Legislature(1999 - 2000)

04/21/1999 08:07 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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SENATE BILL NO. 148                                                                                                             
"An Act imposing landing fees at state owned and                                                                                
operated airports; and providing for an effective                                                                               
date."                                                                                                                          
                                                                                                                                
                                                                                                                                
CURT PARKINS, Deputy Commissioner, Department of                                                                                
Transportation and Public Facilities testified. The                                                                             
department appreciated the committee's concern with the                                                                         
cost of operating the rural airports.  This would be an                                                                         
additional revenue source that could help close the gap. He                                                                     
advised that other impact should be looked at.                                                                                  
                                                                                                                                
Tape: SFC - 99 #103, Side A  9:54 AM                                                                                            
                                                                                                                                
A past effort to impose landing fees in 1993 failed. The                                                                        
court had ruled that the department inappropriately imposed                                                                     
those fees. This was because policy rather than regulation                                                                      
instituted them. Under this bill, the department would have                                                                     
the ability to impose the fees through regulation and thus                                                                      
meet the court requirement.                                                                                                     
                                                                                                                                
Another effort was made by the Legislature in the increase                                                                      
the aviation fuel tax to an amount that approximated what                                                                       
had been collected in landing fees at the time. The 1994                                                                        
legislation raising that tax stipulated the department                                                                          
could not impose landing fees and the fuel tax could not                                                                        
increase more than what was previously generated with the                                                                       
landing fees.  That provision would expire in January 1,                                                                        
2000.                                                                                                                           
                                                                                                                                
The benefit to the department would be that the fees                                                                            
generated could be used to operate the rural airports.                                                                          
                                                                                                                                
He noted potential weakness in that it did not give the                                                                         
department flexibility to adjust fees over time or to                                                                           
modify for the weight of equipment. There was a potential                                                                       
disadvantage in an inequality occurring with commercial                                                                         
aircraft weighing less than 6000 lbs. He noted smaller                                                                          
aircraft weighing under 6000 lbs. would not be charged the                                                                      
landing fee.  Two carriers servicing a community would be                                                                       
charged differently according to the size of their                                                                              
aircraft.                                                                                                                       
                                                                                                                                
Another concern was with the ability to monitor the                                                                             
activity reports to ensure compliance.  He recommended                                                                          
additional staff to audit.  He also suggested a penalty fee                                                                     
to impose on violators.                                                                                                         
                                                                                                                                
Senator Randy Phillips wanted to know if the department                                                                         
charged a passenger fee for rural airports.  Curt Parkins                                                                       
replied that there was no passenger fee. The department                                                                         
generated most of its fees through space rental. Some                                                                           
funding came from the US Air Force for the Galena and Cold                                                                      
Bay airports. Other funding came from the Federal Aviation                                                                      
Administration.                                                                                                                 
                                                                                                                                
Senator Randy Phillips asked what the department collected                                                                      
versus the cost of operations. The airports generated $2.8                                                                      
million in general funds statewide. He wanted to know how                                                                       
much was then spent on rural airports alone. Curt Parkins                                                                       
estimated the cost of operating rural airports including                                                                        
the cost of leasing projects, at about $20 million. That                                                                        
was about ten-percent. Senator Randy Phillips suggested the                                                                     
department consider a passenger fee. Curt Parkins replied                                                                       
that the department had chosen to pursue passenger charges                                                                      
first at the international airports to access the public                                                                        
acceptance.                                                                                                                     
                                                                                                                                
Senator Al Adams suggested imposing the landing fee in                                                                          
Anchorage since that was were most of the landings                                                                              
occurred. He knew the legislation applied to state-owned                                                                        
airports. He wanted to know if the legislation considered                                                                       
state-owned and leased airports and municipal-owned                                                                             
airports that were maintained by the state. Curt Parkins                                                                        
said it was his understanding this would apply to airports                                                                      
state-owned and operated.  The airport in Ketchikan was                                                                         
state-owned but was operated by the municipality and had                                                                        
its own fee schedule that was considerably higher than what                                                                     
was proposed here. Airports that were owned and operated by                                                                     
the municipalities, such as Juneau and Kenai would remain                                                                       
the same using their own fee schedules. The legislation                                                                         
would apply to 25 certificated airports that the state                                                                          
owned and operated.                                                                                                             
                                                                                                                                
Senator Al Adams asked if this legislation would impose the                                                                     
fee based on weight rather than on the number of                                                                                
passengers. Curt Parkins affirmed and detailed the fees                                                                         
imposed on the different types of aircraft. A Cessna 206                                                                        
and 207 would not pay any landing fee. A Navaho weighing                                                                        
7000 lbs. would pay $3.50 each time it landed. A DC-6,                                                                          
often used for cargo shipments would pay $50.                                                                                   
                                                                                                                                
Senator Al Adams was concerned how this would affect Prudoe                                                                     
Bay and the impact on the economy. Curt Parkins said the                                                                        
fee would not be based on the number of passengers but on                                                                       
the gross weight of the aircraft. He had done some figures                                                                      
on what the cost per passenger would be and would give that                                                                     
information to the committee it the members were                                                                                
interested.                                                                                                                     
                                                                                                                                
Senator Al Adams then asked about mail, noting that the                                                                         
carriers were subsidized by the US Postal Service.  How                                                                         
would that be affected? Curt Parkins was unsure.  Co-Chair                                                                      
John Torgerson said it was his intention that if the mail                                                                       
was handled by a private carrier they would be charged the                                                                      
fee.                                                                                                                            
                                                                                                                                
Senator Gary Wilken asked what was the take-off weight of a                                                                     
Cessna 206 and a 207. Curt Parkins answered the 206 was                                                                         
3600 lbs. and the 207 was slightly larger.  Senator Gary                                                                        
Wilken then wanted to know why floatplanes were exempted.                                                                       
Curt Parkins understood this was similar to what was                                                                            
proposed in the earlier landing fee in 1991-93. He deferred                                                                     
to Steve Pabish (?) to give more information.                                                                                   
                                                                                                                                
STEVE PARISH (incorrect last name provided by                                                                                   
teleconference operator) testified via teleconference from                                                                      
Anchorage.  He explained that the float plane operation                                                                         
cost the rural airports nothing. This was discovered during                                                                     
the public testimony process of the earlier attempt. There                                                                      
were relatively few floatplanes that exceeded the 6000 lb.                                                                      
limit.                                                                                                                          
                                                                                                                                
Co-Chair John Torgerson asked why the 1992 regulations were                                                                     
not written to include all commercial aircraft rather than                                                                      
just charging by weight. Curt Parkins was unsure but said                                                                       
they did not want to push the airlines into using smaller                                                                       
aircraft to avoid the fees.  He noted it was a potential                                                                        
safety concern.                                                                                                                 
                                                                                                                                
There was discussion between the co-chair and Curt Parkins                                                                      
about the use of the different aircraft.                                                                                        
                                                                                                                                
Senator Loren Leman asked how the Ketchikan airport landing                                                                     
fees compared. Curt Parkins responded it was a different                                                                        
mechanism in that a flat fee was charged up to a certain                                                                        
weight. The fee was $1.62 per thousand pounds. An aircraft                                                                      
weighing over 12,000 lbs. was charged $8.50 per landing.                                                                        
                                                                                                                                
Co-Chair John Torgerson asked if 50-cent charge was                                                                             
reasonable. Curt Parkins said it was and compared it to the                                                                     
Anchorage airport.                                                                                                              
                                                                                                                                
Co-Chair John Torgerson asked about the size of aircraft                                                                        
using the rural airports. The fees charged various aircraft                                                                     
were again discussed.                                                                                                           
                                                                                                                                
Senator Gary Wilken asked if a city-owned airport would be                                                                      
exempt.  Co-Chair John Torgerson said they would along with                                                                     
the City of Ketchikan, which leased from the state.                                                                             
                                                                                                                                
Senator Al Adams compared the tax rates on air carriers to                                                                      
other businesses across the state such as mining and                                                                            
tourism.  Curt Parkins was unable to respond but noted that                                                                     
the aviation industry was crucial to development across the                                                                     
state. He referred to his earlier statement that the impact                                                                     
this would have in other areas should be considered.                                                                            
                                                                                                                                
Senator Al Adams commented that this could impact rural                                                                         
development and asked for the department's position on the                                                                      
bill. Curt Parkins answered that the department supported                                                                       
finding mechanisms to close the funding gap for rural                                                                           
airport maintenance and operation costs. This was one                                                                           
mechanism and there could be other ways to meet the need.                                                                       
He was not in a position to say whether the department                                                                          
fully supported or opposed the legislation and that it                                                                          
could be improved.                                                                                                              
                                                                                                                                
DON ETHERIDGE, Union Local #71, testified in opposition to                                                                      
the bill. This affected members of the union.                                                                                   
                                                                                                                                
KIM ROSS, Executive Director, Alaska Air Carriers                                                                               
Association testified in opposition to the bill. She told                                                                       
about her organization. The association wanted the                                                                              
Legislature to cut the budget. However, caution and common                                                                      
sense must prevail, she stressed. Any tax policy decision                                                                       
should be based on accurate facts and sound analysis. She                                                                       
gave a history of the prior attempt to impose a landing                                                                         
fee. She then told of other carrier's attempt to comply                                                                         
with FAA criteria. She gave an analogy of a carrier                                                                             
operated by "Charlie". To avoid paying landing fees,                                                                            
"Charlie" would choose to fly a smaller, less safe aircraft                                                                     
to transport a high school basketball team. Landing fees                                                                        
were discriminatory and created an additional                                                                                   
administrative burden.                                                                                                          
                                                                                                                                
Senator Gary Wilken wanted clarification of "Charlie's"                                                                         
problem. Kim Ross had a breakdown of the amounts the                                                                            
different aircraft would pay. Senator Gary Wilken wanted to                                                                     
understand why "Charlie" would send the basketball team on                                                                      
an unsafe aircraft in order to save $3.50. Kim Ross gave                                                                        
totals of daily amounts the aircraft would pay based on the                                                                     
number of flights they would have.                                                                                              
                                                                                                                                
BUTCH HALLFORD, Vice President, Northern Air Cargo,                                                                             
testified via teleconference from Anchorage in opposition                                                                       
to the bill. He felt the administrative cost would cut into                                                                     
the revenue generated. He believed this legislation placed                                                                      
an unfair expectation on rural communities to make up                                                                           
budget shortfalls.                                                                                                              
                                                                                                                                
Co-Chair John Torgerson commented that the financial load                                                                       
was distributed across the state by the many bills                                                                              
sponsored by the committee.                                                                                                     
                                                                                                                                
Senator Loren Leman noted there was an overall net gain to                                                                      
the rural operating budget.                                                                                                     
                                                                                                                                
Butch Hallford said he had not considered that valid                                                                            
because the Village Safe Water projects would be done in a                                                                      
couple years and the airport fees would continue                                                                                
indefinitely. He noted that the burden would fall on nine                                                                       
carriers.  He also pointed out that there would be a need                                                                       
for more administrators to oversee the program.                                                                                 
                                                                                                                                
Co-Chair John Torgerson clarified *.                                                                                            
                                                                                                                                
Senator Randy Phillips asked if the witness advocated an                                                                        
increase in aviation tax in lieu of this bill. Butch                                                                            
Hallford chose the aviation tax.                                                                                                
                                                                                                                                
Senator Pete Kelly pointed out that the money would have                                                                        
gone away under the current structure.  Therefore that tax                                                                      
structure did not work.                                                                                                         
                                                                                                                                
JOHN STEINER, Assistant Attorney General, Transportation                                                                        
Section, Civil Division, Department of Law, representing                                                                        
the airports, testified via teleconference from Anchorage.                                                                      
He noted the department was already allowed to impose                                                                           
landing fees, as they felt appropriate. They had the                                                                            
flexibility to give considerations                                                                                              
                                                                                                                                
CORBY HUNT, Alaska Airlines testified via teleconference                                                                        
from off net out of state. He felt the legislation was                                                                          
discriminatory and should be imposed on all commercial                                                                          
carriers. He also suggested the fees should be accessed on                                                                      
an airport by airport basis.  He noted the last time the                                                                        
landing fees were imposed, they were ruled by the court.                                                                        
                                                                                                                                
Co-Chair John Torgerson said he felt there should be a cost                                                                     
analysis for each airport anyway.                                                                                               
                                                                                                                                
                                                                                                                                
Tape: SFC - 99 #103, Side B  10:42AM                                                                                            
                                                                                                                                
                                                                                                                                
Senator Al Adams recommended the bill be left in committee.                                                                     
                                                                                                                                
Senator Loren Leman thought there was merit to the argument                                                                     
that some commercial carriers would be charged because of                                                                       
their larger aircraft.  He did not have an amendment                                                                            
prepared to address that.                                                                                                       
                                                                                                                                
Co-Chair John Torgerson agreed but did not think the fee                                                                        
was sufficient. He felt that to impose the fee to smaller                                                                       
aircraft would entail more expenses.                                                                                            
                                                                                                                                
Senator Randy Phillips suggested the committee consider an                                                                      
aviation fuel tax over the landing fee.                                                                                         
                                                                                                                                
Co-Chair John Torgerson asked Corby Hunt if Alaska Airlines                                                                     
would prefer the aviation fuel tax over the landing fee.                                                                        
Corby Hunt noted the accounting of the landing fee was done                                                                     
with no oversight.  As far as the aviation fuel tax, he                                                                         
said he would need to confer with his boss.                                                                                     
                                                                                                                                
Senator Lyda Green was reluctant to put the Department of                                                                       
Transportation and Public Facilities into the regulation                                                                        
process because of the difficulties with airport leasing                                                                        
regulations.                                                                                                                    
                                                                                                                                
Senator Gary Wilken asked what revenues this fee would                                                                          
generate.  Co-Chair John Torgerson noted the fiscal note                                                                        
had not yet been prepared but the department estimated                                                                          
$1.5.                                                                                                                           
                                                                                                                                
Senator Gary Wilken offered a motion to move SB 148 from                                                                        
committee.  Senator Al Adams objected. By a vote of 6-1-2,                                                                      
the motion passed.  Senator Al Adams cast the nay vote.                                                                         
Senator Pete Kelly and Senator Sean Parnell were absent.                                                                        
                                                                                                                                
                                                                                                                                
ADJOURNED                                                                                                                       
                                                                                                                                
Senator Torgerson adjourned the meeting at 10:50 AM.                                                                            
SFC-99  (23) 4/21/99                                                                                                            

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