Legislature(2013 - 2014)BUTROVICH 205

03/20/2014 01:30 PM TRANSPORTATION


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Audio Topic
01:33:30 PM Start
01:34:14 PM SB178
02:59:52 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Executive Session
<Rescheduled from 3/18/14>
Bills Previously Heard/Scheduled
Including But Not Limited to:
+= SB 178 PASSENGER VEHICLE RENTAL TAX TELECONFERENCED
Moved CSSB 178(TRA) Out of Committee
+= SB 211 STATE LAND AND MATERIALS TELECONFERENCED
<Bill Hearing Canceled>
+= SB 94 RIGHTS-OF-WAY TELECONFERENCED
<Bill Hearing Canceled>
+= SB 197 NATURALLY OCCURRING ASBESTOS TELECONFERENCED
<Bill Hearing Canceled>
+ HJR 10 CONST. AM: TRANSPORTATION FUND TELECONFERENCED
<Bill Hearing Canceled>
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE TRANSPORTATION STANDING COMMITTEE                                                                          
                         March 20, 2014                                                                                         
                           1:33 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Dennis Egan, Chair                                                                                                      
Senator Fred Dyson, Vice Chair                                                                                                  
Senator Anna Fairclough                                                                                                         
Senator Click Bishop                                                                                                            
Senator Hollis French                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 178                                                                                                             
"An  Act relating  to the  application of  the passenger  vehicle                                                               
rental tax; and providing for an effective date."                                                                               
                                                                                                                                
     - MOVED CSSB 178(TRA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 211                                                                                                             
"An  Act  providing  for the  Department  of  Transportation  and                                                               
Public Facilities  to hold  the surface  estate of  certain state                                                               
land;  relating  to  the  transfer  of  certain  state  land  and                                                               
materials;  relating  to the  lease,  sale,  or disposal  by  the                                                               
Department of Transportation and Public Facilities of rights-of-                                                                
way, property  interests, or improvements; relating  to the grant                                                               
of certain  easements over  submerged state  land to  the federal                                                               
government; relating  to the conveyance of  land for right-of-way                                                               
purposes from  the Alaska Railroad Corporation  to the Department                                                               
of  Transportation and  Public Facilities;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
SENATE BILL NO. 94                                                                                                              
"An Act vacating a portion  of the Copper Center-Valdez right-of-                                                               
way;  and  relating to  rights-of-way  acquired  under former  43                                                               
U.S.C.  932   that  cross   land  owned   by  an   Alaska  Native                                                               
corporation."                                                                                                                   
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
SENATE BILL NO. 197                                                                                                             
"An  Act extending  the  termination date  of  the Department  of                                                               
Transportation   and    Public   Facilities'    interim   project                                                               
authorization   regarding  naturally   occurring  asbestos;   and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
CS FOR HOUSE JOINT RESOLUTION NO. 10(FIN)                                                                                       
Proposing amendments to the Constitution of the State of Alaska                                                                 
creating a transportation infrastructure fund.                                                                                  
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 178                                                                                                                  
SHORT TITLE: PASSENGER VEHICLE RENTAL TAX                                                                                       
SPONSOR(s): SENATOR(s) BISHOP                                                                                                   
                                                                                                                                
02/18/14       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/18/14       (S)       TRA                                                                                                    
02/25/14       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
02/25/14       (S)       Heard & Held                                                                                           
02/25/14       (S)       MINUTE(TRA)                                                                                            
03/04/14       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
03/04/14       (S)       -- MEETING CANCELED --                                                                                 
03/11/14       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
03/11/14       (S)       Scheduled But Not Heard                                                                                
03/13/14       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
03/13/14       (S)       Heard & Held                                                                                           
03/13/14       (S)       MINUTE(TRA)                                                                                            
03/18/14       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
03/18/14       (S)       -- MEETING CANCELED --                                                                                 
03/20/14       (S)       TRA AT 1:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
BRITTANY HUTCHISON                                                                                                              
Staff to Senator Click Bishop                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Explained CSSB 178(TRA) for the sponsor.                                                                  
                                                                                                                                
MATT FONDER, Director                                                                                                           
Tax Division                                                                                                                    
Alaska Department of Revenue (DOR)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:  Answered  fiscal  note  questions  on  CSSB
178(TRA).                                                                                                                       
                                                                                                                                
COMMISSIONER ANGELA RODELL                                                                                                      
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:  Explained  how  the  department  wrote  the                                                             
fiscal note.                                                                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:33:30 PM                                                                                                                  
CHAIR  DENNIS  EGAN  called the  Senate  Transportation  Standing                                                             
Committee meeting  to order at 1:33  p.m. Present at the  call to                                                               
order were Senators Bishop, Dyson,  French, Fairclough, and Chair                                                               
Egan.                                                                                                                           
                                                                                                                                
1:34:14 PM                                                                                                                    
SENATOR  DYSON  moved pursuant  to  Uniform  Rule 22(b)  go  into                                                               
executive  session.  There were  no  objections,  and it  was  so                                                               
ordered.                                                                                                                        
                                                                                                                                
1:34:41 PM                                                                                                                    
Recessed from 1:34 to 2:34 p.m.                                                                                                 
                                                                                                                                
                                                                                                                                
              SB 178-PASSENGER VEHICLE RENTAL TAX                                                                           
                                                                                                                                
2:34:15 PM                                                                                                                    
CHAIR  EGAN announced  SB  178  to be  up  for consideration.  He                                                               
removed  his objection  and CSSB  178(), version  28-LS1406\C was                                                               
before the  committee. He invited  Brittany Hutchison  to explain                                                               
the changes in version C.                                                                                                       
                                                                                                                                
2:35:40 PM                                                                                                                    
At ease from 2:35 to 2:36 p.m.                                                                                                  
                                                                                                                                
2:36:50 PM                                                                                                                    
BRITTANY HUTCHISON, staff to Senator  Click Bishop, sponsor of SB
178,  said section  1 on  page 1,  line 4,  consolidates existing                                                               
sections regarding  the terms "passenger" and  "recreational" for                                                               
better organization of the statutes.  Section 2, page 1, line 10,                                                               
reduced the term from  90 days to 30 for which  a lease or rental                                                               
is  exempt  from   the  tax.  Section  3  on  page   2,  line  6,                                                               
consolidates the  terms "passenger"  and recreational"  to better                                                               
organize that  statute, but they are  taxed separately; passenger                                                               
vehicles are  taxed at 10  percent and recreational  vehicles are                                                               
taxed at 3 percent.                                                                                                             
                                                                                                                                
Section 4, page  2, line 13, amends the  term "passenger vehicle"                                                               
to  specify  it  is  for  the  primary  purpose  of  transporting                                                               
passengers. Section 4,  subsection (f), page 2,  line 28, reduces                                                               
the gross vehicle  weight (GVW) from 8,500 to  6,500 lbs. Section                                                               
5, page 3, line 7, repeals  AS 43.52.030 and .040, since they are                                                               
no longer  needed. She  noted that  SB 178 also  had a  Letter of                                                               
Intent.                                                                                                                         
                                                                                                                                
2:38:28 PM                                                                                                                    
SENATOR FAIRCLOUGH  asked if the  sponsor had a new  fiscal note;                                                               
she  expressed  concern about  the  financial  impact on  current                                                               
revenues of renting vehicles over 30 days and under 90.                                                                         
                                                                                                                                
MS.  HUTCHISON  said  the  new  fiscal note  states  there  is  a                                                               
possible  10 percent  reduction  in revenue.  Right  now the  tax                                                               
brings in roughly $8.3 million  and the reduction is estimated to                                                               
be $800 thousand to $1.6 million.                                                                                               
                                                                                                                                
SENATOR  FAIRCLOUGH  noted  public   testimony  had  to  do  with                                                               
vehicles  on the  North Slope  that should  be exempt,  and asked                                                               
what that number would be inside of the $800,000.                                                                               
                                                                                                                                
SENATOR FRENCH  said he thought  the committee was  interested in                                                               
exploring,  forgiving, or  eliminating collection  of the  tax on                                                               
trucks that  operate on  the North  Slope that  is free  of state                                                               
maintenance and state services.                                                                                                 
                                                                                                                                
SENATOR FAIRCLOUGH said  the public has said two  times they have                                                               
been unfairly  called upon  to owe  a tax;  some said  they never                                                               
collected  the tax  and  that they  shouldn't  have collected  it                                                               
because they  were operating on  the North Slope in  a commercial                                                               
capacity  versus on  Alaska's highways.  Their perception  of the                                                               
original intent of  the legislation was that it  was for tourists                                                               
but that  some Alaskans would  be affected  by it. But  the folks                                                               
who  testified were  small equipment  rental companies  with some                                                               
trucks that are lighter than the weight load that is in statute.                                                                
                                                                                                                                
MS. HUTCHISON said  the intent of reducing the  weight from 8,500                                                               
lbs.  to 6,500  is to  get  back to  the original  intent of  the                                                               
legislation -  that only  those trucks  that are  for passengers,                                                               
not equipment, would be taxed.                                                                                                  
                                                                                                                                
2:44:37 PM                                                                                                                    
SENATOR BISHOP asked  how much of the estimated  $800 thousand to                                                               
$1.6 million a year can be  identified as coming out of the North                                                               
Slope rental.                                                                                                                   
                                                                                                                                
SENATOR FAIRCLOUGH  asked if  the fiscal  note is  prospective or                                                               
shows the state losing actual revenue.                                                                                          
                                                                                                                                
2:45:55 PM                                                                                                                    
MATT  FONDER,  Director,  Tax   Division,  Alaska  Department  of                                                               
Revenue  (DOR), Anchorage,  Alaska, said  the fiscal  note is  an                                                               
estimate for  future revenues,  so future  rental taxes  would be                                                               
decreasing.                                                                                                                     
                                                                                                                                
2:47:19 PM                                                                                                                    
ANGELA  RODELL,   Commissioner,  Department  of   Revenue  (DOR),                                                               
Anchorage,  Alaska,  explained that  they  attempted  to write  a                                                               
fiscal note  based on the contracts  as they have seen  them. The                                                               
difficulty  is that  they don't  distinguish those  contracts and                                                               
don't have  the information by  region. The rental  companies are                                                               
submitting their  vehicle rental tax through  their headquarters,                                                               
so they don't distinguish the  money they might have collected in                                                               
Bethel or Nome versus Anchorage and Juneau.                                                                                     
                                                                                                                                
One of  the current version is  that the reduction to  6,500 lbs.                                                               
will exclude the Suburbans and  large Jeep vehicles that Avis and                                                               
Hertz  routinely  rent  in  Anchorage. So,  they  are  trying  to                                                               
determine by size  of vehicle more so than the  region from which                                                               
they are being rented.                                                                                                          
                                                                                                                                
SENATOR  FAIRCLOUGH commented  that their  estimate was  based on                                                               
past experiences, but she was  trying to project an estimate into                                                               
future, so it's a little bit of both.                                                                                           
                                                                                                                                
COMMISSIONER  RODELL  answered that  is  right;  they are  making                                                               
their best guess based on what they know.                                                                                       
                                                                                                                                
SENATOR FRENCH  said it would be  tricky to pull this  off and to                                                               
cut out  vehicles that had  not touched a state  maintained road.                                                               
Pt.  Thomson is  a perfect  example of  a truck  that will  never                                                               
touch a  state maintained road;  there is no  road; it is  an ice                                                               
road and the  trucks will stay there. Kuparuk  is another example                                                               
where the  road is 30  miles from the  Haul Road, so  the chances                                                               
are  those trucks  will never  touch a  state road.  But in  Dead                                                               
Horse, trucks leased to Great Bear  - all the work they are doing                                                               
is on  the Haul  Road and  plenty of Dead  Horse trucks  drive to                                                               
Fairbanks and come back. This is a  good idea that may be hard to                                                               
pull off.                                                                                                                       
                                                                                                                                
SENATOR DYSON asked the basis for deciding on 6,500 lb. GVW.                                                                    
                                                                                                                                
2:50:57 PM                                                                                                                    
SENATOR BISHOP  said development of  the North Slope  had started                                                               
with  using gasoline  driven vehicles  and had  evolved to  using                                                               
diesel, and  now industry is  going back to gas  vehicles. Pickup                                                               
trucks have grown and a half-ton  pickup is heavier and there are                                                               
more crew cab, half-ton, 6,500 lbs. trucks.                                                                                     
                                                                                                                                
SENATOR DYSON asked if he  intended to tax Suburbans as passenger                                                               
vehicles.                                                                                                                       
                                                                                                                                
SENATOR BISHOP  said he didn't know  about the weight of  a full-                                                               
sized Suburban, but they would fall in line with 6,500 lbs.                                                                     
                                                                                                                                
2:53:17 PM                                                                                                                    
SENATOR DYSON said that is  what he thought, but the Commissioner                                                               
said it wouldn't.                                                                                                               
                                                                                                                                
2:53:40 PM                                                                                                                    
COMMISSIONER  RODELL said  she wanted  to get  the definition  of                                                               
"transporting passengers"  on the record, because  many times she                                                               
is  by  herself  and  rents   a  vehicle  and  might  be  hauling                                                               
furniture. She  wanted to understand  their intent,  because they                                                               
would have  to write  regulations if this  bill moves  forward as                                                               
written. She was specifically looking at page 2, line 16.                                                                       
                                                                                                                                
SENATOR DYSON suggested using "transport people."                                                                               
                                                                                                                                
2:55:40 PM                                                                                                                    
COMMISSIONER RODELL said  the challenge is that this  tax will be                                                               
passed on to  the renter and they will be  looking to the vehicle                                                               
rental company  to consolidate  and remit this  tax on  behalf of                                                               
the state, so they will want  the companies to certify that these                                                               
cars were  used for  the purposes  they outline,  and enforcement                                                               
becomes a challenge in some cases.                                                                                              
                                                                                                                                
SENATOR DYSON  moved to report  CSSB 178(),  version 28-LS1406\C,                                                               
from committee  to the next  committee of referral  with attached                                                               
fiscal  notes  and  individual  recommendations.  There  were  no                                                               
objections   and   CSSB   178(TRA)    moved   from   the   Senate                                                               
Transportation Standing Committee.                                                                                              
                                                                                                                                
2:57:58 PM                                                                                                                    
At ease from 2:57 to 2:59 p.m.                                                                                                  
                                                                                                                                
2:59:52 PM                                                                                                                    
Finding no further business to come before the committee, Chair                                                                 
Egan adjourned the Senate Transportation Standing Committee at                                                                  
3:00 p.m.                                                                                                                       

Document Name Date/Time Subjects
4407 MOU.pdf STRA 3/20/2014 1:30:00 PM
SB 211
Egan SB211 Response.pdf STRA 3/20/2014 1:30:00 PM
SB 211
Happy Valley Docs.pdf STRA 3/20/2014 1:30:00 PM
SB 211
Project Flow Chart.pdf STRA 3/20/2014 1:30:00 PM
SB 211
Wilson HB371 Response.pdf STRA 3/20/2014 1:30:00 PM
HB 371
Wilson HB371 Response.pdf STRA 3/20/2014 1:30:00 PM
SB 211
SB211_milius,milles,smith_response3-18-14.pdf STRA 3/20/2014 1:30:00 PM
SB 211