Legislature(2011 - 2012)CAPITOL 17

03/15/2011 01:00 PM TRANSPORTATION

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 64(TRA) Out of Committee
Moved CSHB 10(TRA) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
           HB 64-PERMANENT MOTOR VEHICLE REGISTRATION                                                                       
[Contains brief discussion of HB  10, a related bill that affects                                                               
noncommercial trailer registration fees.]                                                                                       
1:07:51 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."                                                                     
CHAIR P.  WILSON asked Representative  Petersen to report  on the                                                               
work  the  subcommittee did  on  the  motor vehicle  and  trailer                                                               
registration fee bills.                                                                                                         
1:08:21 PM                                                                                                                    
REPRESENTATIVE PETERSEN  referred to the subcommittee  work on HB                                                               
10 and  HB 64 and  indicated the  subcommittee met and  have made                                                               
suggestions to  the committee  for consideration.   He  asked his                                                               
staff to provide details.                                                                                                       
DAVID BREMER,  Staff, Representative Pete Petersen,  Alaska State                                                               
Legislature, explained the  changes the subcommittee recommended,                                                               
which  he  said  are  incorporated   into  a  proposed  committee                                                               
substitute  for the  committee's consideration.   He  stated that                                                               
the  subcommittee suggested  removing  the  language in  proposed                                                               
subsection  (b) that  referred to  the lesser  of five  times the                                                               
rate or $100,  and replaced it with "three times  the rate" which                                                               
would apply  to the registration  fee rate and the  Motor Vehicle                                                               
Registration Tax  (MVRT) collection.  The  subcommittee suggested                                                               
adding a  new section,  proposed section 4,  which would  allow a                                                               
municipality  to  establish a  permanent  MVRT.   A  municipality                                                               
could charge more or less than  the three times set in subsection                                                               
(b) of the bill.                                                                                                                
MR.  BREMER  reported  the subcommittee  considered  issues  with                                                               
respect  to collections  budgeting discussed  at prior  committee                                                               
hearings  for both  the  vehicle  registration and  noncommercial                                                               
trailer registration.   He stated  that the state  revenues would                                                               
increase  for two  years, but  revenues would  drop off  for each                                                               
year thereafter.   Currently, emissions tests  (I/M) are required                                                               
in  Anchorage.    Owners  would   still  be  required  to  obtain                                                               
emissions test and present the results  to the DMV at the time of                                                               
renewal.   Older vehicles  are most likely  to fail  I/M testing,                                                               
and someone who  has permanent registration may move  into an I/M                                                               
area and  there is no way  to verify the vehicle  can comply with                                                               
the  IM  requirements.    Owners  in I/M  areas  would  still  be                                                               
required to obtain I/M testing.                                                                                                 
1:13:30 PM                                                                                                                    
MR. BREMER  related that HB 64  is based on Montana's  law, which                                                               
allows for  permanent motor vehicle  registration based on  a fee                                                               
of five  times the  vehicle registration  rate for  vehicles that                                                               
are 11 years  old.  The subcommittee  suggests inserting language                                                               
eight  years old  and  three  times the  rate.    Once a  vehicle                                                               
reaches 14  years, a  municipality would  begin to  lose revenue.                                                               
The benchmark arrived at is a  combination of the vehicle age and                                                               
a multiplier of the registration rate.   He said that 34 years is                                                               
the point  at which  the bill becomes  revenue neutral.   Montana                                                               
permanent registration  also applies  to light vehicles  only, or                                                               
vehicles of  one ton  or less  whereas the  proposed HB  64 would                                                               
apply to  all vehicles.   Montana  provides the  county treasurer                                                               
the authority to  collect the motor vehicle tax.   In Alaska, the                                                               
tax  is  an  MVRT,  which is  not  collected  by  municipalities.                                                               
However, the bill allows a  municipality to establish a permanent                                                               
MVRT.   in the original  HB 64,  motorcycle fees were  set higher                                                               
than  the MVRT.   The  subcommittee  removed the  lesser of  five                                                               
times  the  rate or  $100,  which  addresses the  motorcycle  fee                                                               
issue, he said.                                                                                                                 
MR. BREMER recalled  the issue of safety, noting  that people may                                                               
wish to drive their motor vehicle  longer, which could lead to an                                                               
increase in the number of unsafe  cars on the roadway.  Permanent                                                               
registration is  not transferable, but is  not enforceable unless                                                               
a  driver  is pulled  over  by  law  enforcement.   Some  members                                                               
expressed  concern  over  liability  issues  if  a  vehicle  with                                                               
permanent  registration  is  sold  and not  reregistered.    This                                                               
issued is not easily detected unless  the person is involved in a                                                               
vehicular accident.                                                                                                             
1:16:10 PM                                                                                                                    
MR. BREMER related  a concern with respect to  DMV funding, which                                                               
is receipt  based funding.   If the  DMV revenues decreased  to a                                                               
level below  the necessary funding  level, the  legislature would                                                               
need to  enact a new  funding mechanism for the  DMV's day-to-day                                                               
MR.  BREMER highlighted  the  current  Municipality of  Anchorage                                                               
(MOA) tax  cap limits the  amount of  taxes the MOA  can collect.                                                               
This bill  would increase  MVRT revenues in  the first  two years                                                               
significantly  with a  corresponding property  tax decrease.   In                                                               
year  three and  thereafter,  MVRT  revenues would  significantly                                                               
decrease, which  could adversely  affect MOA property  tax rates.                                                               
The  MOA's  tax cap  is  calculated  annually  based on  all  tax                                                               
revenues  collected,   including  property  tax,   liquor  taxes,                                                               
tobacco  taxes.   As  MVRT tax  income  decreases property  taxes                                                               
would increase.                                                                                                                 
MR.  BREMER related  that  the  subcommittee discussed  potential                                                               
amendments  to HB  64.    The first  amendment  was proposed  and                                                               
withdrawn  for further  discussion by  the full  committee.   The                                                               
subcommittee considered  on page 1, line  12 of HB 64  to replace                                                               
"eight"  with "fourteen"  to push  back the  eligibility date  of                                                               
vehicles to  lessen potential revenue  loss.  He  reiterated that                                                               
the amendment was proposed, discussed, and withdrawn.                                                                           
MR. BREMER  stated the subcommittee  considered on page  2, lines                                                               
5-6 of HB  64, to replace "three" with "six"  times the permanent                                                               
registration  fees to  increase permanent  registration cost  and                                                               
reduce  revenue   loss.    This  amendment   was  considered  and                                                               
withdrawn.  Finally, the subcommittee  considered on page 2, line                                                               
29 of HB 64 to replace  2012 with 2014 to allow municipalities to                                                               
set a  permanent MVRT.   The municipality  must file a  notice of                                                               
change  by January  1  of the  preceding year  in  which the  tax                                                               
change  would take  effect.   A municipality  may not  change the                                                               
amount of the  tax imposed more than once every  two years.  Some                                                               
municipalities  set  their MVRT  last  year  and would  need  the                                                               
effective  date  adjusted  to enact  a  permanent  motor  vehicle                                                               
registration tax without incurring a drastic loss of revenue.                                                                   
1:20:40 PM                                                                                                                    
MR.   BREMER  recapped   the  subcommittee's   work  on   HB  10.                                                               
Currently,  owners  can  register their  commercial  trailers  by                                                               
paying a one-time fee for  permanent registration.  This bill, HB                                                               
10, would  offer the  same consideration  for owners  to register                                                               
noncommercial trailers.   Some  of the  same issues  were raised,                                                               
but  the revenue  issues  were minimal.    The sponsor  suggested                                                               
incorporating  language from  Section 4,  of  64 into  HB 10,  in                                                               
order  to  allow  municipalities   a  mechanism  to  collect  any                                                               
permanent MVRT for trailers.   This provision is necessary in the                                                               
event that HB 10 passes prior to passage of HB 64.                                                                              
1:21:52 PM                                                                                                                    
REPRESENTATIVE  PRUITT  moved  to adopt  the  proposed  committee                                                               
substitute (CS), labeled 27-LS0327\I,  Luckhaupt, 3/14/11, as the                                                               
working  document.   There  being  no  objection, Version  I  was                                                               
before the committee.                                                                                                           
1:22:23 PM                                                                                                                    
DARRELL BREESE, Staff, Representative  Bill Stoltze, Alaska State                                                               
Legislature, on  behalf of one  of the  prime sponsors of  HB 64,                                                               
Representative  Bill Stoltze,  stated that  the sponsor  reviewed                                                               
and the  agrees with the  changes incorporated into  the proposed                                                               
CS, Version I.  He also  discussed the effective date change with                                                               
the sponsor, who  agrees since it would  allow the municipalities                                                               
to make  an adjustment  to the MVRT.   Additionally,  the sponsor                                                               
agreed to  add the language from  proposed Section 4 of  HB 64 to                                                               
HB 10,  which would allow  the permanent registration rate  to be                                                               
set for noncommercial trailer ownership.                                                                                        
1:23:14 PM                                                                                                                    
REPRESENTATIVE  MUNOZ referred  to the  issue for  the MOA.   She                                                               
asked if  the municipality takes advantage  of increased revenues                                                               
and budgets  the revenues  over ten years  whether the  MOA would                                                               
run into the problem of revenue  shortfalls after year two of the                                                               
permanent registration for motor vehicles.                                                                                      
MR. BREESE answered  no.  He discussed this with  the MOA mayor's                                                               
office, who advised him that so  long as the MVRT is collected in                                                               
2010  but accounted  for 2011-13,  that  the MOA  would not  have                                                               
issues  with major  adjustment  to  the tax  cap  or tax  revenue                                                               
collected.  The MOA could assign  the MVRT revenue to a different                                                               
year, such as 2011-2013, the revenue  would affect the tax cap in                                                               
the subsequent years.                                                                                                           
1:24:24 PM                                                                                                                    
REPRESENTATIVE  MUNOZ recapped  the  amendments the  subcommittee                                                               
discussed.    The subcommittee  did  not  have consensus  on  two                                                               
amendments.  She  clarified that the subcommittee  brought up the                                                               
first amendment for discussion to  push back the eligibility date                                                               
to a higher level but did not reach any consensus.                                                                              
1:25:24 PM                                                                                                                    
MR. BREESE, in  response to Chair P. Wilson, explained  that if a                                                               
municipality decides to set an MVRT  rate, the rate it sets would                                                               
cover the municipal tax imposed for  the life of the vehicle.  In                                                               
further   response  to   Chair  P.   Wilson,  he   described  the                                                               
registration  fees.   Currently,  Alaska statutes  allow a  motor                                                               
vehicle registration tax  (MVRT) rate to be collected  on the age                                                               
of the motor vehicle.  As  per the table set in existing statute,                                                               
once  a vehicle  is eight  years old,  the rate  is flat.   Thus,                                                               
additional MVRT is  not imposed on motor vehicles  eight years or                                                               
older.   A municipality  can also elect  to impose  an additional                                                               
MVRT,   by   ordinance.     He   recalled   that  currently,   16                                                               
municipalities have  done so.  He  related a scenario in  which a                                                               
municipality would charge $50 or  $100, instead of charging a fee                                                               
of $25  set in  current statute.   The  municipality can  set the                                                               
rate based on  the vehicle age and at a  rate that a municipality                                                               
determines provides adequate revenue for the municipality.                                                                      
CHAIR  P.   WILSON  asked  whether   a  municipality   could  add                                                               
additional fees in year nine or 10.                                                                                             
MR. BREESE  answered that after  year eight, the MVRT  rate would                                                               
be flat,  but the provision would  allow a municipality to  set a                                                               
fee  for  motor  vehicle  owners  who  elect  to  have  permanent                                                               
registration.   Thus, a  municipality could  impose an  extra fee                                                               
and  decide  the amount  of  the  fee  required to  register  the                                                               
vehicle  permanently  to  keep  the  municipal  revenue  neutral.                                                               
Additionally, the municipality could  decide to accept the "three                                                               
times" fee as  currently written.  The proposed Section  4 of the                                                               
committee substitute  (CS) for HB  64 would allow  a municipality                                                               
to set  a certain tax  for permanent motor  vehicle registration.                                                               
It  is possible  an  owner  could decide  to  wait until  his/her                                                               
vehicle  is  12  years  old   before  permanent  registration  is                                                               
selected.  At the point  an owner selects permanent registration,                                                               
any municipal  fees would apply,  if the municipality  has passed                                                               
an ordinance  imposing additional  one-time registration  fees on                                                               
motor  vehicles,  he said.    In  further  response to  Chair  P.                                                               
Wilson,  Mr.  Breese  he reiterated  the  process  municipalities                                                               
would  use to  collect either  three  times the  MVRT or  another                                                               
amount set  by municipal  ordinance for any  amount it  elects to                                                               
1:29:37 PM                                                                                                                    
REPRESENTATIVE  PETERSEN pointed  out that  the MOA's  Treasurer,                                                               
Cheryl  Frasca, said  the  collection  of the  MVRT  is based  on                                                               
collection   rather  than   on   budgeting.     He  related   his                                                               
understanding that the MOA is not  set up to collect taxes in one                                                               
year and budget it over other years.                                                                                            
1:30:15 PM                                                                                                                    
RICK GIFFORD,  Manager, Kodiak Island Borough  (KIB), stated that                                                               
the KIB still  has concerns with HB  64.  He said  it was unclear                                                               
in  HB  64  exactly  how   the  MVRT  will  be  administered  and                                                               
collected.  He related his  understanding that municipalities use                                                               
the  MVRT funds  for abandoned  vehicles, noting  that the  older                                                               
vehicles cause problems in Kodiak.   He recalled that the DMV had                                                               
a  similar fund  and reducing  the overall  MVRT collected  would                                                               
impact the DMV's ability to  assist municipalities.  He expressed                                                               
his concern over HB 64.                                                                                                         
1:32:45 PM                                                                                                                    
WHITNEY  BREWSTER, Director,  Division of  Motor Vehicles  (DMV),                                                               
Department  of Administration  (DOA), stated  the CS  drastically                                                               
reduces the  fiscal note from  the DMV.   She advised the  FN was                                                               
submitted  just prior  to  this hearing.    She highlighted  that                                                               
removing  certain  language from  the  bill  solidifies the  fees                                                               
collected by the DMV.                                                                                                           
CHAIR P. WILSON related that she  has not yet received the fiscal                                                               
note and asked for clarification.                                                                                               
MS. BREWSTER understood.  The  Governor's office prepared a draft                                                               
fiscal note since the CS had not  yet been adopted.  In the first                                                               
year,  FY   2012  the  change   in  revenue  would   increase  to                                                               
$3,550,000, and revenue would increase  in FY 2013 to $4,120,000.                                                               
In  FY 2014,  the DMV  anticipates  a revenue  reduction of  $1.2                                                               
million, in  FY 2015 the  DMV anticipates a revenue  reduction of                                                               
$1,500,000, in FY  2016 the DMV estimates a  revenue reduction of                                                               
$1,500,000,  and  in  FY  2017 the  DMV  estimates  a  $1,800,000                                                               
revenue reduction.   She stated that the  CS dramatically changes                                                               
the fiscal note.   In response to Chair P.  Wilson, she responded                                                               
that  the DMV's  proposed  budget is  approximately $16  million.                                                               
She stressed that  with the adoption of the proposed  CS, the DMV                                                               
does not see an impact on  the DMV's budget.  In further response                                                               
to Chair P. Wilson, she  indicated that the proposed changes will                                                               
reduce  the overall  revenue  collected,  but in  FY  10 the  DMV                                                               
collected approximately $65.8 million  in revenue, which is still                                                               
substantially more than necessary to run DMV.                                                                                   
CHAIR  P. WILSON  related  the revenue  collected  would be  less                                                               
revenue collected for the general fund each year.                                                                               
MS. BREWSTER agreed.                                                                                                            
1:36:16 PM                                                                                                                    
KATHIE  WASSERMAN, Executive  Director,  Alaska Municipal  League                                                               
(AML), stated that she spoke  to a number of municipalities prior                                                               
to the meeting.  Many of  them indicated that the MVRT funds help                                                               
with junk car  removal.  If this bill  passes, the municipalities                                                               
will need  to determine how  much tax to  require.  She  said the                                                               
municipalities would estimate the proposed  MVRT, since it is not                                                               
possible  to  determine  how  many years  an  older  vehicle  may                                                               
operate.    Thus, some  municipalities  will  have shortfalls  or                                                               
excesses, accordingly.   Additionally, municipalities would still                                                               
need to adopt the tax change  by ordinance and may result in some                                                               
"pushback" from  residents.  She  is most familiar with  the City                                                               
and Borough  of Juneau, which  collects $22 per  registered motor                                                               
vehicle, or basically $11 per year.   If an automobile will be on                                                               
the road for an indeterminate  amount of time, the municipalities                                                               
express concern.  The system seemed  to work fine.  She concluded                                                               
that the municipalities  are at a loss in terms  of assessing the                                                               
overall  impact,  which would  likely  increase  personnel.   She                                                               
said, "The municipalities are not comfortable with this bill."                                                                  
1:38:46 PM                                                                                                                    
CHAIR P.  WILSON, after first  determining no one else  wished to                                                               
testify, closed public testimony on HB 64.                                                                                      
1:38:57 PM                                                                                                                    
REPRESENTATIVE PETERSEN suggested considering  the age of vehicle                                                               
for eligibility for  one-time registration.  The  current CS uses                                                               
eight years,  the Montana model  uses 11  years.  He  wondered if                                                               
the bill was moved to 11  years it may allow municipalities to be                                                               
revenue  neutral until  motor vehicles  are  17 years  old.   The                                                               
number of motor vehicle on the  roadway greater than 17 years old                                                               
diminishes rather quickly,  he said.  Thus, it  would likely have                                                               
a little less  effect on municipalities strapped  for funding, he                                                               
1:41:03 PM                                                                                                                    
REPRESENTATIVE  PETERSEN  made  a   motion  to  adopt  Conceptual                                                               
Amendment 1 to HB  64.  He referred to page 1, line  12 of HB 64,                                                               
to change the applicable vehicle age from "eight" to 11.                                                                        
REPRESENTATIVE JOHNSON objected.                                                                                                
REPRESENTATIVE JOHNSON  related the committee  spent considerable                                                               
time discussing  how to best accommodate  the municipalities, but                                                               
little  time  to  discuss  the convenience  or  cost  savings  to                                                               
consumers.   The  point of  this bill  has somewhat  been missed,                                                               
which is to  save money, time and convenience for  consumers.  He                                                               
said it  might be  inconvenient for  municipalities.   He pointed                                                               
out that any money municipalities lose  is money that is saved by                                                               
consumers.  He maintained his objection.                                                                                        
1:43:10 PM                                                                                                                    
A roll  call vote was  taken.  Representatives  Munoz, Gruenberg,                                                               
and  Petersen   voted  in  favor   of  Conceptual   Amendment  1.                                                               
Representatives  Johnson,  Feige,  Pruitt, and  P.  Wilson  voted                                                               
against it.   Therefore, Conceptual Amendment 1 failed  by a vote                                                               
of 3-4.                                                                                                                         
1:43:55 PM                                                                                                                    
REPRESENTATIVE  PRUITT moved  to  report  the proposed  committee                                                               
substitute  (CS)  for  HB  64,  labeled  27-LS0327\I,  Luckhaupt,                                                               
3/14/11,  out of  committee with  individual recommendations  and                                                               
the accompanying  fiscal note.   There  being no  objection, CSHB                                                               
64(TRA)  was  reported  from the  House  Transportation  Standing                                                               

Document Name Date/Time Subjects
HB 131.Community & Transportation Board.pdf HTRA 3/15/2011 1:00:00 PM
HB 131
HB131 Sectional Analysis.2.2.11.pdf HTRA 3/15/2011 1:00:00 PM
HB 131
HB131.Sponsor Statement.2.14.11.pdf HTRA 3/15/2011 1:00:00 PM
HB 131
HB131.Alaska Mobility Coalition support ltr.2.15.11.pdf HTRA 3/15/2011 1:00:00 PM
HB 131
HB131.Trust transportation priorities.pdf HTRA 3/15/2011 1:00:00 PM
HB 131
HB131.Gov Task Force Recommendation Report.2.11.10.pdf HTRA 3/15/2011 1:00:00 PM
HB 131
HB131.Gov Coordinated Transportation Task Force.pdf HTRA 3/15/2011 1:00:00 PM
HB 131
HB0131A.pdf HTRA 3/15/2011 1:00:00 PM
HB 131
HB131-DOT-PD-3-11-11.pdf HTRA 3/15/2011 1:00:00 PM
HB 131
CSHB64- sub committee version I.pdf HTRA 3/15/2011 1:00:00 PM
HB 64
HB64 Vehicle Counts Statewide.pdf HTRA 3/15/2011 1:00:00 PM
HB 64
HB 64 CS Section Changes.pdf HTRA 3/15/2011 1:00:00 PM
HB 64
HB 64cs Sponsor Statement.pdf HTRA 3/15/2011 1:00:00 PM
HB 64
CSHB10 Ver B.pdf HTRA 3/15/2011 1:00:00 PM
HB 10