04/25/1994 09:10 AM Senate FIN

  CSSB 256(TRA): An Act relating  to the tax on  transfers and                 
                 consumption of aviation  fuel; and  providing                 
                 for an effective date.                                        
                                                                               
                 Mary Nordale,  representing Federal  Express,                 
                 testified in  opposition to  SB 256.   Robert                 
                 Hallford,  Northern  Air Cargo  employee, and                 
                 Vice   President,   Alaskan    Air   Carriers                 
                 Association,  testified  in  support  of  the                 
                 bill.   CSSB  256(TRA) was  REPORTED  out  of                 
                 committee  with  individual  recommendations,                 
                 and fiscal note for Department of Revenue for                 
                 $20.4                                                         
                                                                               
  CS FOR SENATE BILL NO. 256(TRA):                                             
                                                                               
            An  Act  relating  to  the  tax on  transfers  and                 
            consumption of aviation fuel; and providing for an                 
            effective date.                                                    
                                                                               
  CO-CHAIR  PEARCE  announced  that  SB  256  was  before  the                 
  committee and invited Mary Nordale, Federal Express, to join                 
  the members at the table.                                                    
                                                                               
  MARY NORDALE said that Federal Express was opposed to SB 256                 
  for several reasons.   One, it would add  approximately $12-                 
  13,000 per  month to  the cost  of their  operations out  of                 
  Anchorage.  She  felt this legislation placed the  burden of                 
  small airports on  large air carriers that derive no benefit                 
  from that service.   In 1993, the  legislature directed that                 
  no landing fees be charged at  small rural airports to those                 
  air carriers who use those airports.  She felt if it was the                 
  determination of the  legislature that no such  landing fees                 
  should be charged, then  it should be a general  subsidy and                 
  not a subsidy supported by large carriers.                                   
                                                                               
  Federal  Express   believed  that  this   legislation  would                 
  discourage  increased  usage  of   Anchorage  and  Fairbanks                 
  International  Airports  by  large  international  carriers.                 
  When the  stretch 747s  were developed,  usage of  Anchorage                 
  International Airport dropped  to almost nothing.   She also                 
  believed that the foreign air carriers which pay a large fee                 
  to  Anchorage  and  Fairbanks  would  likely diminish  their                 
  service   because  of   higher  costs   imposed  making   it                 
  uncompetitive.  Federal Express also predicted that it would                 
  diminish purchases  of fuel  in Alaska to  the detriment  of                 
                                                                               
                                                                               
  Mapco,  and  Mapco  would  be  the most  seriously  effected                 
  business  in  the  state.   She  said  Federal  Express  was                 
  exploring alternatives  to purchasing  fuel in  Anchorage in                 
  order to  stay competitive.  Federal Express  asked that the                 
  bill be held so a representative from the company could talk                 
  to the committee.  He would be in town this afternoon.                       
                                                                               
  ROBERT  HALLFORD,  Northern  Air  Cargo  employee  and  Vice                 
  President of Alaskan  Air Carriers Association, representing                 
  large  and small air carriers  said that the Association was                 
  unanimous  in its  support of SB  256.   It was a  matter of                 
  choice  that the fuel  tax be increased,  not desirable, but                 
  the  lesser  of  two  evils  because  without  the  fuel tax                 
  increase, there would be a reimposition of the rural landing                 
  fees.  He disagreed with testimony by Mary Nordale, that the                 
  fuel tax hit the  air carriers disportionately.  He  said it                 
  hit every carrier  proportionately to  the amount that  they                 
  use Alaskan airports and  air space.  The landing  fees only                 
  hit a very few specific carriers in  the state.  There was a                 
  substantial difference in cost but the fuel tax increase was                 
  the only one which hits everyone, small carriers to large.                   
                                                                               
  Mr. Hallford said that the  landing fees previously imposed,                 
  were just  sitting on the  shelf ready to be  reimposed.  It                 
  was clear to  him that the fuel tax  was the preference over                 
  landing fees.                                                                
                                                                               
  SENATOR KERTTULA asked  what percentage  of Federal  Express                 
  deliveries was passed on to  other carriers in rural Alaska.                 
  Ms. Nordale felt there was  very small percentage that  went                 
  into the bush, and that the postal service took care of most                 
  of the rural service.                                                        
                                                                               
  SENATOR  SHARP  MOVED for  passage of  CSSB 256(TRA)  out of                 
  committee  with individual  recommendations.   No  objection                 
  being  heard,  it   was  REPORTED  out  of   committee  with                 
  individual  recommendations,  and  a  fiscal  note  for  the                 
  Department  of   Revenue  for  $20.4,  showing   revenue  of                 
  $(1,725.7).    Senator Rieger  signed  "do pass."   Co-chair                 
  Pearce,  Senator  Sharp  and  Senator  Kerttula  signed  "no                 
  recommendation."