03/10/2009 01:30 PM Senate LABOR & COMMERCE

            SB  14-EXTEND MOTOR FUEL TAX SUSPENSION                                                                         
                                                                                                                                
2:25:55 PM                                                                                                                    
CHAIR PASKVAN announced SB 14 to be up for consideration.                                                                       
                                                                                                                                
TOM OBERMEYER, staff to Senator Davis,  sponsor of SB 14, said it                                                               
extends  the  motor  fuel tax  suspension  period.  The  governor                                                               
originally suspended  the tax  to help  stimulate the  economy in                                                               
Alaska.  However, Alaska  continues to  pay some  of the  highest                                                               
motor fuel  prices in  the nation;  it affects  the price  of all                                                               
goods that have to be shipped here.                                                                                             
                                                                                                                                
Air and cruise travel to Alaska  is also declining because of the                                                               
current  recession. Extending  the suspension  of the  motor fuel                                                               
tax will have  a major impact on the enormous  quantities of fuel                                                               
consumed in the transport of goods  and people in Alaska. It will                                                               
encourage cargo  carriers to maintain  flights and cargo  hubs in                                                               
Alaska,  and it  will encourage  air and  cruise lines  to reduce                                                               
fares to stimulate demand.                                                                                                      
                                                                                                                                
2:28:39 PM                                                                                                                    
SENATOR  MEYER asked  if the  gist of  the bill  is to  give some                                                               
relief  to   their  constituents  who  are   suffering  with  the                                                               
recession and  to help  tourists come to  the state,  which helps                                                               
the economy. Last year the gist  was that the state had plenty of                                                               
money, but  constituents were still  suffering because  they were                                                               
paying  high prices  for motor  fuel. He  is perfectly  okay with                                                               
helping constituents, and,  "Folks do need every  break that they                                                               
can  get."  He wanted  to  know  if  the suspension  affects  the                                                               
state's ability to receive any federal highway funds.                                                                           
                                                                                                                                
MR.  OBERMEYER answered  that the  tax  affects not  just to  the                                                               
average  consumer, but  also to  people in  the Bush.  It affects                                                               
aviation and  water craft  fuel prices, as  well. These  are very                                                               
substantial  amounts  of money;  they  have  just heard  that  28                                                               
pilots are being transferred from  FedEx and fuel usage in Alaska                                                               
is being reduced due to  the current recession. This measure will                                                               
help  maintain  the  economy  as  well  as  helping  the  average                                                               
consumer.                                                                                                                       
                                                                                                                                
2:31:36 PM                                                                                                                    
JOHANNA  BALES,  Deputy  Director, Tax  Division,  Department  of                                                               
Revenue (DOR), said the previous  legislation required motor fuel                                                               
dealers to  continue to  report the  amount of  fuel used  to the                                                               
department so  it could provide  the information required  by the                                                               
U.S. Division of Highways. Some  of the information is estimated,                                                               
but the  federal Department  of Highways is  fine with  that, and                                                               
said the state does  not have to impose a fuel  tax, but it still                                                               
has to provide them with the amounts of fuel used on the road.                                                                  
                                                                                                                                
SENATOR  MEYER  said  last year  this  was  the  administration's                                                               
proposal and asked if the governor still supports it.                                                                           
                                                                                                                                
MS. BALES answered yes.                                                                                                         
                                                                                                                                
2:33:56 PM                                                                                                                    
SENATOR  BUNDE  said the  sponsor  statement  talks about  cruise                                                               
lines and asked if they pay a gas tax on their bunker fuel.                                                                     
                                                                                                                                
MS.  BALES answered  that it's  possible  for the  ships to  have                                                               
enough fuel if  they take it on in Washington.  The state doesn't                                                               
have  actual  data  that  shows  the end  users;  they  only  get                                                               
information from the qualified dealers.                                                                                         
                                                                                                                                
SENATOR  BUNDE asked  if the  highway  tax is  imposed on  bunker                                                               
fuel.                                                                                                                           
                                                                                                                                
MS. BALES answered no.                                                                                                          
                                                                                                                                
SENATOR BUNDE  said, then, that if  a cruise line bought  fuel in                                                               
Alaska, they wouldn't  pay the tax because they  use bunker fuel.                                                               
He wanted to know how this would change the state's revenues.                                                                   
                                                                                                                                
CHAIR PASKVAN  said he just  got the  fiscal note, and  he didn't                                                               
intend to pass the bill today.                                                                                                  
                                                                                                                                
SENATOR BUNDE asked  how the fuel tax impacts  the state's budget                                                               
for upgrading roads.                                                                                                            
                                                                                                                                
2:36:30 PM                                                                                                                    
MS.  BALES said  the  fuel  tax doesn't  cover  the total  amount                                                               
needed to upgrade the state's roads.                                                                                            
                                                                                                                                
SENATOR BUNDE said he saw how  this bill would reduce income, and                                                               
asked how the  cost of maintaining roads would  be funded without                                                               
the motor fuel tax.                                                                                                             
                                                                                                                                
CHAIR PASKVAN  also asked if the  proceeds of the motor  fuel tax                                                               
are a "pass  through" from the Department of  Revenue directly to                                                               
the Department  of Transportation and Public  Facilities for road                                                               
maintenance and repair.                                                                                                         
                                                                                                                                
MS.  BALES  answered  that  tax revenue  is  deposited  into  the                                                               
general fund.                                                                                                                   
                                                                                                                                
2:37:59 PM                                                                                                                    
CHAIR  PASKVAN  asked  if  the   money  is  identified  for  road                                                               
maintenance and repair.                                                                                                         
                                                                                                                                
MS. BALES replied, "Not that I'm aware of."                                                                                     
                                                                                                                                
MR.  OBERMEYER  inserted that  AS  43.40.010  indicates that  the                                                               
proceeds  of  the taxes  go  into  a  specific highway  fuel  tax                                                               
account in the state's general fund.                                                                                            
                                                                                                                                
SENATOR THOMAS  asked if the  change in revenue between  2010 and                                                               
2011 in the  fiscal note were based on the  expectation the state                                                               
will have fewer travelers in 2011 than 2010.                                                                                    
                                                                                                                                
MS. BALES answered that the  department already prepared a fiscal                                                               
note that  addressed the first  two months  of 2010. So,  the new                                                               
fiscal note represents just this  piece of legislation. The total                                                               
change in revenues would be  approximately $40 million if you add                                                               
the amount from the previous fiscal note for FY2010.                                                                            
                                                                                                                                
SENATOR THOMAS asked  if she knew the per capita  impact this has                                                               
on the driving public.                                                                                                          
                                                                                                                                
MS.  BALES  answered  that  it  is  a  savings  of  approximately                                                               
$50/year for a normal commuter.                                                                                                 
                                                                                                                                
2:41:00 PM                                                                                                                    
CHAIR  PASKVAN  asked  the sponsor  if  AS  43.40.010(f)(g)(h)(j)                                                               
allocates  tax  money  to  the   account  for  water  and  harbor                                                               
facilities for  direct expenditure by  DOTPF or is it  matched by                                                               
available federal  aide highway money.  So, if there is  no money                                                               
in  that fund,  is there  a  potential risk  for losing  matching                                                               
federal dollars?                                                                                                                
                                                                                                                                
MR.  OBERMEYER responded  that someone  else could  better answer                                                               
that  question.  He also  said  the  governor's office  indicated                                                               
support of this bill.                                                                                                           
                                                                                                                                
2:43:05 PM                                                                                                                    
SENATOR  MEYER asked  if they  thought about  not putting  an end                                                               
date on it. How did they come up with two years?                                                                                
                                                                                                                                
SENATOR DAVIS  said she came  up with  two years as  an arbitrary                                                               
time for  reviewing how  the missing  revenues are  affecting the                                                               
state.                                                                                                                          
                                                                                                                                
CHAIR PASKVAN said he would hold SB 14 for another meeting.