Legislature(2013 - 2014)BARNES 124

02/14/2013 01:00 PM TRANSPORTATION


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01:06:10 PM Start
01:07:10 PM HB19
02:16:13 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 19 PERM. MOT. VEH. REGISTRATION/TRAILERS TELECONFERENCED
Moved CSHB 19(TRA) Out of Committee
          HB 19-PERM. MOT. VEH. REGISTRATION/TRAILERS                                                                       
                                                                                                                              
1:07:10 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON  announced that the only order  of business would                                                               
be  HOUSE  BILL NO.  19,  "An  Act  relating to  permanent  motor                                                               
vehicle  registration;  relating  to  the  registration  fee  for                                                               
noncommercial  trailers   and  to  the  motor   vehicle  tax  for                                                               
trailers; and providing for an effective date."                                                                                 
                                                                                                                                
1:07:32 PM                                                                                                                    
                                                                                                                                
DARREL BREESE,  Staff, Representative  Bill Stoltze,  speaking on                                                               
behalf of  the sponsor, Representative Bill  Stoltze, stated that                                                               
HB 19  would allow for  permanent registration of  motor vehicles                                                               
older  than  eight years  and  for  noncommercial trailers.    He                                                               
explained that  owners would have an  option to pay a  $25 fee in                                                               
addition   to  the   regular  registration   fee  for   permanent                                                               
registration.  This bill would  add several provisions, including                                                               
one  to  allow municipalities  to  cover  any potential  loss  in                                                               
revenue by establishing a motor  vehicle registration tax (MVRT).                                                               
Currently,  the Division  of Motor  Vehicles  (DMV) collects  the                                                               
MVRT  on behalf  of  the municipalities,  with 16  municipalities                                                               
having established this  tax.  The bill would also  not allow the                                                               
DMV will to  collect any MVRT tax on behalf  of a municipality if                                                               
the rate is set above $100.                                                                                                     
                                                                                                                                
1:09:04 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON asked him to  explain the provision for  the DMV                                                               
not collecting the MVRT if the rate is set higher than $100.                                                                    
                                                                                                                                
MR. BREESE answered  that currently, the state  collects the MVRT                                                               
on  behalf  of  municipalities,  who  levy  the  tax.    The  DMV                                                               
currently  collects  the  MVRT   and  charges  an  eight  percent                                                               
administrative cost  to do so.   The MVRT's rate varies  based on                                                               
the MVRT rate adopted by each  of the 16 municipalities.  Section                                                               
9 of  HB 19 relates  that municipalities  who set their  tax rate                                                               
for  registration of  motor  vehicles  or noncommercial  trailers                                                               
above  $100  must  collect  the  one-time  tax  at  the  time  of                                                               
registration.   He related  that Section 9  shifts the  burden of                                                               
the tax collection  for MVRT rates higher than $100  from the DMV                                                               
to the individual municipality.                                                                                                 
                                                                                                                                
1:10:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ISAACSON asked  for  further  clarification.   He                                                               
understood  the DMV  could only  collect a  one-time registration                                                               
tax.                                                                                                                            
                                                                                                                                
MR. BREESE further explained that  current statute allows for the                                                               
MVRT to be collected once at  the time of registration.  However,                                                               
if the  City of North  Pole sets the  MVRT higher than  $100, the                                                               
city would need to collect the entire tax.                                                                                      
                                                                                                                                
REPRESENTATIVE  ISAACSON related  he  has several  cars that  are                                                               
older  than  eight years.    He  asked  for  the reason  for  the                                                               
constraint.  For example, the  community would have the burden to                                                               
collect the tax if a municipality set the tax at $125.                                                                          
                                                                                                                                
MR. BREESE answered that most people  don't realize the MVRT is a                                                               
municipal tax and not a state tax.                                                                                              
                                                                                                                                
REPRESENTATIVE ISAACSON  asked whether the sponsor  would support                                                               
an amendment that  would remove the cap on the  MVRT collected by                                                               
the DMV on behalf of municipalities.                                                                                            
                                                                                                                                
MR. BREESE  said the sponsor likes  the bill as it  stands but he                                                               
will allow the committee to proceed and consider the measure.                                                                   
                                                                                                                                
1:13:15 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON understood that the  $100 MVRT in question  is a                                                               
municipal tax.                                                                                                                  
                                                                                                                                
MR.  BREESE answered  yes;  the  MVRT is  a  municipal  tax.   He                                                               
clarified  that if  municipalities choose  to enact  the MVRT  in                                                               
excess of $100 the DMV would not  collect it.  He pointed out the                                                               
$100  figure is  an arbitrary  number and  only one  community in                                                               
Alaska -  Dutch Harbor/Unalaska  - would  be affected  since that                                                               
community currently  sets the  MVRT at $116.   He  explained that                                                               
the Dutch Harbor/Unalaska  community would need to  lower its tax                                                               
to $100 or less, if it wishes  the DMV to continue to collect the                                                               
MVRT.   He reminded the  committee that  the MVRT is  a municipal                                                               
tax.   Further, he  pointed out  that municipalities  who collect                                                               
their own taxes  would also not pay the eight  percent it does to                                                               
DMV in  administrative costs, so  those funds would  be available                                                               
to cover  any additional  costs to  implement collections  of the                                                               
MVRT.                                                                                                                           
                                                                                                                                
CHAIR P.  WILSON pointed  out a  spreadsheet in  members' packets                                                               
entitled,  "Estimated  Revenue  MVRT Change  Using  Current  MVRT                                                               
Rates"  that identifies  the  effect  of HB  19  and the  revenue                                                               
losses   in  the   16  communities   over   time  for   permanent                                                               
registration of vehicles.                                                                                                       
                                                                                                                                
1:15:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FEIGE  understood  the   MVRT  is  collected  for                                                               
vehicle   registration  taxes,   but  municipalities   also  have                                                               
property taxes.  He asked whether  the MVRT could be collected at                                                               
the same time using the same process.                                                                                           
                                                                                                                                
MR. BREESE answered yes.                                                                                                        
                                                                                                                                
REPRESENTATIVE FEIGE  asked for further clarification  on whether                                                               
the municipal MVRT  is solely a vehicle tax and  does not contain                                                               
any personal property taxes.                                                                                                    
                                                                                                                                
MR. BREESE answered not to my knowledge.                                                                                        
                                                                                                                                
REPRESENTATIVE  FEIGE  asked  what  the   MVRT  is  used  for  by                                                               
municipalities.                                                                                                                 
                                                                                                                                
MR. BREESE related  his understanding that the  MVRT is deposited                                                               
into the  municipal general funds and  each municipal legislative                                                               
body would  decide how to allocate  its funding.  He  offered his                                                               
belief that  Unalaska uses  its revenue  to remove  abandoned and                                                               
junk vehicles.   He said  he was not aware  of how the  funds are                                                               
otherwise  allocated.   In further  response,  he reiterated  the                                                               
funds would  be deposited  into each  municipal general  fund and                                                               
allocated by the municipality for its specific purposes.                                                                        
                                                                                                                                
1:16:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   FEIGE   related   his   understanding   that   a                                                               
municipality could  replace general  fund revenue  from someplace                                                               
else within the municipality.                                                                                                   
                                                                                                                                
MR.  BREESE   answered  yes;  however,   the  bill   also  allows                                                               
municipalities  to  increase  the   MVRT  rates  for  permanently                                                               
registered vehicles  or noncommercial trailers by  ordinance once                                                               
every two years to make up potential revenue losses.                                                                            
                                                                                                                                
1:17:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE referred to the  16 communities and asked if                                                               
any impose other taxes.                                                                                                         
                                                                                                                                
MR. BREESE  answered yes, several  do, but  he was unsure  of the                                                               
specific taxes levied.                                                                                                          
                                                                                                                                
REPRESENTATIVE  FEIGE asked  whether  any  of the  municipalities                                                               
depend solely on the MVRT for revenue.                                                                                          
                                                                                                                                
MR. BREESE answered no, not to his knowledge.                                                                                   
                                                                                                                                
1:18:05 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON asked  for clarification on  the other  types of                                                               
taxes municipalities collect.                                                                                                   
                                                                                                                                
MR.  BREESE recalled  that  Anchorage  and the  Matanuska-Susitna                                                               
Borough have  real and personal property  taxes, cigarette taxes,                                                               
gas taxes, and business taxes  and other taxes exist, although he                                                               
was unsure of the specific taxes collected.                                                                                     
                                                                                                                                
1:18:55 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON asked for the specific reason for the bill.                                                                     
                                                                                                                                
MR.  BREESE answered  that several  constituents requested  this.                                                               
He  recalled the  issue arose  initially  when some  constituents                                                               
moved from  Montana.   He recalled that  Montana has  had similar                                                               
legislation  in  place  for  several  years,  which  started  the                                                               
conversation.  The idea has grown  as a matter of convenience for                                                               
constituents to  not to have  to routinely  re-register vehicles.                                                               
Further, the  sponsor believes sufficient fees  have already been                                                               
paid for the vehicle registration  during the initial eight years                                                               
of  the  vehicle's life.    The  genesis for  offering  permanent                                                               
registration  for   noncommercial  trailers  is  to   extend  the                                                               
benefits  commercial   trailer  owners  have  had,   noting  that                                                               
permanent registration  has been an  option since 1998 for  a fee                                                               
of $20.                                                                                                                         
                                                                                                                                
1:20:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON asked whether  the fee for registration on                                                               
trucks  was  increased  at  the  time  the  fees  for  commercial                                                               
trailers was decreased to offset the  fee.  He asked whether this                                                               
fee is  inside or outside  the Municipality of  Anchorage's (MOA)                                                               
tax cap.                                                                                                                        
                                                                                                                                
MR. BREESE said he was unsure.                                                                                                  
                                                                                                                                
REPRESENTATIVE  JOHNSON surmised  it probably  is not  inside the                                                               
tax cap.                                                                                                                        
                                                                                                                                
1:21:31 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON asked for clarification.                                                                                        
                                                                                                                                
REPRESENTATIVE  JOHNSON related  a tax  cap is  set at  a certain                                                               
rate to  limit the total  taxes in a municipality,  often related                                                               
to  property taxes.   He  was unsure  if the  MVRT fell  into the                                                               
category limited by the MOA's tax cap.   If not, the fee may fall                                                               
outside the cap, and not be  accounted for under the law that set                                                               
the tax cap.  Therefore, it would be an additional fee.                                                                         
                                                                                                                                
1:22:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS  asked whether he has  specific figures for                                                               
the number of eight-year and  older motor vehicles.  She wondered                                                               
whether the DMV  would reduce staff by an employee  of two if the                                                               
permanent registration  removes a substantial amount  of work for                                                               
staff.                                                                                                                          
                                                                                                                                
MR. BREESE deferred  to the DMV to  specifically answer; however,                                                               
he referred to page two of  the fiscal note, and pointed out that                                                               
the  DMV  estimates  470,400   noncommercial  vehicles  would  be                                                               
eligible for permanent registration in  FY 14.  Additionally, the                                                               
fiscal  note  projects  vehicles   not  renewed  would  represent                                                               
approximately  20   percent  of  the  total   vehicles  annually;                                                               
however, this  is offset  by the  number new  vehicles registered                                                               
each year so it would probably level out over time.                                                                             
                                                                                                                                
1:24:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS understood  the only community that                                                               
would  be  affected  would be  Dutch  Harbor/Unalaska,  since  it                                                               
assesses a MVRT in excess of $100.                                                                                              
                                                                                                                                
MR.  BREESE responded  that all  municipalities will  be affected                                                               
due  to a  loss of  revenue currently  collected every  two years                                                               
since some vehicles would be  permanently registered.  Thus after                                                               
two  years  municipalities  with  an   MVRT  would  not  have  an                                                               
opportunity  to   collect  taxes  on  the   vehicles  permanently                                                               
registered.  He clarified that  Dutch Harbor/Unalaska is the only                                                               
community with an MVRT set at a fee higher than the $100 cap.                                                                   
                                                                                                                                
1:25:15 PM                                                                                                                    
                                                                                                                                
AMY  ERICKSON,  Director,  Division   of  Motor  Vehicles  (DMV),                                                               
Department of Administration (DOA),  began by offering to address                                                               
Representative  Gattis's  earlier question  on  how  HB 19  would                                                               
impact the DMV's  employees.  She stated that only  11 percent of                                                               
motor  vehicle registrations  happen  in-house and  the rest  are                                                               
online transactions.  Therefore the DMV would not be impacted.                                                                  
                                                                                                                                
1:26:07 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON asked how  many communities collect a  MVRT that                                                               
is more than $100.                                                                                                              
                                                                                                                                
MS. ERICKSON  said only Dutch Harbor/Unalaska  collects more with                                                               
a MVRT of $116, but the rest of the communities fall under $100.                                                                
                                                                                                                                
1:26:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ISAACSON asked  about the  cost to  the DMV.   He                                                               
asked whether the  bill would have any  unintended consequence to                                                               
the  small community  of Dutch  Harbor/Unalaska  and the  process                                                               
that the  community would use  to identify the  vehicles exempted                                                               
and pursue the registrations.   He suggested the DMV would likely                                                               
incur  additional   costs  to  track  the   vehicles  permanently                                                               
registered.                                                                                                                     
                                                                                                                                
MS.  ERICKSON answered  that the  DMV would  need to  supply each                                                               
community with the vehicles due for registration.                                                                               
                                                                                                                                
REPRESENTATIVE  ISAACSON   suggested  it  could   increase  DMV's                                                               
expenses that the communities would  need to individually collect                                                               
the balance.                                                                                                                    
                                                                                                                                
MS.  ERICKSON responded  that the  process just  described sounds                                                               
logical.                                                                                                                        
                                                                                                                                
1:28:02 PM                                                                                                                    
                                                                                                                                
CHAIR  P.  WILSON asked  whether  any  information exists.    She                                                               
understood the DMV retains eight  percent in administrative costs                                                               
for collecting the current MVRT.   She asked whether Ms. Erickson                                                               
could estimate  the cost a  community would incur to  collect the                                                               
MVRT on its own.                                                                                                                
                                                                                                                                
MS.  ERICKSON she  was  unsure.   She  clarified  that the  eight                                                               
percent fee that DMV retains is  returned to the general fund and                                                               
is not held by the DMV.                                                                                                         
                                                                                                                                
1:28:59 PM                                                                                                                    
                                                                                                                                
KATHIE  WASSERMAN, Executive  Director,  Alaska Municipal  League                                                               
(AML), stated  the AML has concerns  about HB 19 since  the AML's                                                               
communities  have not  taken a  formal stand  on the  bill.   She                                                               
explained  that each  community  acts separately.   She  recalled                                                               
only one community  has expressed opposition to the  bill and she                                                               
did not  recall any  communities have written  in support  of the                                                               
bill.   She explained that  the AML  has concerns about  the bill                                                               
after  seeing  the revised  figures  from  DMV on  the  potential                                                               
impacts of HB 19.   She said that most of  the concerns relate to                                                               
Section 9, since it would limit  the amount of the MVRT collected                                                               
by the DMV to $100.  For  example, the City and Borough of Juneau                                                               
(CBJ)  collects  about $78  and  could  raise  its tax  to  $100;                                                               
however, each two years the CBJ  would lose the $77 fee from each                                                               
motor   vehicle   owner   that  opted   for   permanent   vehicle                                                               
registration.  Most of the 16  communities use the funds for road                                                               
maintenance and junk car removal, she said.                                                                                     
                                                                                                                                
MS.   WASSERMAN  recalled   the  Matanuska-Susitna   Borough  has                                                               
indicated it  passes on its  fees to Palmer, Wasilla  and Houston                                                               
municipal  governments.    Additionally,  she  expressed  concern                                                               
about  the effective  date  since  in order  to  raise taxes  the                                                               
question  must  go  to  a   vote.    She  outlined  the  process:                                                               
municipalities would  need to pass  an ordinance, which  would go                                                               
to  an election  - with  sufficient  noticing -  and the  results                                                               
would be  reported to the  DMV prior to  enacting the MVRT.   She                                                               
suggested it  may be a two-year  lag, perhaps a little  less, but                                                               
she recalled  the DMV needs  at least  one year to  implement any                                                               
changes  and an  election could  take  seven or  eight months  to                                                               
complete.                                                                                                                       
                                                                                                                                
1:32:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON asked  whether the  MVRT falls  inside or                                                               
outside the municipal tax cap.                                                                                                  
                                                                                                                                
MS.  WASSERMAN  answered   that  she  was  unsure   of  how  each                                                               
municipality works internally.  She  surmised the cap was related                                                               
to property taxes.  She reiterated she was unsure.                                                                              
                                                                                                                                
1:32:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON expressed  his concern  that if  the MVRT                                                               
falls within  the cap the  impact on municipalities  would result                                                               
in  a  $6  million  increase  in  2019  property  taxes  for  his                                                               
constituents.  He related that if  the MVRT falls outside the tax                                                               
cap and  will not  be passed  on to constituents  in the  form of                                                               
property tax increases  then he would have less  concern with the                                                               
bill.  Ultimately,  the burden should not fall  on homeowners, he                                                               
said.                                                                                                                           
                                                                                                                                
1:33:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ISAACSON suggested  this  could potentially  hurt                                                               
municipal  revenues.   He  offered his  belief  that revenues  in                                                               
Fairbanks  fall under  the tax  cap to  ensure taxation  does not                                                               
outpace development  or impede private  investment.   He recalled                                                               
Ms.  Erickson indicated  it could  affect the  DMV's costs.   The                                                               
bill  could affect  potentially  hurt  municipalities, since  the                                                               
cost of mailing  may increase the costs too.   He noted that some                                                               
communities  collect  from  $13,000  to  $18,000  in  MVRT.    He                                                               
concluded  this  could  have  a  significant  impact  on  smaller                                                               
communities.   He wondered if  HB 19 would create  any unintended                                                               
consequences,  such  as  more municipalities  would  need  to  be                                                               
bailed out at some point.                                                                                                       
                                                                                                                                
MS. WASSERMAN  agreed.  She acknowledged  that municipalities are                                                               
also stretched for funds, yet  have certain responsibilities they                                                               
must provide.   Thus the 16  municipalities may need to  pass the                                                               
burden on to  property tax owners or some service  must go by the                                                               
wayside.   However, holding  a vote on  taxes is  also unwelcome.                                                               
She  said  this system  has  been  working very  efficiently  and                                                               
effectively for  the municipalities and  to date the AML  has not                                                               
heard any complaints.   She assumed most people  would prefer not                                                               
to pay taxes.                                                                                                                   
                                                                                                                                
1:36:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ISAACSON asked  if the AML could  support the bill                                                               
if the  committee removed  Section 9.   He acknowledged  that not                                                               
registering older  vehicles would  save people  money.   He asked                                                               
whether removing Section 9 would balance it out.                                                                                
                                                                                                                                
MS. WASSERMAN answered that the  AML would look more favorably on                                                               
the bill, although  she would need to discuss  it with individual                                                               
municipalities.                                                                                                                 
                                                                                                                                
1:37:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS  stated she has received  comments from her                                                               
constituents, but  none from her  municipality.  She  related her                                                               
constituents believe they  have already paid their  MVRT taxes up                                                               
front  for eight  years.   Further, these  constituents will  pay                                                               
taxes again when they buy a  new car.  Therefore her constituents                                                               
want relief on the  tail end.  Even though she  was unsure of the                                                               
average age  of a  vehicle in  Alaska she  suggested that  such a                                                               
vehicle has likely used up its useful life.                                                                                     
                                                                                                                                
1:38:50 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON asked whether  the constituents will  still want                                                               
to drive the eight-year-old vehicles on the road.                                                                               
                                                                                                                                
REPRESENTATIVE GATTIS agreed.                                                                                                   
                                                                                                                                
1:39:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FEIGE did  not  find anything  in  the bill  that                                                               
would limit a municipality's ability to levy a tax.                                                                             
                                                                                                                                
MS. WASSERMAN answered that is correct.                                                                                         
                                                                                                                                
1:39:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FEIGE suggested  that  money would  not be  taken                                                               
away  from  the   municipalities,  but  it  would  be   up  to  a                                                               
municipality to collect taxes on vehicles eight years or older.                                                                 
                                                                                                                                
MS.   WASSERMAN   responded   that  was   incorrect   since   the                                                               
municipalities  would also  need  to set  up  the tax  collection                                                               
system and infrastructure necessary to do so.                                                                                   
                                                                                                                                
REPRESENTATIVE FEIGE  asked whether the  municipalities currently                                                               
have tax collection methods and staff.                                                                                          
                                                                                                                                
MS.  WASSERMAN answered  yes;  but the  system  is for  different                                                               
taxes  and the  municipalities would  need to  figure out  how to                                                               
obtain  information from  the  DMV as  to the  age  of each  car.                                                               
Further,  the  MVRT would  be  levied  differently from  property                                                               
taxes.   She concluded HB 19  would result in some  type of added                                                               
infrastructure.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  FEIGE asked  whether all  communities have  local                                                               
police forces.                                                                                                                  
                                                                                                                                
MS. WASSERMAN replied  that she was unsure if  Nenana or Whittier                                                               
has police,  although she thought  the communities may  each have                                                               
one  officer.   She  agreed  Anchorage and  Bethel  has a  police                                                               
force, but  she thought that the  Bristol Bay area relies  on the                                                               
Alaska State Troopers for enforcement.                                                                                          
                                                                                                                                
1:40:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS asked  for  clarification that  in                                                               
considering  the  projected  loss   the  AML  has  assumed  these                                                               
municipalities will decide not to collect the fees.                                                                             
                                                                                                                                
MS.  WASSERMAN answered  yes.   She  referred to  the figures  as                                                               
representing potential impacts  since the AML is  unsure how long                                                               
a vehicle  would be used  after the permanent registration.   She                                                               
pointed out the older vehicles could be  on the road from 2 to 10                                                               
more years.   Additionally, the  AML is unsure  which communities                                                               
would decide  to collect to make  up any lost revenue.   She said                                                               
it is difficult to predict.                                                                                                     
                                                                                                                                
1:42:01 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON said she  was unsure about  the age of  cars but                                                               
she acknowledged that  her community has numerous old  cars.  She                                                               
did not  know the effect  of the bill  on her community,  but she                                                               
indicated the  roads still need to  be maintained.  She  saw [the                                                               
permanent  registration]  as  problematic  and  related  her  own                                                               
personal experience.   She agreed that the number  of vehicles is                                                               
unpredictable.  She asked Mr.  Breese to speak to Ms. Wasserman's                                                               
earlier comments.                                                                                                               
                                                                                                                                
1:44:31 PM                                                                                                                    
                                                                                                                                
MR. BREESE  questioned Ms. Wasserman's  comments that  the voters                                                               
would need  to approve any tax.   He explained that  this is true                                                               
in  some  communities,  but in  Anchorage  and  Matanuska-Susitna                                                               
Borough the MVRT can be approved  by the city council or assembly                                                               
by  passing an  ordinance.   He  offered his  belief since  these                                                               
communities represent  the highest  populations in the  state, it                                                               
would  impact  the  majority  of  vehicles  that  would  qualify.                                                               
Therefore in Anchorage or the  Matanuska-Susitna Borough a simple                                                               
ordinance change  could change the  MVRT rate, which is  laid out                                                               
in statute and is currently in HB 19.                                                                                           
                                                                                                                                
MR.  BREESE reiterated  that some  cities require  votes for  all                                                               
taxes,  but  not for  the  MVRT  in Anchorage  or  the  MSB.   He                                                               
provided  the  committee  with  a  handout  with  the  number  of                                                               
vehicles  eight  years or  older  in  each community  that  would                                                               
qualify under the bill, as  follows:  Anchorage, 190,075; Bethel,                                                               
2,440;  Bristol Bay,  1,676; Cordova,  2,403; Dillingham,  1,748;                                                               
Juneau, 20,526;  Kenai, 55,885; Ketchikan, 9,308;  Kodiak, 8,940;                                                               
Matanuska-Susitna, 83,919; Nenana,  833; Nome, 1,647; Petersburg,                                                               
2,513;  Sitka, 5,809;  Unalaska, 1,796;  and Whittier,  327.   He                                                               
suggested this addresses how many  vehicles are eligible for each                                                               
of  the  communities.   He  reiterated  that  20 percent  of  the                                                               
vehicles would  not be registered;  however, as new  vehicles are                                                               
registered  more   vehicles  enter   the  pool.     Additionally,                                                               
permanent registration  is not transferable  so in the  event the                                                               
owner  sells the  vehicle with  permanent  registration, the  new                                                               
owner would  need to register  the vehicle and select  whether to                                                               
use the permanent registration.                                                                                                 
                                                                                                                                
1:46:28 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON  remarked that if 20 percent of  the vehicles are                                                               
eligible  for permanent  registration,  coastal communities  must                                                               
take  care of  the [abandoned  or  junk] vehicles.   She  further                                                               
recalled  a  Juneau person  came  into  her office  recently  and                                                               
complained about people driving with expired registrations.                                                                     
                                                                                                                                
1:47:24 PM                                                                                                                    
                                                                                                                                
MS. WASSERMAN pointed  out that Ms. Erickson has  figures for the                                                               
percentage of cars on Alaska's highways over eight years old.                                                                   
                                                                                                                                
MS.  ERICKSON referred  to the  fiscal note.   She  said that  72                                                               
percent  of current  vehicles  on  the road  are  eight years  or                                                               
older.   She also stated that  the average age of  vehicles is 13                                                               
years old.                                                                                                                      
                                                                                                                                
CHAIR P. WILSON said she spoke  to the sponsor about changing the                                                               
vehicle age in  the bill.  The sponsor prefers  not to change the                                                               
age of the vehicles eligible for permanent registration.                                                                        
                                                                                                                                
1:48:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS asked  whether municipalities would                                                               
still  be  affected  if  Section  9,  which  caps  the  amount  a                                                               
municipality  can collect  at $100,  were removed  from the  bill                                                               
since  these municipalities  could not  collect the  MVRT through                                                               
the DMV.                                                                                                                        
                                                                                                                                
MS. WASSERMAN  answered yes;  however, last  year the  AML worked                                                               
closely with  the sponsor's staff,  Mr. Breese on the  MVRT bill.                                                               
Last year's bill  did not contain the language in  Section 9.  In                                                               
fact, the sponsor  removed the language AML had  issues with last                                                               
year  and subsequently  the AML  took a  neutral position  on the                                                               
bill.   While AML  did not  support the bill,  the AML  agreed it                                                               
would remain neutral  on the bill.  She indicated  that Section 9                                                               
was  added this  session to  the MVRT  bill currently  before the                                                               
committee, HB  19.  Although,  municipalities would  likely still                                                               
be affected she  thought they will agree to remain  neutral on HB
19.                                                                                                                             
                                                                                                                                
1:50:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  was   unsure  why  municipalities                                                               
would  remain neutral  since Section  9 would  only affect  Dutch                                                               
Harbor/Unalaska.                                                                                                                
                                                                                                                                
MS. WASSERMAN  answered that the municipalities  are uneasy about                                                               
taking a negative position on the bill.                                                                                         
                                                                                                                                
REPRESENTATIVE  ISAACSON  understood  the  department  would  not                                                               
collect  the  tax; however,  he  thought  Ms. Erickson  said  the                                                               
municipalities could  opt to  collect any MVRT  beyond $100.   He                                                               
asked  for  further  clarification  on  the  effect  of  removing                                                               
Section  9 from  the bill.    He further  asked whether  removing                                                               
Section 9  would remove  the ability  of the  DMV to  collect the                                                               
MVRT on behalf of municipalities.                                                                                               
                                                                                                                                
MR. BREESE shook his head no.                                                                                                   
                                                                                                                                
CHAIR  P.  WILSON  asked  the  negative  response  given  by  the                                                               
sponsor's staff [shook head no] be reflected in the record.                                                                     
                                                                                                                                
1:51:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ISAACSON   understood  the  effect   of  removing                                                               
Section 9 would be to remove the cap of the MVRT.                                                                               
                                                                                                                                
[The committee and sponsor's staff appeared to agree.]                                                                          
                                                                                                                                
1:51:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON suggested a  method exists for communities                                                               
to avoid losing revenue by implementing  a system.  Such a system                                                               
would  be  similar to  the  Municipality  of Anchorage's  (MOA's)                                                               
emission's standards [IM  program], in which the  MOA would issue                                                               
a sticker.   The  registered owner  could receive  a ticket  if a                                                               
vehicle  did not  have a  sticker.   He surmised  such a  program                                                               
could  be  a revenue  generator  for  cities and  municipalities;                                                               
however it  might also  be a  politically tough  issue.   He also                                                               
thought it could be a neutral  issue, as well.  He emphasized his                                                               
concern  about passing  the buck  from one  community or  area to                                                               
another;  especially   since  it   might  cost  owners   more  to                                                               
permanently register a vehicle.   He was unsure if [the permanent                                                               
registration] would  be a big  plus since some  communities might                                                               
impose an extra sticker or star on the window.                                                                                  
                                                                                                                                
1:53:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ISAACSON  suggested that the Fairbanks  North Star                                                               
Borough (FNSB)  does not have  policing authority.   He expressed                                                               
concern that  the borough would  need to become  policing agents.                                                               
He indicated  that the FNSB is  a second-class borough and  not a                                                               
home rule city.  He also  mentioned that Nenana does not have the                                                               
sophistication,  necessarily  [to  implement  this].    He  asked                                                               
whether  the Alaska  State Troopers  would need  to monitor  [the                                                               
permanent registered  vehicles for  compliance].  He  agreed with                                                               
Representative  Johnson that  he also  did not  want to  pass the                                                               
burden on to  municipalities.  He spoke to his  own experience as                                                               
mayor  and the  financial  challenges the  communities face  with                                                               
declining property  values.  He  reiterated his concern  that the                                                               
bill might pass on to  communities an opportunity to charge more.                                                               
He  suggested the  simple  fix would  be to  remove  the cap  and                                                               
owners would continue to pay  the eight percent municipal MVRT to                                                               
the DMV, which will bring about $1 million to the general fund.                                                                 
                                                                                                                                
1:55:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON thought  [Repetitive  Isaacson] might  be                                                               
misunderstanding  the  source  of  the   loss  of  revenue.    He                                                               
explained that  it would not happen  due to the loss  of the $100                                                               
MVRT in  year one  of the  program, but in  year two,  three, and                                                               
four,  during  the  renewal cycle  [when  taxes  for  permanently                                                               
registered  vehicles  would  not   be  collected].    He  further                                                               
explained  his  comments  demonstrated how  municipalities  could                                                               
avoid such  a loss.   He advised the  committee he just  spoke to                                                               
the MOA  and this proposal  [in HB 19]  would fall under  the tax                                                               
cap.  Thus  if the legislature removes the  $6,818,910 million in                                                               
[2019],  referring to  the handout  in members'  packets entitled                                                               
"MVRT  Collections  by  Community  (HB 19  Scenario,)"  the  lost                                                               
revenue  would be  passed on  to  property owners  via the  MOA's                                                               
property  tax  roll.    He   predicted  the  $2,889,180  in  MVRT                                                               
reductions  and savings  in the  Matanuska-Susitna Borough  (MSB)                                                               
would be passed  on in the form of increased  property taxes.  He                                                               
concluded by  stating that  [the effect of]  passing HB  19 would                                                               
increase property taxes.                                                                                                        
                                                                                                                                
The committee took an at-ease from 1:56 p.m. to 2:00 p.m.                                                                       
                                                                                                                                
2:00:07 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON, after first  determining no one else  wished to                                                               
testify, closed public testimony on HB 19.                                                                                      
                                                                                                                                
2:00:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ISAACSON  made a  motion  to  adopt Amendment  1,                                                               
labeled 28-LS0130\A.1, Gardner, 2/14/13, which read as follows:                                                                 
                                                                                                                                
     Page 5, lines 7 - 11:                                                                                                      
          Delete all material.                                                                                                  
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
                                                                                                                                
CHAIR P. WILSON explained that this would remove the MVRT cap.                                                                  
                                                                                                                                
REPRESENTATIVE FEIGE objected for the purpose of discussion.                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  objected.   He asked whether  deleting AS                                                               
28.10.421 (c)  (3) and (4)  would cause any difficulties  for the                                                               
department.                                                                                                                     
                                                                                                                                
MS. ERICKSON said she was online.                                                                                               
                                                                                                                                
REPRESENTATIVE  JOHNSON, after  determining  his  concern was  in                                                               
Section  10  [a different  section  of  the bill],  withdrew  his                                                               
objection.                                                                                                                      
                                                                                                                                
REPRESENTATIVE FEIGE maintained his  objection for the purpose of                                                               
discussion.                                                                                                                     
                                                                                                                                
2:02:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE expressed concern  about removing Section 9.                                                               
He related a scenario in which  a person elected to use permanent                                                               
registration for an eight-year old  vehicle; however, the average                                                               
age  of   the  vehicle  is  13   years.    He  did   not  believe                                                               
municipalities  were restricted  from imposing  a tax.   One  way                                                               
municipalities  could  recover lost  revenue  would  be to  raise                                                               
taxes  on the  first  eight years  of  a vehicle's  registration.                                                               
Thus Section  9 tends to  restrict the amount  municipalities can                                                               
raise, he said.   He asked for the overall point  of the bill and                                                               
whether the purpose of HB 19 is  to increase taxes or if it is to                                                               
eliminate a  perceived hassle for  many citizens since  they need                                                               
to renew vehicle registration.                                                                                                  
                                                                                                                                
CHAIR  P. WILSON  suggested  that the  majority  of people  could                                                               
register  online.   Another consideration  would  be whether  the                                                               
legislature should legislate how  municipalities operate.  In one                                                               
instance,  the bill  would allow  the municipalities  a means  to                                                               
handle  revenue losses,  but on  the  other hand  the bill  would                                                               
allow  people  to  avoid  paying   registration.    However,  the                                                               
permanently  registered vehicles  would still  operate on  roads.                                                               
She   suggested   that   municipalities  might   consider   other                                                               
solutions.                                                                                                                      
                                                                                                                                
2:05:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE asked for the current average tax.                                                                         
                                                                                                                                
MS. WASSERMAN deferred to the DOR.                                                                                              
                                                                                                                                
MS. ERICKSON  stated the MVRT  ranges from  $16 at the  lowest to                                                               
$116 at the highest.                                                                                                            
                                                                                                                                
2:06:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS  related her  understanding of  the purpose                                                               
of the  bill.  First, the  bill would reduce taxes  at a specific                                                               
point in the  age of the vehicle, which will  give some relief to                                                               
owners.    The  second  benefit would  be  relief  from  changing                                                               
plates, adhering stickers, and ensuring  that the paperwork is in                                                               
the vehicle.   She  said from her  personal experience,  that she                                                               
doesn't always  have the snowmachines  or boats available  at the                                                               
time  of   registration  for  the  [noncommercial   trailers]  or                                                               
vehicle.   She  maintained  that relief  from the  aforementioned                                                               
paperwork  represents a  huge  convenience,  which is  paramount.                                                               
For example, a vehicle might be  in storage and the sticker might                                                               
not get  adhered timely.   She concluded that getting  stopped on                                                               
the road [by enforcement] is a huge hassle.                                                                                     
                                                                                                                                
CHAIR  P.  WILSON reminded  members  Amendment  1 is  before  the                                                               
committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  FEIGE withdrew  his  objection.   There being  no                                                               
further objections, Amendment 1 was adopted.                                                                                    
                                                                                                                                
2:08:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON remarked  that  he doesn't  want to  slow                                                               
down the  bill.  In  summary, the committee has  been considering                                                               
the convenience  to the  public versus tax  increases.   While he                                                               
appreciated the  convenience, the  burden would likely  be passed                                                               
on to  all the property owners  in his community.   He emphasized                                                               
he loves  convenience; however, even  only 11 percent  of current                                                               
vehicle renewals  are being  renewed in  person, the  .02 percent                                                               
increase  [in lost  revenue] would  be absorbed  by all  property                                                               
owners.    He  expressed  concern  about  the  tax  increase  and                                                               
concluded by  saying he  did not  want to hold  up the  bill, but                                                               
will speak  to the  sponsor about the  aforementioned issue.   He                                                               
further  suggested  some  of  the  communities  should  speak  up                                                               
instead of being neutral.                                                                                                       
                                                                                                                                
REPRESENTATIVE FEIGE understood  the committee eliminated Section                                                               
9   of  HB   19;  however,   the  way   Section  8   is  written,                                                               
municipalities are free to raise the  MVRT on newer vehicles.  He                                                               
offered  his belief  that the  language allows  municipalities to                                                               
raise  the MVRT  as  a separate  issue  without raising  property                                                               
taxes.                                                                                                                          
                                                                                                                                
CHAIR P. WILSON offered her belief that is the current law.                                                                     
                                                                                                                                
2:11:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  JOHNSON   suggested  passage   of  HB   19  would                                                               
incentivize motor vehicles with  excessive pollution and penalize                                                               
motor  vehicles that  are ecologically  friendly.   He indicated,                                                               
with  respect to  the bill,  that additional  problems arise  for                                                               
him.                                                                                                                            
                                                                                                                                
REPRESENTATIVE  FEIGE  pointed   out  it  would  be   up  to  the                                                               
municipalities.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  JOHNSON responded  that  most municipalities  are                                                               
not able to do  this and he predicted it would  be a tax increase                                                               
for general population for people  who have older motor vehicles.                                                               
He said, "I happen  to be one of them.  I'm  just not prepared to                                                               
raise taxes for convenience.  Thank you, Madame Chair."                                                                         
                                                                                                                                
REPRESENTATIVE GATTIS  remarked that she typically  registers her                                                               
vehicles online, but  another part of the  convenience is getting                                                               
the sticker applied to the license  plate one time and not having                                                               
to deal with it again.                                                                                                          
                                                                                                                                
2:13:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ISAACSON  appreciated the discussion.   He said he                                                               
did  not  want  to  dis-incentivize the  purchase  of  new  motor                                                               
vehicles.   In terms of the  municipalities, a person who  has an                                                               
objection  to a  tax  the  person goes  to  city  hall and  voice                                                               
his/her  concern to  the  assembly or  council  member, which  he                                                               
thought  would limit  [the amount  of  any taxes].   However,  he                                                               
expressed concern  about transferring the MVRT  to property taxes                                                               
or increases to sales taxes.   He pointed out that the Department                                                               
[of   Commerce,  Community   &   Economic  Development   (DCCED)]                                                               
publishes  each   community's  tax   scheme.    He   agreed  with                                                               
Representative Johnson that the  bill may also increase municipal                                                               
property taxes.   He said, "At  this moment, I don't  have a pass                                                               
or no pass.  I think I'm  just going to have a no recommendation.                                                               
I don't know what to do.  I need to know more about this."                                                                      
                                                                                                                                
REPRESENTATIVE JOHNSON  reiterated he  did not  wish to  hold the                                                               
bill up, but it could be an interesting floor debate.                                                                           
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS said he  was looking forward to the                                                               
debate  on  the  floor  [of   the  House].    He  concurred  with                                                               
Representative  Isaacson that  the concern  about local  taxation                                                               
should be  at the ballot  box of the  local elections and  not in                                                               
the state legislature.                                                                                                          
                                                                                                                                
2:15:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE  moved to report  HB 19, as amended,  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.    There  being no  objection,  CSHB  19(TRA)  was                                                               
reported from the House Transportation Standing Committee.                                                                      
                                                                                                                                
2:16:13 PM                                                                                                                    

Document Name Date/Time Subjects
HB 19 Sponsor Statement.pdf HTRA 2/7/2013 1:00:00 PM
HTRA 2/14/2013 1:00:00 PM
HB 19
HB 19 Supporting DMV Registration Classes.pdf HTRA 2/7/2013 1:00:00 PM
HTRA 2/14/2013 1:00:00 PM
HB 19
HB19 Support Motor Vehicle Registration Taxes Rates.pdf HTRA 2/7/2013 1:00:00 PM
HTRA 2/14/2013 1:00:00 PM
HB 19
HB19 Version A.pdf HTRA 2/7/2013 1:00:00 PM
HTRA 2/14/2013 1:00:00 PM
HB 19
HB-19 Opposition letter.msg HTRA 2/7/2013 1:00:00 PM
HTRA 2/14/2013 1:00:00 PM
HB 19
HB 19 Support Hansen.msg HTRA 2/7/2013 1:00:00 PM
HTRA 2/14/2013 1:00:00 PM
HB 19
HB019-DOA-DMV-2-07-13.pdf HTRA 2/7/2013 1:00:00 PM
HTRA 2/14/2013 1:00:00 PM
HB 19
HB19 AML Ltr 2-14-13.pdf HTRA 2/14/2013 1:00:00 PM
HB 19
HB19 Support Chase.msg HTRA 2/14/2013 1:00:00 PM
HB 19
HB019 MVRT estimate 90% renewel no assum MVRT2-14-13.pdf HTRA 2/14/2013 1:00:00 PM
HB 19
HB 19 MVRT Collections by Community 2-24-13.xlsx HTRA 2/14/2013 1:00:00 PM
HB 19