Legislature(2015 - 2016)SENATE FINANCE 532

03/25/2015 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 33 Presentation: Overview FY17 Operating Budget TELECONFERENCED
Heard & Held
+ SB 49 CIVIL LEGAL SERVICES FUND TELECONFERENCED
Heard & Held
+ SB 32 TIMBER SALES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 33                                                                                                            
                                                                                                                                
     "An Act relating to remittance of tire fees; and                                                                           
     providing for an effective date."                                                                                          
                                                                                                                                
9:05:36 AM                                                                                                                    
                                                                                                                                
ANNA KIM, TAX DIVISION,  DEPARTMENT OF REVENUE, discussed SB                                                                    
33. She explained that the bill  changed the due date of the                                                                    
tire  fee return  and payment  from 30  days (following  the                                                                    
calendar quarter)  to the last  day of the  calendar quarter                                                                    
in which  the tires were  sold or studs were  installed. The                                                                    
rationale for  the bill was  to mitigate  taxpayer confusion                                                                    
that  was a  result  of quarterly  tax  due-dates that  fell                                                                    
prior to  the last  day of  the month,  and had  resulted in                                                                    
late fees and penalties.                                                                                                        
                                                                                                                                
Ms. Kim  went over the legislation,  explaining that Section                                                                    
1 changed the  due date of the tire fees.  Currently for the                                                                    
months of  July, October  and January the  fees were  due on                                                                    
the 30th  of the month; the  bill would set the  due date on                                                                    
the last  day of  each month. She  explained that  Section 2                                                                    
aligned the payment  dates used to determine  the timely pay                                                                    
credit (compensation to taxpayers  for timely collection and                                                                    
remittance) with the  new dates in Section  1. She specified                                                                    
that  the  timely pay  credit  was  equal  to 5  percent  of                                                                    
collected taxes, not  to exceed $900 per  quarter. Section 3                                                                    
applied  to the  due date,  which  would be  changed to  the                                                                    
first calendar quarter after the  effective date of the act.                                                                    
Section  4   indicated  that  the  act   would  take  effect                                                                    
immediately.                                                                                                                    
                                                                                                                                
9:08:10 AM                                                                                                                    
                                                                                                                                
Ms. Kim stated  that the attached fiscal note  was zero, and                                                                    
furthered  that there  were no  new positions  proposed. She                                                                    
clarified  that   there  would  be  an   approximate  $5,000                                                                    
reduction  from a  change  in revenue  due  to an  estimated                                                                    
$2,500 increase  in the timely  pay credit and  an estimated                                                                    
$2,500 less in penalties collected.                                                                                             
                                                                                                                                
Vice-Chair  Micciche noted  that he  had a  constituent that                                                                    
commented on the bill, and asked  Ms. Kim to verify if there                                                                    
was  an increase  in the  per-tire fee  associated with  the                                                                    
legislation. Ms. Kim responded in the negative.                                                                                 
                                                                                                                                
Co-Chair MacKinnon  asked if the bill  addressed a quarterly                                                                    
fee. Ms. Kim answered in the affirmative.                                                                                       
                                                                                                                                
Co-Chair MacKinnon  observed that  the state  was collecting                                                                    
about $1.3 million in tire  fees, and that the penalties and                                                                    
interest had gone down over time. Ms. Kim agreed.                                                                               
                                                                                                                                
Co-Chair  MacKinnon  wondered  if the  administration  still                                                                    
believed there  was a reason  some taxpayers were  not aware                                                                    
of the  current fee  timetable. Ms. Kim  discussed education                                                                    
and outreach with taxpayers that  resulted in a reduction in                                                                    
penalties   and  interest   over  time.   She  thought   the                                                                    
legislation  was a  simple  administrative  change to  bring                                                                    
more efficiency to the system.                                                                                                  
                                                                                                                                
Co-Chair  MacKinnon shared  that  in 2012  the penalties  in                                                                    
interest  for the  tire  fee  was $20,026,  in  2013 it  was                                                                    
$18,435, in 2014 it was  $3,477; and reflected a significant                                                                    
drop   in  penalties   to  taxpayers.   She  commended   the                                                                    
administration for its work.                                                                                                    
                                                                                                                                
9:10:42 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon asked for clarification  as to what would                                                                    
happen if  the last day of  the month fell on  a Saturday or                                                                    
Sunday.                                                                                                                         
                                                                                                                                
BRANDON   S.   SPANOS,   DEPUTY  DIRECTOR,   TAX   DIVISION,                                                                    
DEPARTMENT  OF  REVENUE  (via teleconference),  cited  Title                                                                    
43.05,  which  allowed  for  the  payment  due  date  to  be                                                                    
extended to  the next business day  if it fell on  a weekend                                                                    
or holiday.  He added  that the significantly  lower penalty                                                                    
and interest fees  from 2014 had been due  to the department                                                                    
tax auditors  being completely engaged  in developing  a new                                                                    
revenue  management system  and having  no time  to complete                                                                    
audits.                                                                                                                         
                                                                                                                                
Co-Chair MacKinnon  wondered if the bill  was necessary. Mr.                                                                    
Spanos  explained   that  there  was  still   an  occasional                                                                    
taxpayer  that  expressed  confusion with  the  current  due                                                                    
dates.  He  expressed  the need  for  alignment  with  other                                                                    
quarterly tax filings.                                                                                                          
                                                                                                                                
9:12:48 AM                                                                                                                    
                                                                                                                                
Senator Hoffman  asked about the justification  for the tire                                                                    
fee, and  wondered if other  states employed the  same fees.                                                                    
Mr. Spanos was not aware  of the fees other states employed.                                                                    
He  explained   that  the  tire   fee  (for   studded  tires                                                                    
specifically)  was  created to  assist  in  revenue for  the                                                                    
deterioration of  roads. He added  that the fee  for studded                                                                    
tires was twice that of regular tires.                                                                                          
                                                                                                                                
Senator  Hoffman  asked  if   there  was  a  differentiation                                                                    
between the  fees of studded  and regular tires.  Mr. Spanos                                                                    
explained that  the $2.50  new tire fee  applied to  all new                                                                    
tires sold, with an additional $5 fee for studded tires.                                                                        
                                                                                                                                
Senator Hoffman  commented that the most  significant damage                                                                    
to  roads  in Alaska  was  due  to  studded tires,  and  the                                                                    
expense ran into the tens  and possibly hundreds of millions                                                                    
of dollars. He wondered how  tire fees in Alaska compared to                                                                    
other  states.  Mr.  Spanos  agreed   to  get  back  to  the                                                                    
committee with the information.                                                                                                 
                                                                                                                                
Ms.  Kim  interjected  that the  classification  of  studded                                                                    
tires in  the current statute  was defined by  "heavy studs"                                                                    
that  weighed 1.1  grams  or more.  She  concurred that  the                                                                    
department  would  provide   information  about  how  Alaska                                                                    
compared to other states.                                                                                                       
                                                                                                                                
Vice-Chair   Micciche  asked   what   year  Alaska   started                                                                    
collecting  tire fees.  Ms. Kim  thought  that the  original                                                                    
bill to collect the fees was passed in 2003.                                                                                    
                                                                                                                                
9:16:07 AM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon OPENED and CLOSED public testimony.                                                                          
                                                                                                                                
SB  33  was   HEARD  and  HELD  in   committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
SB33 Sponsor Statement.pdf SFIN 3/25/2015 9:00:00 AM
SB 33
SB 49 civil legal services fund sheet.pdf SFIN 3/25/2015 9:00:00 AM
SB 49
SB 49 Letter of Support-Alaska Mental Health Board.pdf SFIN 3/25/2015 9:00:00 AM
SB 49
SB 49 Letter of Support-Council on Disabilities.pdf SFIN 3/25/2015 9:00:00 AM
SB 49
SB 49 Letter of Support-VCI.jpg SFIN 3/25/2015 9:00:00 AM
SB 49
SB 49 Sponsor Statement. ALSC.pdf SFIN 3/25/2015 9:00:00 AM
SB 49
SB49 Letter of Support-ACOA.pdf SFIN 3/25/2015 9:00:00 AM
SB 49
SB 32 AFA Support Letter.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB 32 Briefing Paper.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB 32 CSSB32 Supporting Documents- Resolution.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB 32 Letter of Support 2.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB 32 Sectional Analysis.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB 32 Sponsor Statement.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB 32 Written Testimony - Knight.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB32 Letter of Support 1.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB32 Letter of Support 3.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB32 Summary of Changes.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB32 Supporting Documents- Letter of Support Superior Pellets.pdf SFIN 3/25/2015 9:00:00 AM
SB 32
SB 33 Public Testimony Myers - opposition.pdf SFIN 3/25/2015 9:00:00 AM
SB 33