that might not benefit from this. He asked Mr. Janke, What is the feasibility of eliminating the tax and going directly to a user-fee arrangement? MR. JANKE replied he can't answer that question with any accurateness. It is possible, but it sounds like it would be difficult given that the state already has a marine fuel tax program in place. Number 2388 CHAIRMAN HALCRO said, to Representative Kohring, the marine fuel tax basically is a user-fee tax. In other words, those who are fueling their boats are using the harbors and the facilities. The bill would not increase the tax; it would simply redirect a percentage of it back to communities who have taken ownership of their harbor. MR. JANKE pointed out that, oftentimes, boaters out of Seward may sail someplace else and utilize a small harbor that doesn't have a tax. In that way, those users are also benefiting from the 2 cents that would go to the state. CHAIRMAN HALCRO pointed out the transient vessels that refuel and use the facilities in Seward, for example, are contributing as well. Number 2448 JAMES COLLMAN, President, Seward Boat Owners Association, Inc., testified via teleconference. He called the $3 million provided to Seward for deferred maintenance a Band-Aid. As a result, he explained, the city decided to upgrade half of the harbor; the other half still needs to be looked after. He also stated that environmental laws continually change and need to be attended to which takes money. The association has a good working relationship with the city, and the city has a good program for looking into the future for these types of things. TAPE 00-5, SIDE B Number 0001 MR. COLLMAN continued. A user fee in lieu of the marine fuel tax would cost the city more money by having to change to a new system. He further stated that there is a need to upgrade the fish cleaning facilities as part of the environmental concern he mentioned earlier. He then stated that the association includes members who operate commercial, charter and pleasure vessels that travel from one end of the state to the other; they need the upgrades and support that comes with the use of transient facilities. Number 0074 CHAIRMAN HALCRO called on Mr. Brett Fried with the Department of Revenue and asked him to discuss ways to make the bill work. The fiscal note from the department indicates that the bill is administratively unworkable. BRETT FRIED, Economist, Income & Excise Audit Division, Department of Revenue, came before the committee to answer Chairman Halcro's question. He said, unfortunately, the auditor for the motor fuel tax program is not available today; he is not prepared to answer that question. CHAIRMAN HALCRO asked Mr. Fried whether there are forms of taxes where municipalities keep the rebates and forward the difference to the state. MR. FRIED replied, in terms of a shared tax, there is the fisheries business tax and the fisheries landing tax. CHAIRMAN HALCRO asked Mr. Fried whether those taxes are collected by the local governments then forwarded to the Department of Revenue. MR. FRIED replied, "Yes." CHAIRMAN HALCRO asked Mr. Fried how the marine fuel tax is collected. Is it collected by retailers who then submit a form to the state? MR. FRIED replied the marine fuel tax is collected at the wholesale level, which is the main reason why the department has a problem with how the tax is structured in the bill. As the bill is currently written, the tax would be collected at the retail level creating different points of taxation. CHAIRMAN HALCRO asked Mr. Fried whether moving the collection from the retail to the wholesale level would address the concerns of the department. MR. FRIED replied it would be better for somebody with technical knowledge to answer that question. MR. JANKE stated the intent of the bill is for the wholesaler to collect 5 cents from the user, of which, 3 cents would be sent to the cities and 2 cents would be sent to the state. He doesn't see how that would create legislative problems. The state would keep the 2 cents and it wouldn't have to refund anything to the cities. It's not duplicating any tax; it's just distributing it differently. MR. FRIED stated that might work well for the City of Seward, but in other places wholesalers sell to retailers who then distribute to different outlets; the state does not track it to the endpoints. Number 0232 REPRESENTATIVE HUDSON stated the only way to resolve the issue is to have the state collect it entirely then redistribute it back. MR. FRIED replied that is the way the state handles the fisheries taxes now. REPRESENTATIVE HUDSON asked whether the communities collect and keep their own fish landing tax. MR. JANKE replied the state collects it then redistributes it back. He also noted that the Bristol Bay Borough collects a 3 percent fish landing tax as well that matches the state's. MR. JANKE further stated that he is concerned about the state collecting a check because of the constitutional issue of dedicating funds. The reason the bill is written as such is because cities are able to dedicate funds, and they want the user groups to be assured that the money will go back into the harbor. He suggested, as a possible solution, to change the language so that the retailer sends 3 cents to the city and 2 cents to the state. Number 0309 CHAIRMAN HALCRO asked Mr. Janke whether the retailer or wholesaler or whoever collects the tax submits a quarterly form to the state with a remittance. MR. FRIED replied it's a monthly report. CHAIRMAN HALCRO asked Mr. Fried, Why couldn't that same retailer or wholesaler complete a form for the city and for the state and remit accordingly? The state gives rebates to off-road users for the motor fuel tax; the paperwork and procedures are already in place. REPRESENTATIVE HUDSON said he's not sure they would know where to send a check. For example, people might be fueling their boats in Anchorage and boating in Prince William Sound. He said: I understand where the communities are concerned with and that is that we -- we say we're going to share money back to them. We did that in the beginning and the reason they're coming to us now and saying, is there a way to give it to us direct without going to the general fund then we can avoid the dedicated problem that the state has at the present time. But if the state collects it and puts it into the treasury then it's -- they've got to trust us. And that's what they're having trouble with. Number 0394 CHAIRMAN HALCRO indicated that this is becoming more complicated than it should be. If a wholesaler in Anchorage sells fuel to a retailer within the harbor limits of Seward, then whoever is collecting the tax has to realize that they are liable. Similarly, companies do business with cities that have sales taxes and cities that don't have sales taxes; the funds go to the main office and are handled accordingly. MR. JANKE noted that when a boater pulls up to a fuel dock in Seward the receipt indicates how much was paid in taxes; the records are being kept. He suggested working with the Department of Revenue to find a way to make this work while still maintaining the intent of the bill. Number 0440 CHAIRMAN HALCRO stated the city, that assumes responsibility of its harbor, would be responsible for collecting and auditing the taxes due, which would create an additional responsibility for the local community. He said, "If you're willing to accept that, then I think we should be willing to give it to you." MR. FRIED suggested sitting down and discussing the issue further with the experts from the Department of Revenue. He further stated that a dealer doesn't necessarily track the fuel to the end. For example, a dealer could sell or transfer to a retailer who sells fuel all over the state to areas that don't have tax jurisdictions, and that dealer would be required to track the fuel. It would be a large burden and he's not sure that it would work. Number 0507 CHAIRMAN HALCRO commented he doesn't see the marine fuel tax as any different than any other tax that employers or retailers have to submit to the state, other than it requires additional bookkeeping. If a wholesaler in Anchorage wants to sell marine fuel to a retailer in Seward, then that wholesaler has to understand additional paperwork is involved. This is definitely a workable issue, and it's definitely in the state's best interest for a community to assume responsibility of its harbor. CHAIRMAN HALCRO further stated that he likes the bill and wants to see it move forward as soon as possible. In the meantime, he will work on a committee substitute that reflects the responsibility of communities to adopt local ordinances designating the funds to their harbor. Number 0607 REPRESENTATIVE KEMPLEN asked Mr. Fried whether it's correct to say that the state currently collects approximately $6 million in revenues from the marine fuel tax. MR. FRIED replied, "Yes." The state collected $6.6 million in FY [fiscal year] 99. REPRESENTATIVE KEMPLEN asked Mr. Fried whether it varies by location. MR. FRIED replied the tax is levied at the wholesale level; it is not tracked by location. REPRESENTATIVE KEMPLEN asked Mr. Fried what type of impact would this bill have on places that sell a lot of marine fuel? He cited Dutch Harbor as an example. He further asked, How much of the $6.6 million comes from Dutch Harbor? a half? a third? Would the monies pay the entire cost of operation and maintenance for the harbor, if the city was to take it over? MR. FRIED replied he doesn't know. He reiterated the state levies the marine fuel tax at the wholesale level. Number 0690 HAROLD MOESER, State Harbor Engineer, Division of Statewide Design and Engineering Services, Headquarters, Department of Transportation & Public Facilities, came before the committee to answer questions. He agrees with Mr. Fried in that the state really doesn't know what the impact would be on Dutch Harbor. He believes that they would take a considerable "piece of the puzzle," depending on how the term "harbor" is defined. Dutch Harbor, he explained, has a very small harbor but it has a very large port. He can't put an exact figure on the impact, but he noted that a big piece of the $6 million comes from Seward and the communities west of Seward. CHAIRMAN HALCRO asked Mr. Moeser how the Department of Transportation & Public Facilities decides to spend the marine fuel tax receipts every year, since there is some confusion as to what defines a harbor. MR. MOESER replied the original intent of the marine fuel tax was to support water and harbor facilities, which traditionally includes small boat harbors, flood control, and erosion. He cited there are about 98 public harbors in the state, and included in that number are docks. For example, the state owns the dock in Bethel. The department recognizes that the definition needs fine-tuning, but it doesn't want to exclude those harbors that it specifically wants to transfer. MR. JANKE explained that he had an amendment at one point to include the term "port," as well as harbor. Number 0816 REPRESENTATIVE KEMPLEN asked whether it's possible to get additional information relating to the costs and revenues associated with this bill. He feels that there is a lot of ambiguity in terms of its real impact on the various ports and harbors around the state. There seems to be a lot of variety, and what may be appropriate for Seward may have significant implications for Southwest Alaska. Number 0851 REPRESENTATIVE HUDSON said: Do we do separate accounting, or could we do separate accounting on the 3 [cents] and 5 [cents]? So that if we were unable to because of the constitutional bar not dedicate the funds to this purpose we have in the past indicated by intent to essentially by establishing separate accounting that the funds be continued to be collected as they are at the present time, but that 3 out of the 5 cents with some sort of a definition of a separate fund, a ports and harbors redistribution fund or something like that. I wonder if that would be an avenue. I'm hearing some real difficulty in trying to figure out how you correlate where the fuel is sold or transferred and the tax collected and the legitimate end-recipients in, you know, by the communities. I think in Seward's case, for the most part, the people would buy their fuel there because it's kind of like a separate port. But in areas to where there's several, particularly here in Southeast, it may be harder to separate them. I'm -- I'm still in favor of this and I'd like to see them work this out Mr. Chairman and us move this timely out of here just as a concept if nothing else. Number 0929 BRAD PIERCE, Senior Policy Analyst, Office of Management & Budget [OMB], Office of the Governor, came before the committee to testify. He stated that the Governor agrees with many of the provisions embodied in the bill, especially as they relate to the upgrade and transfer of the harbors. However, there is concern because this would reduce general fund revenues up to around $3.8 million, thereby adding to the fiscal gap. In addition, OMB feels that this would result in an inequitable distribution of the revenues unrelated to the amount of money that the state has already invested in the harbors. As indicated by Mr. Moeser's testimony, there are only a few good gas stations in Western Alaska, and they sell most of the fuel; a place like Dutch Harbor would get a huge amount of money. MR. PIERCE further stated in 1996 the Governor vetoed a motor fuel tax increase because he felt that the distribution was fatally flawed. Mr. Pierce further stated that there has been a suggestion to increase the motor fuel tax by 5 cents per gallon and to share that increase with municipalities, which could be used to upgrade all the transferable facilities in the form of a revenue bond program. He commented that the suggestion is just an idea; he is not laying that on the table. Number 1104 CHAIRMAN HALCRO replied he views the marine fuel tax as a user tax, and if the state doesn't have to maintain a harbor then it shouldn't have the same corresponding liability to the general fund. Furthermore, he thinks that the collection of the taxes is workable even though it may require an additional accounting step. Furthermore, if a boat owner in Seward or Kodiak is paying a fuel tax, then those funds should rightfully go back into that facility; 2 cents would still go to the state to be distributed to the smaller harbors that don't have a revenue source. Furthermore, it seems like there already is an inequitable distribution because the communities who are paying-in aren't necessarily getting a commensurate return on their investment. He called it a win-win situation in that the state gets out of the business of being responsible and that the local communities get ownership and assume liability. As a result, they should be entitled to the revenue flow. He would like to see OMB and the Department of Revenue sit down with the local municipalities and come up with a way to make this work. CHAIRMAN HALCRO asked Mr. Moeser whether the state wants to get out of the harbor business in those 17 communities who are on a list for transfer. MR. MOESER replied, "Yes." In a perfect world, all organized communities who have a harbor would assume responsibility; the harbors belong at the local level. The question is, What is the state's role after transfer? He doesn't have the answer, but there still is the issue of the core matching program, which is where most of the revenues have gone to for the past five to six years. However, this is not the "carrot" that will bring them to the table; it's bringing the deferred maintenance up to standard that will bring them to the table. MR. PIERCE interjected and stated that the issue is how to financially bring harbors up to standard in the current fiscal situation. He further stated the distribution formula that OMB has discussed is based on the replacement value of the harbors. In other words, the state would distribute a harbor back based on a pro rata share of its total replacement value. CHAIRMAN HALCRO asked Mr. Moeser, How many communities, of the 17 harbors identified, have expressed interest in ownership? MR. MOESER replied, "Nine." He noted that $35 million is reflected in HB 282 to deal with the deferred maintenance. Number 1399 REPRESENTATIVE HUDSON asked Mr. Moeser, What is the approximate deferred maintenance value to bring all 17 harbors up to speed? MR. MOESER replied about $44 million, and another million for the outlying, unorganized areas that are truly used by transients around the state. The reality is, the state will always have responsibility for the harbors in the unorganized areas, and there are a good number of harbors in the second class cities that the state will always have responsibility for because they are considered quasi-transient. Number 1508 CHAIRMAN HALCRO stated he doesn't believe that communities like Seward or Kodiak, who want to take over the responsibility for operation and maintenance of their harbor, should be punished by not benefitting from the tax. The state shouldn't just cut them off; the state needs to give them something back in order to help keep their harbor up-to-date. MR. MOESER replied taxes are never fair. He noted that the original program was spread across the state because there wasn't any fuel sold in Dutch Harbor in the early 1960s; it was all sold in Southeast Alaska and Prince William Sound. CHAIRMAN HALCRO stated taxes are fair when they go back into what they are being paid for. This bill gets the state one step closer to a perfect world - local control and local dispersement of taxes collected locally. Number 1618 REPRESENTATIVE MASEK asked Chairman Halcro whether he is going to put a committee substitute together. CHAIRMAN HALCRO replied he is going to incorporate the amendments touched on today, especially the concerns relating to collection and inequitable distribution. REPRESENTATIVE MASEK further stated she is appalled that the person from the Administration who is knowledgeable on this issue is not here today. The meeting was posted and noted in the House Journal. She hopes that person will be here on Tuesday [February 01, 2000]. Number 1710 REPRESENTATIVE KOOKESH expressed his appreciation to the state employees who are here today. He knows it is a thankless job at times. CHAIRMAN HALCRO expressed his appreciation to the state employees and their willingness to craft something that can move forward to the House Finance Committee where the financial issues can be discussed. Number 1770 REPRESENTATIVE KEMPLEN suggested that some attention be given to the definition of the term "harbor" as the committee substitute is being considered. He also suggested coming up with language so that the generated revenues go toward operation and maintenance rather than reducing user fees, which speaks to the issues of inequitable distribution and urban-rural divide. Otherwise, the smaller ports and harbors will be "starved" for monies. Number 1881 REPRESENTATIVE KOOKESH stated it is important to keep in mind that these facilities are very valuable pieces of property; they are not gifts. CHAIRMAN HALCRO suggested, in response to Representative Kemplen's comments, a sliding scale concept so that the smaller ports and harbors aren't starved for monies. REPRESENTATIVE KEMPLEN replied, "That sounds appropriate." [HB 243 WAS HELD OVER FOR FURTHER CONSIDERATION]
| Document Name | Date/Time | Subjects |
|---|