Legislature(2003 - 2004)

04/04/2003 09:01 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     SENATE BILL NO. 103                                                                                                        
     "An Act increasing certain motor vehicle registration fees;                                                                
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  noted this bill would  increase motor vehicle  fees                                                            
$10 to $15 per year for most classes of vehicles.                                                                               
                                                                                                                                
DUANE  BANNOCK,   Director,  Division   of  Motor  Vehicles   (DMV),                                                            
Department of  Administration, testified via teleconference  from an                                                            
offnet site reading a statement into the record as follows.                                                                     
                                                                                                                                
     In front  of you today  is a senate bill  that was proposed  by                                                            
     the Administration.  Senate Bill 103 is a overall comprehensive                                                            
     bill  review of our  current registration  rates as they  apply                                                            
     mostly to noncommercial  vehicles, a small extent to commercial                                                            
     vehicles  and to other administrative functions  that apply the                                                            
     re-registration  and new registration  of automobiles  in title                                                            
     fee and  lien fee. Those are  the majority of the changes  that                                                            
     are proposed.                                                                                                              
                                                                                                                                
     We'll  start with title  and lien. Title  fee is a fee  that is                                                            
     collected  by the  DMV every  time there is  a title  transfer;                                                            
     whether  it be when  the vehicle is purchased  new or  when the                                                            
     vehicle  is sold to subsequent  owners. Currently that  rate is                                                            
     five dollars.  My records don't show that it  was ever anything                                                            
     but five  dollars. It's been  proposed that that fee  be raised                                                            
     to $15. A  lien fee, likewise, since its inception  has been at                                                            
     five  dollars. A  lien fee is  something that  is paid,  it's a                                                            
     one-time  pay  by the  customer if  they borrow  money  against                                                            
     their   vehicle.  Oftentimes   the  lender  will  process   the                                                            
     paperwork  for  them and  show  the lender  as  a lien  holder.                                                            
     Again, currently five  dollars, and being proposed to be raised                                                            
     to $15.                                                                                                                    
                                                                                                                                
     As we  move into the  noncommercial fees  for many many  years,                                                            
     there  has  been two  sets  of  fees for  vehicles  defined  as                                                            
     passenger  vehicles or vehicles  defined as pick-up  trucks and                                                            
     vans.  The difference  for the  past approximate  20 years  has                                                            
     been  a five  to ten  dollar difference  in  the rates  between                                                            
     those  two vehicles.  This  bill  proposes two  major  factors.                                                            
     Number  one: eliminating  the difference  in the fee  structure                                                            
     between  a passenger  vehicle or  a pick-up  truck, and  raises                                                            
     them both to the same  level. Currently, we collect bi-annually                                                            
     or for a  two-year period and the bi-annual fee  on a passenger                                                            
     vehicle today is $58;  on a pickup truck, it is $78 dollars. We                                                            
     have proposed  that that become  $100 across the board  for all                                                            
     noncommercial  vehicles   that weigh  less  than  10,000,  thus                                                            
     eliminating  the difference  between a  passenger vehicle  or a                                                            
     pick-up truck.                                                                                                             
                                                                                                                                
     As  it applies  to commercial  fees, we have  suggested  and we                                                            
     have  recommended  an increase  of ten  dollars on  all of  our                                                            
     commercial fees rates.  There are currently four different sets                                                            
     of rates  and a commercial vehicle  is registered based  on its                                                            
     weight  category.  We have asked  for a  ten-dollar per  weight                                                            
     class increase.                                                                                                            
                                                                                                                                
Senator  Taylor  recalled   the  Legislature  addressed   commercial                                                            
vehicle  and trailer  registration  in 1999.  He  charged that  this                                                            
legislation  would triple  the licensing fees  of all trailers  from                                                            
$10 to $30 citing language on page 2, line 6.                                                                                   
                                                                                                                                
Mr. Bannock  corrected  the language  referenced  does not apply  to                                                            
commercial trailers. He  reminded that in 1999, the licensing method                                                            
was changed to  a permanent registration with a fee  established. He                                                            
noted that this bill proposed to increase that fee.                                                                             
                                                                                                                                
Senator  Taylor  asked  the  amount of  the  proposed  increase  for                                                            
commercial trailers registration.                                                                                               
                                                                                                                                
Co-Chair  Wilken  directed  attention  to  page  3,  line  5,  which                                                            
stipulates that  the fee for commercial trailers would  be increased                                                            
from $10 to $20.                                                                                                                
                                                                                                                                
Senator Bunde  asked if Section 2  is the "biannual representation"                                                             
of Section 3.                                                                                                                   
                                                                                                                                
Mr. Bannock affirmed.                                                                                                           
                                                                                                                                
FRANK   DILLON,   Executive   Vice   President,    Alaska   Trucking                                                            
Association, testified  via teleconference from Anchorage in support                                                            
of this legislation. He  described the 45-year old trade association                                                            
that  represents  transportation  interests  throughout  Alaska.  He                                                            
stated the  increased fees would generate  revenues without  causing                                                            
undue hardship.                                                                                                                 
                                                                                                                                
JAMES  DOYLE,   Partial  Owner,  Weaver   Brothers,  testified   via                                                            
teleconference  from Kenai in support of the bill.  He referenced an                                                            
amended proposal,  which represents  a 73  percent increase  in fees                                                            
over the  amounts specified  in the  bill. He  objected to this  and                                                            
asked if it would be considered.                                                                                                
                                                                                                                                
Co-Chair Wilken  informed that this bill would be  held in Committee                                                            
and that a  committee substitute would  be drafted to contain  a fee                                                            
restructuring   to  correct  an  inequity  that  was   created  with                                                            
legislation  passed in 1998 and 1999.  He assured the witness  would                                                            
have an opportunity to comment on the updated version.                                                                          
                                                                                                                                
Co-Chair Wilken  asked for an explanation of the one-time  licensing                                                            
of a  trailer that  enters Alaska.  He noted it  has been  suggested                                                            
that the fee for this licensing be increased.                                                                                   
                                                                                                                                
CHUCK  HOSACK,   Deputy  Director,   Division  of  Motor   Vehicles,                                                            
Department of  Administration, testified via teleconference  from an                                                            
offnet location and stated  that a commercial trailer not registered                                                            
in Alaska could obtain  a registration upon entering the State. This                                                            
registration,  he pointed out is the same for in-State  trailers and                                                            
costs  ten dollars.  He  qualified  that the  "power  unit" must  be                                                            
legally  registered in Alaska,  either through  a dual registration                                                             
that allows  the owner to retain registration  in their home  state,                                                            
or through  a commercial trip  permit for a  $350 fee. He noted  the                                                            
fee for a dual  registration is the  same as the regular  commercial                                                            
vehicle registration fees, based on the weight of the vehicle.                                                                  
                                                                                                                                
Co-Chair Wilken  clarified the trailer  could be legally  registered                                                            
through a one-time fee  but the vehicle towing it requires an Alaska                                                            
registration.                                                                                                                   
                                                                                                                                
Mr. Hosack  replied  that either an  Alaska registration  or  a trip                                                            
permit  could be  obtained for  the power  vehicle.  He stated  that                                                            
State law requires  commercial vehicles to be registered  as soon as                                                            
they begin  commercial use in Alaska,  which in the case  of out-of-                                                            
state originators,  is at  the time the vehicle  crosses the  border                                                            
from Canada.                                                                                                                    
                                                                                                                                
Co-Chair  Wilken asked  the registration  fee  for an eight-wheeled                                                             
tractor.                                                                                                                        
                                                                                                                                
Mr. Hosack replied  the annual fee is $321 for a commercial  vehicle                                                            
weighing more  than 18,000 pounds  "unladen" and $248 for  a vehicle                                                            
that weighs between 12,000 and 18,000 pounds.                                                                                   
                                                                                                                                
Co-Chair  Wilken  asked  for an  explanation  of  the International                                                             
Registration Plan (IRP).                                                                                                        
                                                                                                                                
Mr. Hosack  detailed that  the IRP represents  an agreement  between                                                            
the Lower 48 states  to allow commercial vehicles  to travel between                                                            
states without  obtaining separate registration or  trip permits. He                                                            
stated the Plan was mandated  by a federal transportation equity act                                                            
during the 1990s,  although Alaska and Hawaii are  exempt. He shared                                                            
that the  Alaska Trucking  Association and  the National  Governor's                                                            
Association  researched whether  Alaska would  benefit from  joining                                                            
the  IRP and  it  was determined  that  Outside  commercial  vehicle                                                            
operators  would benefit more  than Alaskan  operators and  that the                                                            
cost would be  high for the State to join and maintain  the program.                                                            
As a result,  he said, Alaska has  chosen to not participate  in the                                                            
IRP.                                                                                                                            
                                                                                                                                
Co-Chair  Wilken asked  if a trade  association  within Alaska  made                                                            
this determination.                                                                                                             
                                                                                                                                
Mr. Hosack  affirmed.  He noted  that no  federal  or State  statute                                                            
requires that Alaska join the IRP.                                                                                              
                                                                                                                                
Co-Chair  Wilken  asked what  entity  would make  the determination                                                             
whether  to join the  IRP if  it were  in the best  interest of  the                                                            
"people of Alaska".                                                                                                             
                                                                                                                                
Mr. Hosack  replied that  the State Administration  could  recommend                                                            
participation,  although  a statutory  change would  be required  to                                                            
provide the pro-ration of registration fees.                                                                                    
                                                                                                                                
Co-Chair Wilken commented  that such statutory changes could be made                                                            
in this legislation if  it were deemed to be in the best interest of                                                            
the State.                                                                                                                      
                                                                                                                                
Mr. Hosack affirmed.                                                                                                            
                                                                                                                                
Senator  Olson asked  why the  fee amounts  were  not even  numbers,                                                            
rather than $168, $38, $494, $662, etc.                                                                                         
                                                                                                                                
[Note:  Mr. Hosack and  Mr. Bannock  were testifying  from the  same                                                            
offnet location and did not identify themselves as they spoke.]                                                                 
                                                                                                                                
Mr. Hosack  or Mr. Bannock  replied that the  $35 fee for  passenger                                                            
vehicles  and $40 fee for  pick-up trucks  were initially  collected                                                            
annually. He  continued that the process  was changed to  a biannual                                                            
registration in 1997 and  the fee payments were subsequently doubled                                                            
with a $1-per  year reduction. He noted the Division  is "looking to                                                            
unwind this and go with a simple round number".                                                                                 
                                                                                                                                
Senator Olson did not see this reflected in other fees.                                                                         
                                                                                                                                
Mr.  Hosack  or  Mr.  Bannock  replied  those  fees  reflect  a  $10                                                            
increase.                                                                                                                       
                                                                                                                                
Senator  Taylor  asked  the cost  to  register  commercial  vehicles                                                            
weighing up to 12,000 pounds  and commercial vehicles weighing up to                                                            
18,000 pounds.                                                                                                                  
                                                                                                                                
Mr. Hosack or  Mr. Bannock referenced Sections 2 and  3 of the bill,                                                            
which  he  explained  differentiate   between  biannual  and  annual                                                            
commercial   vehicle  license  fees.   He  stated  that   owners  of                                                            
commercial vehicles  have the option of registering  vehicles either                                                            
annually or biannually.                                                                                                         
                                                                                                                                
Senator Taylor and Mr.  Hosack or Mr. Bannock established the annual                                                            
and biannual registration  fees for commercial vehicles of different                                                            
weights as proposed in this legislation.                                                                                        
                                                                                                                                
Senator  Taylor asked  if  commercial  vehicles traveling  into  the                                                            
State had  three options  for registration:  a trip  permit,  a dual                                                            
registration and an Alaska registration.                                                                                        
                                                                                                                                
Mr. Hosack or Mr. Bannock  corrected that two options are available,                                                            
clarifying  that  a  dual registration   would apply  to  a  vehicle                                                            
currently registered in another state.                                                                                          
                                                                                                                                
Senator Taylor asked the fee for a trailer registration.                                                                        
                                                                                                                                
Mr. Hosack or Mr. Bannock  answered the bill proposed increasing the                                                            
one-time  permanent registration  fee for  commercial trailers  from                                                            
$10 to $20.                                                                                                                     
                                                                                                                                
PAUL  FUHES,  representing  Horizon  Shipping  Line,  formally,  CSX                                                            
Shipping Line,  testified in Juneau in favor of the  legislation. He                                                            
told   of  the  difficulties   of   the  previous   annual   trailer                                                            
registration  process  of tracking  all  trailers,  plus the  higher                                                            
costs to the Division  of Motor Vehicles. He noted  the registration                                                            
fees for  commercial vehicles  are "at  least twice  as high  as any                                                            
other  category"   and  that  additional  increases   could  not  be                                                            
supported.  He then spoke of the cumulative  impact of the  proposed                                                            
fee and tax increases under  consideration this legislative session,                                                            
listing this  bill, the proposal to  amend the legislation  relating                                                            
to studded  tires to  impose a tax  on all tire  purchases,  and the                                                            
legislation proposing to  increase the tax on fuel. He stressed that                                                            
the total  of these increases  would have  a "tremendous impact"  on                                                            
industry and warned  this would increase the cost  of imported goods                                                            
as well as the shipment costs of fish and other commodities.                                                                    
                                                                                                                                
Senator Taylor clarified the witness supports SB 103.                                                                           
                                                                                                                                
Mr. Fuhs affirmed  and noted the company also supports  the proposed                                                            
$2.50 tax on tire purchases.                                                                                                    
                                                                                                                                
Senator  Olson questioned  the  witness' assertion  that  commercial                                                            
vehicle registration fees are twice as high.                                                                                    
                                                                                                                                
Mr. Fuhs  referenced the  proposed fees for  vehicles weighing  more                                                            
than  12,000  pounds  of  $516  and  $662   and  stated  that  large                                                            
commercial  tour buses  have the  next highest  registration fee  at                                                            
$300.                                                                                                                           
                                                                                                                                
Co-Chair Wilken  reminded that prior to 1998 trailers  were licensed                                                            
annually  with fees  of  $51 to  $221 imposed  based  on weight.  He                                                            
shared that  this process  was cumbersome,  as registration  renewal                                                            
stickers had to be attached  to each trailer every year. In 1999, he                                                            
continued,  the regulation process  was changed and replaced  with a                                                            
lifetime registration  with a $10  fee for all commercial  trailers.                                                            
He stressed  this  resulted in  $1.6 million  reduced revenues  from                                                            
trailer registration  fees, and subsequently  the registration  fees                                                            
for all commercial  vehicles, regardless of whether  the vehicle was                                                            
used to haul trailers,  was increased 44 to 59 percent to neutralize                                                            
the  change.   He noted  the commercial  vehicle  registration  also                                                            
applies to leased cars, small pick-up trucks, etc.                                                                              
                                                                                                                                
Co-Chair Wilken  gave an example of one trucking company  that owned                                                            
1,711 trailers:  in 1997 this company  paid $288,691 in fees  and in                                                            
1998,  paid $17,000  in fees  for the  same number  of trailers.  He                                                            
characterized  this  as "the  gift  that kept  on giving"  with  the                                                            
difference passed  along to all other commercial vehicle  owners. He                                                            
informed  that a committee  substitute  would be  drafted to  "right                                                            
that wrong  because it was  clearly bad legislation,  for the  right                                                            
purposes with the wrong affect."                                                                                                
                                                                                                                                
Mr. Fuhs noted  that increased in fees on larger trucks  was "worked                                                            
out with  the teamsters,"  as " we do not  drive our own trucks,  we                                                            
have contracts  with other companies."  He stated that although  the                                                            
trailer registration  fees were reduced,  the shipping company  paid                                                            
the increased  vehicle registration  fees to the "truckers"  through                                                            
renegotiated contracts.                                                                                                         
                                                                                                                                
Mr.  Dillon  added  that  the  majority  of  the  30,000  commercial                                                            
vehicles  in  the State  are  rental  cars and  that  the  increased                                                            
registration fees  computed to approximately $6 per  vehicle. He was                                                            
aware of no complaints related to this increase.                                                                                
                                                                                                                                
Co-Chair  Wilken requested  the information  regarding rental  cars,                                                            
recalling  this  was  a "selling  tool"  when  the  legislation  was                                                            
considered  in 1998. He asserted he  remained disgruntled  about the                                                            
changes made in that legislation.                                                                                               
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                

Document Name Date/Time Subjects