Legislature(2011 - 2012)CAPITOL 17

02/24/2011 01:00 PM TRANSPORTATION

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* first hearing in first committee of referral
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= bill was previously heard/scheduled
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Heard & Held; Assigned to Subcommittee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held; Assigned to Subcommittee
           HB 64-PERMANENT MOTOR VEHICLE REGISTRATION                                                                       
1:13:04 PM                                                                                                                    
CHAIR P. WILSON announced that  the first order of business would                                                               
be  HOUSE  BILL NO.  64,  "An  Act  relating to  permanent  motor                                                               
vehicle registration; and providing for an effective date."                                                                     
1:13:28 PM                                                                                                                    
DARRELL BREESE, Staff, Representative  Bill Stoltze, Alaska State                                                               
Legislature,   on  behalf   of   one  of   the  prime   sponsors,                                                               
Representative Bill  Stoltze, related  that HB  64 would  offer a                                                               
permanent motor  vehicle registration to vehicles  that are eight                                                               
years old or older.   The reason for the bill  is to make process                                                               
more  user friendly  since older  vehicles tend  to be  used less                                                               
frequently.    He  recalled  that some  people  use  their  older                                                               
pickups for  snowplowing or other  activities such as  dump runs.                                                               
He offered his  belief that to reregister the  older vehicle each                                                               
two years  is burdensome.   The goal is  to create an  option for                                                               
owners  to  permanently  register  their  eight  years  or  older                                                               
vehicles.  He related that if a  vehicle is sold the new owner is                                                               
required   to  register   the  vehicle   again.     The  biennial                                                               
registration  would still  be  an  option for  the  owner.   Some                                                               
issues  arose  in  hearings  held by  the  prior  committee  with                                                               
respect  to  how  the  motor  vehicle  tax  change  would  affect                                                               
municipalities.   He said he hopes  to remedy any issues  with HB                                                               
64 in  a future committee substitute  for the bill.   In response                                                               
to  Chair   P.  Wilson,  he  explained   the  proposed  committee                                                               
substitute is not yet ready.                                                                                                    
1:16:22 PM                                                                                                                    
REPRESENTATIVE PRUITT asked whether  the potential exists for the                                                               
state to  increase revenues for motor  vehicle registration fees.                                                               
He said  after a few years  an owner could pay  for the permanent                                                               
registration and  later sell  the vehicle.   The new  owner would                                                               
register the vehicle which could generate more revenue.                                                                         
MR. BREESE answered  no, not as HB 64 is  currently written since                                                               
the proposed  motor vehicle registration  fee in the bill  is set                                                               
at five times the normal  motor vehicle registration fee or $100,                                                               
whichever  is  less.    Under  current  law,  the  motor  vehicle                                                               
biennial registration  fee is set at  $100.  He said  the sponsor                                                               
anticipated some debate  to determine if the $100 fee  was a fair                                                               
rate.   He  was  uncertain as  to  the best  rate  to charge  for                                                               
trailers.    He  welcomed  more  people  being  involved  at  the                                                               
committee level.  He agreed if  the rate increases it is possible                                                               
state  to   revenues  collected   to  also  increase,   at  least                                                               
initially.   He  related a  scenario in  which the  motor vehicle                                                               
registration fees  were be  increased by  five times  the current                                                               
fee.   He assumed half  of vehicles  would be registered  in year                                                               
one  and  the  other half  in  year  two.    In year  three,  the                                                               
permanently  registered   vehicle  owners   would  not   pay  any                                                               
additional fees.   In that  scenario, some revenue would  be lost                                                               
in year three and subsequent years, he said.                                                                                    
REPRESENTATIVE PRUITT  related his understanding that  the amount                                                               
of revenue  lost would  be almost  a wash  since the  owner would                                                               
prepay the entire fee.  The  amount would potentially be the same                                                               
over the course of time, he stated.                                                                                             
MR. BREESE  agreed.   He used his  previous scenario,  and stated                                                               
that if  fees are  set at  five times  the registration  fee, the                                                               
owner   would  essentially   pay  for   ten  years   of  biennial                                                               
registration fees for  his/her vehicle.  He  suggested that using                                                               
the state's budget process, the  state would not consider revenue                                                               
in year  one and  two to  be projected in  years three  and four.                                                               
Therefore, it would appear as  a reduction in years three through                                                               
1:20:02 PM                                                                                                                    
CHAIR P.  WILSON referred to  page 2, lines 8-10  of HB 64.   She                                                               
stated that  an owner of  a permanently registered  motor vehicle                                                               
is not  required to pay other  fees or taxes under  this chapter.                                                               
She pointed out that many  municipalities charge fees for vehicle                                                               
registration and  expressed her  concern since she  was uncertain                                                               
of the fees.                                                                                                                    
MR. BREESE  responded that  16 communities,  including Anchorage,                                                               
Bethel,   Bristol  Bay,   Cordova,  Dillingham,   Juneau,  Kenai,                                                               
Ketchikan, Kodiak,  Matanuska-Susitna, Nenana,  Nome, Petersburg,                                                               
Sitka, Unalaska, and Whittier have  enacted ordinances to collect                                                               
additional fees.                                                                                                                
CHAIR P. WILSON  referred to the handout in  members' packets and                                                               
read  the  anticipated  lost revenue  by  communities,  including                                                               
losses  for the  Matanuska-Susitna  at $4  million, Anchorage  at                                                               
$5.3,  Kenai at  $1.5 million,  and  for the  overall total  lost                                                               
revenue anticipated at $12.3 million.                                                                                           
1:21:44 PM                                                                                                                    
REPRESENTATIVE PRUITT asked whether the figures were correct.                                                                   
MR. BREESE answered yes.                                                                                                        
1:22:06 PM                                                                                                                    
WHITNEY  BREWSTER, Director,  Division of  Motor Vehicles  (DMV),                                                               
Department  of  Administration   (DOA),  introduced  herself  and                                                               
stated she was available to answered questions.                                                                                 
CHAIR P.  WILSON recalled  an attorney  general's opinion  on the                                                               
about municipality taxes on permanent vehicle registration fees.                                                                
MS. BREWSTER  explained that the  Department of Law  advises that                                                               
to review HB 64 to  determine whether municipalities could rather                                                               
than  the DMV.   She  stated that  municipalities would  not have                                                               
that ability under the current statute and structure.                                                                           
1:23:24 PM                                                                                                                    
REPRESENTATIVE    JOHNSON   pointed    out   the    $12   million                                                               
municipalities  would lose  is  $12 million  that  would go  into                                                               
Alaskans' pockets.   He stated it is not like  it is vanishing or                                                               
1:23:52 PM                                                                                                                    
TONYA  MILLER,  City of  Unalaska,  explained  that the  City  of                                                               
Unalaska just implemented a $100  biennial fee for junked vehicle                                                               
disposal.   She  explained that  the  City of  Unalaska has  just                                                               
implemented the  law so  the city  has limited  data on  how much                                                               
revenue  would be  lost.    She offered  that  the city  received                                                               
$3,330 in  one month.  She  anticipated the total loss  of $30 to                                                               
$50 thousand  per year.   She  advised members  that the  City of                                                               
Unalaska has had  an issue with junked vehicles,  that it decided                                                               
to provide a  local remedy and thereby  instituted the additional                                                               
$100  biennial  fee.    She concluded  that  removing  the  motor                                                               
vehicle fees  as proposed in  HB 64  would be detrimental  to the                                                               
City of Unalaska.                                                                                                               
1:25:11 PM                                                                                                                    
RICK GIFFORD,  Manager, Kodiak Island Borough  (KIB), related his                                                               
understanding  that the  KIB receives  an additional  $283,000 in                                                               
fees  for the  vehicle registration  fees it  collects.   The KIB                                                               
uses  is fees  to  help  fund schools  but  also remits  $100,000                                                               
towards  recycling junked  and abandoned  vehicles, mostly  older                                                               
vehicles  that  are  left  behind after  the  fishing  season  by                                                               
fishermen and  cannery workers.   He said a 63  percent reduction                                                               
would be approximately  $178,000 per year.   The figure considers                                                               
the fees collected in the first  two years, but he thought it was                                                               
possible the KIB would lose the  entire $283,000.  He said he was                                                               
uncertain.    However,  either  way the  loss  of  revenue  would                                                               
represent a significant amount for the  KIB.  He reported that it                                                               
costs  the city  from  $400 to  $1,000 per  vehicle  to ship  the                                                               
vehicles off the island in order to recycle them.                                                                               
1:27:14 PM                                                                                                                    
MR.  GIFFORD  explained that  if  an  owner was  responsible  and                                                               
recycled the  vehicle rather than  junking, that would  be great.                                                               
Unfortunately, many do not do so.   He further explained that the                                                               
owner  currently only  pays $100  in  vehicle registration  fees.                                                               
Since  owners are  not willing  to  ship their  vehicles off  the                                                               
island  the vehicles  remain  behind  and the  KIB  is forced  to                                                               
remove them.  He recalled the  DMV may have previously had a fund                                                               
designated  for use  for the  purpose of  disposing of  junked or                                                               
abandoned vehicles, but  he was uncertain.  He  commented that he                                                               
has discussed  this issue with  many other communities.   He also                                                               
commented that  this issue is  also a  state issue as  well since                                                               
some of  the vehicles  are left on  state roads  or right-of-way.                                                               
He  expressed  concern  that  HB  64 would  reduce  the  City  of                                                               
Unalaska and  other municipalities' ability to  address junked or                                                               
abandoned vehicle.                                                                                                              
1:28:27 PM                                                                                                                    
REPRESENTATIVE PETERSEN asked whether  a lifetime registration on                                                               
vehicles eight years old or  older would encourage people to keep                                                               
vehicles longer or would add to junked vehicles.                                                                                
MR. GIFFORD said  he was uncertain.  He said  a cost is involved,                                                               
whether  the  cost  is  incurred   by  the  municipality  or  the                                                               
1:29:25 PM                                                                                                                    
REPRESENTATIVE JOHNSON asked  whether it is illegal  to abandon a                                                               
MR. GIFFORD answered yes.  He  indicated that owners often do not                                                               
keep up the registration, but may  give to a friend and the title                                                               
is  not transferred  and  then  they leave  the  island.   It  is                                                               
difficult to find them or enforce the law.                                                                                      
1:30:40 PM                                                                                                                    
JAMIE  SUNDERLAND,  Public  Safety   Director,  stated  that  his                                                               
department  has  the  responsibility   for  junked  or  abandoned                                                               
vehicles.   He related he  has an  employee, the DMV  employee in                                                               
Unalaska,  who works  for  him  at the  satellite  office.   This                                                               
office  is funded  through commission  fees  from DMV.   He  also                                                               
stated that lifetime registration  may impact the commission fees                                                               
since the  city would have  fewer customers.  He  highlighted his                                                               
primary  concern  is  to  address junked  vehicles  in  a  remote                                                               
community.   He  stated that  the  shipping fee  for vehicles  is                                                               
quite high.   The cheapest way to ship a  vehicle out of Unalaska                                                               
to the mainland  is via the Alaska Marine  Highway System (AMHS).                                                               
The cost to  ship a vehicle costs about  $1,000 to/from Unalaska.                                                               
Vehicles  are  typically  older  vehicles  and  many  owners  are                                                               
transient  workers  from  out  of  state or  out  of  country  so                                                               
collecting  the fee  is impossible.    The City  of Unalaska  has                                                               
instituted its $200 biennial tax  to collect a fund for disposing                                                               
of junked or abandoned vehicles.   The city must drain the fluids                                                               
and remove the tires  prior to shipping.   He  said it seems like                                                               
the junked  car would have  a value but it  has not had  a resale                                                               
value in his  experience so it can be quite  expensive to dispose                                                               
of the vehicle.   He expressed concern that if  HB 64 was amended                                                               
to  allow the  municipality to  collect  the tax  outside of  the                                                               
permanent registration,  it may also  prove difficult.   In those                                                               
instances  the  municipality  would  need to  create  a  separate                                                               
registration system  locally for  a vehicle,  perhaps by  using a                                                               
window tag.  The community would  also need to develop a means to                                                               
collect  and enforce  the tax.   He  concluded, "We  see that  as                                                               
potentially difficult."                                                                                                         
1:34:02 PM                                                                                                                    
MR. BREESE  asked whether he  was referring to the  Motor Vehicle                                                               
Registration Tax (MVRT) or another tax.                                                                                         
MR. SUNDERLAND  answered that this  tax is collected  through the                                                               
MVRT.   The City of Unalaska  set the revenue aside  in a special                                                               
fund to be  used for disposal of junked vehicles.   He reiterated                                                               
that the tax is  collected by the DMV as a MVRT.   In response to                                                               
Chair  Wilson, Mr.  Sunderland explained  the MVRT  is the  state                                                               
Motor Vehicle Registration Tax.  He  offered that in the event an                                                               
owner paid $100  to register the vehicle, the owner  would pay an                                                               
additional tax  at the time to  the municipality.  The  DMV would                                                               
return this fee to the community approximately six weeks later.                                                                 
1:35:24 PM                                                                                                                    
REPRESENTATIVE MUNOZ  asked for  the percentage that  is returned                                                               
to communities.                                                                                                                 
MR. SUNDERLAND responded that the  DMV retains eight percent as a                                                               
collection fee.   In response  to Chair Wilson, he  repeated that                                                               
the DMV retains eight percent of the registration tax.                                                                          
1:36:00 PM                                                                                                                    
REPRESENTATIVE  MUNOZ asked  whether 92  percent of  the one-time                                                               
fee, once instituted, would be returned to municipalities.                                                                      
MR. BREESE answered  that the 92 percent of the  one-time fee for                                                               
the  MVRT   would  be  reimbursed  to   municipalities,  but  the                                                               
registration fee is retained by the  DMV.  In further response to                                                               
Representative  Munoz,  he  explained  that  the  way  HB  64  is                                                               
currently written,  the owner would  be charged $100  for vehicle                                                               
registration fee, plus an additional  $100 for the municipal tax.                                                               
He reiterated  the fees for  the permanent  registration proposed                                                               
in  HB   64  is  based   on  five  times  the   current  biennial                                                               
registration tax.                                                                                                               
1:36:51 PM                                                                                                                    
REPRESENTATIVE   PETERSEN  asked   whether  the   bill  is   also                                                               
designating how  much tax local municipalities  can charge owners                                                               
for vehicles.                                                                                                                   
MR. BREESE  answered yes.   HE  said HB 64  would limit  the MVRT                                                               
municipalities  can  collect.   He  suggested  a simple  solution                                                               
exists, which he would be happy to share.                                                                                       
REPRESENTATIVE JOHNSON  asked whether the suggested  changes will                                                               
be incorporated into the forthcoming committee substitute.                                                                      
MR.  BREESE  stated that  the  sponsor  is currently  working  on                                                               
changes that  would be incorporated  into a  committee substitute                                                               
to  present to  the  committee  at a  future  date.   In  further                                                               
response  to Representative  Johnson,  Mr.  Breeze anticipated  a                                                               
committee  substitute would  be prepared  for the  next committee                                                               
REPRESENTATIVE  JOHNSON  suggested  that if  substantive  changes                                                               
will be  made to HB  64, the  committee could adopt  the proposed                                                               
committee substitute (CS) and address the changes at that time.                                                                 
CHAIR P. WILSON indicated that a CS is not yet prepared.                                                                        
REPRESENTATIVE  PETERSEN  said   he  agreed  with  Representative                                                               
1:38:37 PM                                                                                                                    
REPRESENTATIVE MUNOZ agreed also.   She asked whether a future CS                                                               
will contemplate returning a portion  of the registration fees to                                                               
communities, as well.                                                                                                           
MR.  BREESE answered  that the  current statute  does not  return                                                               
registration  fees   to  municipalities  for  any   vehicle  fees                                                               
collected.   The only portion  returned to municipalities  by the                                                               
DMV is the MVRT.  He referred  to two methods to return the fees,                                                               
one  is  by using  a  set  chart,  and  the other  method  allows                                                               
municipalities to  set their own  tax, which  many municipalities                                                               
have already done.   He clarified that this is  not referenced in                                                               
HB 64 in its current form.                                                                                                      
1:39:32 PM                                                                                                                    
REPRESENTATIVE MUNOZ  hoped any  proposed CS would  consider ways                                                               
to lessen  the impact to  municipalities.  She said  she supports                                                               
the intent to  help Alaskan consumers, but  she expressed concern                                                               
about the impact.  She pointed  out that Juneau would face a $500                                                               
thousand impact, which is a big impact for a community.                                                                         
1:40:08 PM                                                                                                                    
CHAIR P. WILSON  related that she requested  some additional work                                                               
on the bill.                                                                                                                    
MR. BREESE offered to share recommendations made by the DMV.                                                                    
CHAIR P. WILSON stated she would leave public testimony open.                                                                   
[HB 64  was held over and  assigned to a subcommittee  chaired by                                                               
Representative  Petersen.    Committee members  assigned  to  the                                                               
subcommittee are Representatives Pruitt, Munoz, and Gruenberg].                                                                 

Document Name Date/Time Subjects
HB_64_Sponsor_Statement.pdf HTRA 2/24/2011 1:00:00 PM
SSTA 4/11/2012 9:00:00 AM
HB 64
HB064-DEC-AQ-02-04-11_(2)1.pdf HTRA 2/24/2011 1:00:00 PM
HB 64
HB064-DOA-DMV-02-18-11 (2).pdf HTRA 2/24/2011 1:00:00 PM
HB 64
HB064-DOA-DMV-02-18-11.pdf HTRA 2/24/2011 1:00:00 PM
SSTA 4/11/2012 9:00:00 AM
HB 64
HB064-STA-DOA-DMV-02-04-111.pdf HTRA 2/24/2011 1:00:00 PM
HB 64
HB64 Bill.pdf HTRA 2/24/2011 1:00:00 PM
HB 64
HB 64 MVRT Revenue.pdf HTRA 2/24/2011 1:00:00 PM
SSTA 4/11/2012 9:00:00 AM
HB 64
HB_64_support_Montana_Law.pdf HTRA 2/24/2011 1:00:00 PM
SSTA 4/11/2012 9:00:00 AM
HB 64
HB064_Class Codes (2).pdf HTRA 2/24/2011 1:00:00 PM
SSTA 4/11/2012 9:00:00 AM
HB 64
HB064_Vehicle Counts-Statewide.pdf HTRA 2/24/2011 1:00:00 PM
SSTA 4/11/2012 9:00:00 AM
HB 64
HB 64 Opposition ltr AML.pdf HTRA 2/24/2011 1:00:00 PM
SSTA 4/11/2012 9:00:00 AM
HB 64
Estimates of revenue effects from HB64 and HB10.pdf HTRA 2/24/2011 1:00:00 PM
HB 10
HB 64