Legislature(2015 - 2016)CAPITOL 17
02/18/2016 01:00 PM House TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| HB249 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 249 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 249-ELECTRONIC TAX RETURNS & MOTOR FUEL TAX
[Contains discussion of SB 132.]
1:23:42 PM
CO-CHAIR FOSTER announced that the only order of business would
be HOUSE BILL NO. 249 "An Act requiring the electronic
submission of a tax return or report with the Department of
Revenue; relating to the motor fuel tax; and providing for an
effective date."
1:23:59 PM
CO-CHAIR HUGHES moved to adopt the proposed committee substitute
(CS) for HB 249, Version 29-GH2912\E, Nauman, 2/17/16, as the
working document.
1:24:11 PM
CO-CHAIR FOSTER objected for purposes of discussion.
1:24:41 PM
CO-CHAIR HUGHES stated that she has had reservations regarding
HB 249 since it was proposed. Specifically, she questioned
whether the tax increases would remain in place in the event of
recovering oil prices, and she echoed the sentiments of several
individuals who provided public testimony, by emphasizing the
importance of directing the revenue from the proposed tax
increase toward maintenance and operation of infrastructure.
She stated that the Senate Transportation Standing Committee
adopted a committee substitute (CS) to SB 132, the Senate's
companion bill to HB 249, which addresses several of these
concerns. She expressed her agreement with the changes outlined
in the CS to SB 132, and noted Version E, of HB 249, proposes
one more change regarding how the revenue would be utilized.
CO-CHAIR HUGHES outlined changes proposed under Version E as the
addition of an oil price per barrel trigger, inclusion of a
sunset date in three years, and clarification regarding the
account where the revenue would be deposited. She noted that
the word "account" would be replaced with "fund" throughout the
applicable statutes, and language would be added stipulating
that the funds could only be used for maintenance and operating
costs, not for administration. She offered to provide a
sectional analysis at the request of the chair.
1:27:10 PM
STUART KRUEGER, Staff, Representative Shelley Hughes, Alaska
State Legislature, on behalf of Representative Hughes, began a
presentation of the sectional analysis of CS HB 249, Version E.
He stated that the first change would be the removal of Section
1 and Section 2, which required the electronic submission of the
tax return and report with the Department of Revenue (DOR). He
noted that this would be included to mirror the change being
proposed in the CS to SB 132. He explained that in the new
Section 1, page 1, line 8, the word "account" would be changed
to "fund", and would be replaced, in kind, throughout the
remainder of HB 249 whenever addressing specific fuel tax funds.
He explained that the purpose of the change would be to provide
more structure as to where those funds can be directed.
1:28:15 PM
MR. KRUEGER explained that Section 2, on page 2, would add an
oil price trigger, such that, if the average price per barrel in
the previous calendar year were to exceed $85, then the highway
fuel tax would return to its previous rate of $0.08 per gallon
for dealers. He related that Section 3, on page 3, would
provide a sunset clause for Section 2; and Section 4, beginning
on page 4, line 15 would enact the same fuel trigger described
in Section 2, but applied to the consumers. Section 5, on page
5, would provide a sunset of Section 4. He stated that Sections
6 through 10 would replace the word "account" with "fund", and
add the language "direct capital, operating, or maintenance
costs," and specify "infrastructure" for airport, marine, and
highway. He related that inclusion of the word "direct" would
eliminate the possibility of the funds being utilized for
administrative purposes.
MR. KRUEGER noted that Sections 11 through 13 add exemptions for
emergency vehicles, as defined in AS 11.56.825, and for student
transportation services, where the school or district receives
funding under AS 14.09.010. He explained that Section 14, on
page 10, would provide the refund rate for "off-road use", as
proposed by the bill sponsor; Section 15, on page 10, beginning
on line 10, would provide a sunset of Section 14. He stated
that in Section 16, on page 10, there would also be replacements
of the word "account" with "fund". He explained that Section
17, on page 10, would move the exemptions from the motor fuel
tax out of the definition of "motor fuel", in AS 43.10.100(2),
and into the body of the motor fuel tax law. He pointed out
that the 2015 Manual of Legislative Drafting states "substantive
provisions of law must not be hidden in definitions," and he
offered that the current motor fuel tax exemptions are in direct
violation of that rule. He said Section 18, on page 12, would
describe the applicability; Section 19, on page 12, would
provide transitional language allowing for regulations to
implement the changes. He explained that Section 20, on page
12, would set an immediate effective date for Section 19;
Section 21 would set an effective date of July 1, 2018, for
Sections 3, 5, and 16; Section 22 would set an effective date of
July 1, 2016, for the remainder of the changes.
1:32:01 PM
CO-CHAIR FOSTER requested clarification that the trigger figure
described in Section 2 and Section 4, which would reduce the tax
to its current rates in the instance that oil prices increased
to $85 per barrel, would apply not only to the highway fuel tax
rates, but also the marine and aviation fuel tax rates.
1:32:58 PM
MR. KRUEGER clarified that the tax rates for all categories of
motor fuel would revert back to their current rate, as outlined
in Section 4.
1:33:20 PM
MARC LUIKEN, Commissioner, Department of Transportation & Public
Facilities (DOTPF), Anchorage, Alaska, drew members' attention
to Section 4, on page 4, and pointed out that the current rates
for all categories of motor fuel are listed below the language
describing the fuel trigger and would be reverted to those rates
if the trigger came into effect.
1:33:54 PM
MR. KRUEGER noted that the change is clear in the statute and
that a clerical error in the sectional analysis was the cause of
the confusion.
1:34:37 PM
CO-CHAIR HUGHES further explained the cause of the confusion in
the sectional analysis and thanked the committee members for
their understanding. She mentioned that the Alaska Aviation
Advisory Board had requested that a fuel trigger be included in
the bill, and she discussed her general apprehension with
increasing taxes without first reducing the state budget,
restating her concern regarding the families that would be
negatively impacted by increases. She acknowledged that as the
tax proposals go through the legislative process, there is the
possibility that they make it to the floor and pass, and
accordingly she wanted to ensure that the changes listed in the
sectional analysis were included in the proposed CS.
1:36:09 PM
REPRESENTATIVE ORTIZ inquired how the trigger point of $85 per
barrel was determined.
MR. KRUEGER stated his belief that it was designed to mirror
changes made in the other body. He deferred to Ken Alper, for a
detailed explanation.
1:37:09 PM
KEN ALPER, Deputy Director, Tax Division, Department of Revenue
(DOR), stated that Mr. Krueger's analysis was correct and that
the $85 trigger was designed to mirror changes introduced in SB
132. He stated his understanding that the reason the chair of
the Senate Transportation Standing Committee, Senator Micciche,
set the trigger at $85 dollars was because it roughly reflects
the point at which the "minimum tax" falls away on oil and gas,
and Alaska begins to increase the amount of money made off of
oil at a greater rate. It is the threshold at which the tax
system of Senate Bill 21 [signed into law on 6/24/13] would come
into effect. He stated that Alaska's revenue problems begin to
diminish more rapidly as the price per barrel exceeds $85. He
stated that there is a reasonable conversation to be had
regarding the value of the trigger point, but that $85 is the
figure that the Senate Finance Committee ultimately settled on
and Co-Chair Hughes wishes to parallel the changes made in the
Senate.
1:38:17 PM
REPRESENTATIVE ORTIZ asked whether $85 per barrel is the price
point where the State of Alaska would be able to balance its
budget or if there would still be a significant deficit at
current spending levels.
MR. ALPER responded no. He expounded that in Fiscal Year 2016
(FY 16) [DOR] estimated that the budget would balance if the
price of oil were $109 per barrel. He stated that although that
number currently sounds unreasonable, two years ago it was
considered to be a normal and rational number. He explained
that if the price of oil were $85, the state would still have a
deficit of approximately $2 billion under the current conditions
and budgetary realities.
1:39:18 PM
REPRESENTATIVE CLAMAN requested clarification that as the
proposed statute is written, this $85 trigger would come into
effect, whether that occurred in 2017 or 2037.
MR. ALPER replied that there are two different triggers written
into the proposed CS for the tax increase to fall away: the $85
dollar per barrel fuel trigger and the 2018 sunset clause. He
stated his understanding that the intent is to bring the issue
before the legislature in two years to determine whether the
legislature wants to continue the increased tax regime.
REPRESENTATIVE CLAMAN requested clarification that the sunset
provision is designed to eliminate the tax in two years.
MR. ALPER responded that the tax increases would disappear in
two years, but stated his understanding that the exemptions for
school busses and emergency vehicles would remain in permanent
statute.
1:40:47 PM
CO-CHAIR HUGHES commented that when considering the various tax
proposals, some are more regressive than others, and she
suggested that this might be the most regressive. She stated,
in reference to commuters who live in her community, that people
with low wages are more likely to drive older vehicles that are
not fuel efficient. She held that an individual who makes a
higher salary is more likely to drive a newer, more fuel-
efficient vehicle. She offered that if the price of fuel goes
up, the motor fuel tax is one of the first that would need to be
reconsidered, and she explained that this is the intention of
the sunset and the oil price trigger. She stated that she does
not want to punish workers in her area and throughout the state
who are trying to make ends meet. She reemphasized her belief
that this is a regressive tax, at least in terms of the highway
fuel increase.
1:42:06 PM
REPRESENTATIVE ORTIZ stated that all legislators share in the
concern regarding the regressive nature of any tax proposal. He
questioned the statement that HB 249 is the most regressive tax
proposal and asked Co-Chair Hughes whether she would consider
changes to the permanent fund as more regressive.
1:42:43 PM
CO-CHAIR HUGHES replied yes, in a sense, primarily because of
the different types of vehicles that people drive. She
acknowledged that an equal amount would be taken from the
permanent fund dividend, but offered that in terms of fuel a
lower income person is actually paying more for a 100-mile trip
than a wealthier person with a better car.
1:43:19 PM
REPRESENTATIVE CLAMAN commented that determining which taxes are
fair versus regressive or more versus less equitable is a very
complicated discussion. He stated that he appreciates Co-Chair
Hughes' perspective, but would like to note that he does not
agree.
1:43:46 PM
CO-CHAIR FOSTER removed his objection to the motion to adopt the
proposed CS for HB 249, Version 29-GH2912\E, Nauman, 2/17/16 as
the working document. There being no objection Version E was
adopted as the working document.
[HB 249 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB249 Sponsor Statement - Governor's Transmittal Letter.pdf |
HTRA 2/18/2016 1:00:00 PM |
HB 249 |
| HB249 ver A.pdf |
HTRA 2/18/2016 1:00:00 PM |
HB 249 |
| HB249 Sectional Analysis.pdf |
HTRA 2/18/2016 1:00:00 PM |
HB 249 |
| HB249 Fiscal Note-0912-DOR-TAX-01-13-16.pdf |
HTRA 2/18/2016 1:00:00 PM |
HB 249 |
| Motor Fuel Tax FAQ.docx |
HTRA 2/18/2016 1:00:00 PM |
|
| Tax presentation MOTOR FUEL 1-22-16 with comparison slide.pdf |
HTRA 2/18/2016 1:00:00 PM |
|
| House Transportation Committee Response - DOR DOT - 1.28.16.pdf |
HTRA 2/18/2016 1:00:00 PM |
|
| HB 249 Draft Proposed CS Version E Section Analysis.pdf |
HTRA 2/18/2016 1:00:00 PM |
HB 249 |
| HB249 Draft Proposed Blank CS ver E.pdf |
HTRA 2/18/2016 1:00:00 PM |
HB 249 |