04/18/1994 09:10 AM Senate FIN

  CSHB 453(FIN):      An Act establishing, for purposes of the                 
                      levy  and collection  of the  motor fuel                 
                      tax  and   for  a   limited  period,   a                 
                      different tax levy on residual fuel  oil                 
                      used in  and on certain  watercraft; and                 
                      providing for an effective date.                         
                                                                               
                      Representative Gary Davis, sponsor of HB
,  spoke  in  support  of  the  bill.                 
                      Discussion  was  had by  Co-chair Frank,                 
                      Senators Kerttula and Kelly  regarding a                 
                      sunset provision, and the  effect of the                 
                      bill on  state revenue.   CSHB  453(FIN)                 
                      was HELD in committee.   (Note SB 327 is                 
                      the Senate's companion bill.)                            
                                                                               
  CS FOR HOUSE BILL NO. 453(FIN):                                              
                                                                               
       An  Act  establishing,  for purposes  of  the  levy and                 
       collection of  the motor  fuel tax  and  for a  limited                 
       period, a different tax levy  on residual fuel oil used                 
       in  and  on certain  watercraft;  and providing  for an                 
       effective date.                                                         
                                                                               
  Co-chair  Pearce  announced  that  HB  453  was  before  the                 
  committee and invited Representative Gary  Davis to join the                 
  members  at the table.   She said  that HB 453  could not be                 
  moved today because the  Senate version of the bill,  SB 327                 
  had been noticed instead of HB 453.                                          
                                                                               
  REPRESENTATIVE GARY DAVIS  said that  CSHB 453(FIN) was  the                 
  same bill as companion bill, SB 327.  He  felt it was a good                 
  economic  development bill  that promoted  Alaska's product,                 
  established  jobs,  and  promoted  some  additional  taxable                 
  infrastructure.  He pointed out reducing the motor fuels tax                 
  on residual oil  seemed untimely  but that 5  cents tax  was                 
  stifling sales of residual  oil.  The prime use  of residual                 
  oil  was by  cruise  ships.   The  CS of  HB  453 carried  a                 
  guarantee that the  state would not lose  revenue from sales                 
  of residual oil.   The cruise  lines used it as  bunker fuel                 
  which was  a blend of residual oil plus #2 diesel, on a 1 to                 
  9 ratio.  There would be  the potential of selling 40M  plus                 
                                                                               
                                                                               
  gallons to the cruise lines.                                                 
                                                                               
  Senator Kerttula asked if a sunset provision should be added                 
  to this bill.   Representative Davis  said that there was  a                 
  four year sunset in the bill.  He agreed  that it was a good                 
  clause so the  legislature could review assumptions  made in                 
  this bill.                                                                   
                                                                               
  In answer to Co-chair Frank, Representative Davis said there                 
  was a tourist year in the bill rather than a FY or CY.                       
                                                                               
  Co-chair Pearce announced  that CSHB 453(FIN) would  be HELD                 
  in committee.