Legislature(2003 - 2004)
05/15/2003 08:39 AM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 15, 2003
8:39 A.M.
TAPE HFC 03 - 95, Side A
TAPE HFC 03 - 95, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 8:39 A.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Ethan Berkowitz
Representative Mike Chenault
Representative Richard Foster
Representative Mike Hawker
Representative Beth Kerttula
Representative Carl Moses
Representative Bill Stoltze
Representative Jim Whitaker
MEMBERS ABSENT
Representative Croft
Representative Joule
ALSO PRESENT
Representative Tom Anderson; Deborah Grundman, Staff,
Senator Ben Stevens; Deborah Behr, Assistant Attorney
General, Legislation and Regulations Section, Department of
Law; Greg O'Claray, Commissioner, Department of Labor and
Workforce Development; John Brown, President, Fairbanks
Central Labor Council, Fairbanks; Don Etheridge, Alaska AFL-
CIO, Juneau; Jeff Acherman, Operating Engineers & Anchorage
Central Council, Anchorage; Pam LaBolle, President, Alaska
State Chamber of Commerce, Juneau; Barbara Huff Tuckness,
Director of Legislative and Government Affairs, General
Teamsters, Local 959, Anchorage; Landa Baily, Special
Assistant, Department of Revenue; John MacKinnon, Deputy
Commissioner, Department of Transportation & Public
Facilities
PRESENT VIA TELECONFERENCE
Royce Rock, Carpenters Union, Anchorage; Rich La Henach,
Association of General Contractors, Anchorage; Dick
Cattanaugh, Executive Director, Associated General
Contractors, Anchorage; Craig Tillery, Assistant Attorney
General, Department of Law
SUMMARY
HB 244 An Act relating to the Code of Criminal Procedure;
relating to defenses, affirmative defenses, and
justifications to certain criminal acts; relating
to rights of prisoners after arrest; relating to
discovery, immunity from prosecution, notice of
defenses, admissibility of certain evidence, and
right to representation in criminal proceedings;
relating to sentencing, probation, and
discretionary parole; amending Rule 16, Alaska
Rules of Criminal Procedure, and Rules 404, 412,
609, and 803, Alaska Rules of Evidence; and
providing for an effective date.
CS HB 244 (JUD) was reported out of Committee with
"individual recommendations" and with zero fiscal
note #1 by the Department of Law, fiscal note #2
by the Department of Corrections and fiscal note
#3 by the Department of Administration.
HB 295 An Act relating to the publishing and furnishing
of certain public notices regarding regulations or
rules of certain state agencies; relating to
distribution of the Alaska Administrative Code,
Alaska Administrative Register, and supplements to
the code or register; and providing for an
effective date.
CS HB 295 (STA) was reported out of Committee with
"individual recommendations" and with
indeterminate note #1 by the Office of Management
and Budget (OMB) and fiscal note #2 by the Office
of Management and Budget.
HB 305 An Act relating to the calculation and payment of
unemployment compensation benefits; and providing
for an effective date.
HB 305 was reported out of Committee with a "do
pass" recommendation and with zero note #1 by the
Department of Labor & Workforce Development.
CS SB 106(FIN)
An Act relating to tires; and providing for an
effective date.
HCS CS SB 106 (FIN) was reported out of Committee
with a "do pass" recommendation and with fiscal
note #2 by the Department of Revenue.
SB 177 An Act relating to cost-of-living benefits for
retired members in the public employees'
retirement system and the teachers' retirement
system who are called to active military duty; and
providing for an effective date.
SB 177 was reported out of Committee with a "do
pass" recommendation and with zero note #1 by the
Department of Administration.
SENATE BILL NO. 177
An Act relating to cost-of-living benefits for retired
members in the public employees' retirement system and
the teachers' retirement system who are called to
active military duty; and providing for an effective
date.
DEBORAH GRUNDMAN, STAFF, SENATOR BEN STEVENS, stated that an
Alaska Cost-of-Living Allowance (COLA) is payable to benefit
recipients of the public employees' (PERS) and teachers'
retirement system (TERS) who remain domiciled in Alaska
after retirement. The allowance amounts to 10% of their
base pay. A person receiving a COLA is not entitled to the
allowance if absent from the State for a period in excess of
90 days, except that a person may be absent from State for
not more than six months if the absence is the result of
illness and required by order of a licensed physician.
Ms. Grundman added that upon return to the State and
notification to the Department of Administration, the person
would be entitled to receive the monthly cost-of-living
allowance, commencing with the first monthly benefit
payment. Retired public employees currently receiving COLA
in the State and who are called to active duty in the
military would not be eligible for the COLA payment while
serving under existing statute. SB 177 rectifies the
situation and allows the retired employees to be eligible to
continue receiving their COLA while on active military duty.
She noted that the legislation would affect about ten
people.
Co-Chair Harris asked why this issue had not been discussed
before. Ms. Grundman replied that a situation had not come
up before in which there is a PERS or TERS member called up
for active duty.
Representative Foster MOVED to report SB 177 out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
SB 177 was reported out of Committee with a "do pass"
recommendation and with zero note #1 by the Department of
Administration.
HOUSE BILL NO. 305
An Act relating to the calculation and payment of
unemployment compensation benefits; and providing for
an effective date.
REPRESENTATIVE TOM ANDERSON explained that HB 305 would
provide for an 8.2% increase to the maximum weekly
unemployment benefit amount. The increase, phased in over a
three-year period, minimizes the impact to employers,
employees, and the Unemployment Insurance (UI) Trust Fund.
th
Alaska currently ranks 47 in the nation with a maximum
weekly benefit of $248 dollars. Alaska would rank at an
th
estimated 28 in the nation when the maximum weekly benefit
is increased to $308 in 2006. The fully increased maximum
benefit amount would be available to claimants earning
$34,250 or more per year.
Representative Anderson pointed out that the full impact of
the increase in benefit costs would not be reflected in the
employer tax rates until 2010. When the cumulative impact
of the increased benefit costs is included in the tax rate
calculation by 2010, the average employer tax rate would
increase by 0.17% and the average employee tax rate would
only increase by 0.04%.
Alaska's unemployment benefits assist Alaskans who find
themselves temporarily without work. The benefits are
distributed back into the local economy, which in turn
maintains economic stability for communities, business, and
workers. HB 305 will enable Alaskan workers to weather
periods of economic downturn and alleviates skill shortages
by keeping trained workers in State.
GREG O'CLARAY, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, spoke to the legislation. He noted
that the bill before the Committee was identical to the one
that overwhelmingly passed the House two years ago except
for the effective date. The last increase had been cut in
half. The Governor requested a compromise. The handout
outlines the amount of dollars that would potentially re-
enter the economy from the unemployment program.
He referenced the handout. (Copy on File). Unemployment
payments total $40 million dollars per year for only the
Anchorage municipality; in Mat-Su Borough that number totals
nearly $50 million dollars. He pointed out that nearly $28
million dollars goes out of State. Much of that money
results from skilled workers who cannot afford to stay in
Alaska because of high costs. One of the Department's
directives from the Governor was to focus on creating good
jobs with good pay for the Alaskan workforce. Commissioner
O'Claray advised that over the next five years, 30% of the
skilled workforce would be retiring. The new Division of
Business Partnerships was created to help address the
concerns for training workers in Alaska.
HB 350 was crafted by a coalition of labor and management.
He pointed out that two sectors choose not to attend because
of conflict. Those are the parties that are holding the
legislation up in the "other body". The bill proposes a
th
modest increase. The State of Alaska currently ranks 47 of
the 50 states in the amount paying toward UI benefits. The
proposed amounts do not include a "dependant allowance" of
$24 dollars per dependant with a maximum of 3. Commissioner
O'Claray emphasized that the proposed legislation was part
of the economic plan to retain skilled workers.
Co-Chair Harris noted that he supports the bill. He asked
for a breakdown of who pays for the benefits. Commissioner
O'Claray explained that the employer pays 80% of the costs
while the employees contribute 20%. The first increase
would not take affect until 2005; the maximum an employer
pays with the increase would be about $5 dollars per year
per employee.
Co-Chair Harris pointed out that the sponsor statement
indicates that Alaska ranks 47th in the nation in the rate
paid for UI benefits and that with passage of the bill,
th
Alaska could rank around 27. The estimated cost-of-living
differential in the State of Alaska ranges around 22.5%. He
admitted that there is speculation regarding the number as
it differs throughout the country.
JOHN BROWN, PRESIDENT, FAIRBANKS CENTRAL LABOR COUNCIL,
FAIRBANKS, testified that the Labor Council is in "strong"
support of HB 305. He noted that it is important to have a
viable unemployment system to help retain qualified workers.
It is very important to have people trained in running
equipment. Without a viable UI system, the State will loose
qualified workers. Mr. Brown urged passage of the bill from
Committee.
DON ETHERIDGE, ALASKA AFL-CIO, JUNEAU, voiced strong support
for the proposed legislation. He reiterated that all
interested parties had an opportunity to come to the table
to work out concerns. Everyone that participated reached an
agreement.
Co-Chair Harris asked when the last unemployment benefit had
been raised. Mr. Etheridge thought that it was five or six
years ago.
Representative Stoltze asked who had not come to the
negotiating table. Mr. Etheridge replied that the Alaska
State Chamber did not participate.
JEFF ACHERMAN, OPERATING ENGINEERS & ANCHORAGE CENTRAL
COUNCIL, ANCHORAGE, testified that they do support passage
of the bill. Construction work is seasonal employment. The
legislation will help people throughout the State that work
in construction, fishing and tourism industry by providing a
much-needed increase.
PAM LABOLLE, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
JUNEAU, clarified that the State Chamber had not boycotted
the meetings. The meetings were scheduled at the same times
that the House Judiciary and Senate Judiciary committees
met. Ms. LaBolle indicated that the Chamber would support
an increase; however, on the third step, they would
recommend that it only be increased ½ way.
Ms. LaBolle identified the increase costs to the employers.
At the current tax rate, the increase would be 8%, which
would be $44 dollars per employee by the time the full
increase was in effect. She understood that the State was
self insured for unemployment insurance costs. The Alaska
Railroad has indicated that the proposed increase would cost
them around $550 thousand dollars.
Ms. LaBolle spoke to the dependent benefit amount. The goal
of the UI program nationally is that 50% of the wage be
replaced by the benefit amount. With the benefit amount
included for three dependents, Alaska would be at the $320
per week amount. With the increase, Alaska will rank in the
top 25%. She pointed out that 44% of the dependents claimed
received benefits this past year. Alaska is one of only 12
states that offer dependant coverage. She stated that the
lower amount would be adequate since Alaska is one of the
easiest State's to get UI benefits from, which differs from
other State's I which claimants must show that they are
actively seeking employment.
Ms. LaBolle stated that the State Chamber would support some
increase, however, the proposed amount places a burden on
the employer.
Representative Berkowitz pointed out that at one time, the
Chamber supported the $320 maximum. Ms. LaBolle explained
that was the amount proposed last year and that the Chamber
did not support it, but instead would have supported the
first step around $273 dollars.
Representative Berkowitz questioned why no one from the
Chamber had participated in any of the discussions. Ms.
LaBolle reiterated that she was the only staff person that
the State Chamber has that could address this type of issue.
A new employee was hired at the end of session for
specifically attending these types of activities. The State
Chamber has a small staff.
Representative Stoltze questioned which issue was more
important to the State Chamber, the Consumer Price Index
(CPI) increase or HB 305. Ms. LaBolle listed issues of
importance: the UI increase, the CPI and HB 255.
Representative Stoltze asked if there were concerns that
would affect the membership more drastically. Ms. LaBolle
responded that the impact for the proposed increase would be
felt within 2 to 6 years; the more immediate impact would be
the CPI.
Co-Chair Harris inquired when the CPI index would take
st
effect. Commissioner O'Claray replied on January 1, 2004.
Representative Hawker asked what the State Chamber believes
the appropriate increment should be. Ms. LaBolle advised
that last year, they had agreed to go ½ through the second
step. The proposed bill would take the State ½ through the
rd
3 step. Ms. LaBolle added that there has been no fiscal
note prepared to indicate the impact on the State.
Representative Hawker acknowledged that the level proposed
by the State Chamber was substantially less than proposed
through the legislation. He noted his concern that if the
Chamber had felt so strongly on the issue, why hadn't they
rearranged their priority schedule to be able to attend the
meetings. Ms. LaBolle explained that only three people from
management had been invited to participate. Those areas
were construction, tourism services and the State Chamber.
The first two have the greatest turnover in employment. She
did not know the ultimate plan and noted that she had no
input for scheduling the meetings.
BARBARA HUFF TUCKNESS, DIRECTOR OF LEGISLATIVE AND
GOVERNMENT AFFAIRS, GENERAL TEAMSTERS, LOCAL 959, ANCHORAGE,
advised that she had been present for the discussions on the
bill. The meetings attempted to attain a compromise for
unemployed workers. She pointed out that the bill was a
compromise. It has received full support from the general
teamsters. She added that she had participated in some of
the meetings via teleconference. Ms. Huff Tuckness
acknowledged that everyone was busy at that time of year but
realized that the message from the Department of Labor was
one of compromise.
The unemployment insurance program offers an economic buffer
against the ripple effect of unemployment. In Alaska, the
maximum weekly benefits have increased four times in the
last 20 years. The last increase was in 1997 and the
payments are made to eligible participants. There are
specific eligibility requirements that must be met to
qualify for the benefits. The benefit is not intended to
replace the wage but does act as a partial benefit intended
to cover shelter, food and clothing for those workers. She
addressed the economic benefits to the State.
Representative Stoltze asked if the Alaska UI program had a
requirement to show that people were actively looking for
work. Ms. Huff Tuckness understood that there was an
eligibility requirement both by the State and federal. She
deferred the question to the Department of Labor & Workforce
Development.
ROYCE ROCK, (TESTIFIED VIA TELECONFERENCE), CARPENTERS
UNION, ANCHORAGE, spoke in support of the bill. He advised
that Alaska is one of the few states in which the employees
pay a part of their UI benefit. He urged that the bill pass
from Committee.
DICK CATTANAUGH, (TESTIFIED VIA TELECONFERENCE), EXECTUTIVE
DIRECTOR, ASSOCIATION OF GENERAL CONTRACTORS, ANCHORAGE,
noted that he was part of the committee that worked on the
legislation and that the process had been fair. The cost
will amount to about a 1% increase per year. He encouraged
the Committee to support the bill.
Vice-Chair Meyer noted that he did support the UI program,
however, voiced concern with the combination to increase
minimum wage, a potential sales tax, alcohol tax, increase
to business license fees and with this legislation an
increase to the unemployment compensation. He warned it
could create an unbalanced situation, shifting too much
economic burden to the small business.
Commissioner O'Claray advised that it is the Governor's
intent to grow the State's economy by producing good jobs
with good pay. HB 305 does not register much to employer
costs. The first increment of cost on average would be $5
dollars per employee per year.
Vice-Chair Meyer MOVED to report HB 305 out of Committee
with individual recommendations and with the accompanying
fiscal note. There being NO OBJECTION, it was so ordered.
HB 305 was reported out of Committee with a "do pass"
recommendation and with zero note #1 by Department of Labor
& Workforce Development.
TAPE HFC 03 - 95, Side B
HOUSE BILL NO. 295
An Act relating to the publishing and furnishing of
certain public notices regarding regulations or rules
of certain state agencies; relating to distribution of
the Alaska Administrative Code, Alaska Administrative
Register, and supplements to the code or register; and
providing for an effective date.
DEBORAH BEHR, ASSISTANT ATTORNEY GENERAL, LEGISLATION AND
REGULATIONS SECTION, DEPARTMENT OF LAW, noted that Assistant
Attorney General Tillery from Anchorage was on line to
address the Committee's technical questions.
Ms. Behr explained that the legislation would deal with
legal notices for regulations that appear in newspapers. It
would change the legal adds for adopting regulations. The
goal of the legislation would allow the State to move toward
an abbreviated notice with more user-friendly information.
The legal notice in the paper would refer to on-line public
notice where more detailed information could be found. If
someone does not have a computer, they could make a public
records request in order to receive a hard copy or get on
the Department's mailing list. The goal is to make it "user
friendly" and is anticipated to cost the State 75% less for
the notices with less information.
Ms. Behr highlighted the second change, which would furnish
notices to agencies that are not covered by the
Administrative Procedures Act (APA). She understood that
most people prefer to get information by email or have the
option to request written copy. The legislation broadens
that language to non-APA agencies not covered by the Act.
Ms. Behr continued, there could be a minor change as some
agencies have a requirement that the information be
published in three newspapers. The language of the bill
reduces that to one. If the agency thought that it was
appropriate to put it in more papers, they would have that
option. Additionally, the bill moves toward web-only
notices for appropriate sets of regulations. The Department
was careful as to which programs were selected for web
notices, making sure that there was access to computers or
ready access to the Internet.
Ms. Behr pointed out that historically, the Executive Branch
provided municipalities hard copies of regulations. Some of
the smaller municipalities prefer to use the Internet
notice. The final change in the bill allows the smaller
areas to request information. If they want hard copy, a
cost of no more than $600 dollars would be charged. Ms.
Behr referenced the cost savings to the State.
Representative Kerttula voiced concern with Section 11, the
Oil and Gas leasing section. She asked if there were
sections throughout the bill in which all public notice
would be deleted. Ms. Behr advised that the program
selection had been done carefully in order to make sure that
there were computers or access to them. Section 11 deals
with the Department of Natural Resources, the Oil and Gas
section. She understood that section had be chosen as if it
was a full blown leasing process, not changing any of the
Title 38 numbers and that it would only affect the notices
related to the underline rate process. The public would
still receive the same information either through an
Internet notice or the Department of Natural Resources
website.
Co-Chair Williams requested that Representative Berkowitz
move his amendment.
Representative Berkowitz MOVED to ADOPT new Amendment #1.
(Copy on File). Co-Chair Williams OBJECTED.
Representative Berkowitz explained that the amendment would
strip out the provisions in the bill indicating that no
notices would be required for certain agencies. The
agencies that are exempted from newspaper notice requirement
include the oil and gas, conservation, pipeline act
regulations, and insurance regulations. The primary savings
in the bill comes from the reduced amount of newspaper
print. He stressed that to exempt these items from public
notice would make the public think that government does not
want people to know what is going on. He added that the
amendment would preserve most of the cost savings contained
in the bill.
Co-Chair Williams suggested that people that know what they
are looking for are the ones that usually read public
notices. He did not believe that most people read them.
Ms. Behr commented that her experience has proven that most
people get their info through emails or mailing notices.
She was not aware that newspaper notices were a primary way
to receive information concerning regulations. The
newspaper ads are mostly used for legal notice versus the
actual notice.
Co-Chair Williams asked if the regular newspaper reader
would be able to get all the information that they need by
reading the add in the paper. Ms. Behr replied that a
professional person would probably get all pertinent
information mailed to them. Representative Berkowitz
appreciated that could be true if that person lived in a
place that was connected by wire. There are large parts of
the State that are not wired and do not have computer
access. For those rural parts of the State, it is important
to retain the legal notice that is available in newspapers.
He emphasized that the newspaper requirement gets
information to those people living in rural Alaska. Keeping
the notice in the newspaper retains the ability to inform
the public about what is happening with government. The
amendment would provide a transitional measure.
Representative Stoltze asked Representative Foster and
Representative Moses if their constituents read newspapers.
Representative Foster replied that in his 27 villages, most
of them do not get newspapers. Representative Berkowitz
asked if all those villages had Internet. Representative
Foster responded that most of the villagers live day to day
and that he doubted that few had access to the Internet or
computers.
Co-Chair Williams argued that there are other means for
disseminating information. He questioned how information is
relayed in the rural communities. Ms. Behr commented that
the on line public notice was a major mode of information
dissemination and that the federal registry was a great way
to get information. The federal government is moving more
toward computer information.
Representative Kerttula pointed out that Section 11 would
omit newspaper publication completely. She agreed that some
of the listings in Section 11 were pretty specific however,
to omit all newspaper publications, particularly when
dealing with oil and gas leases would not be good. She
asked if the Department of Natural Resources had an opinion
regarding the concern. Ms. Behr recommended consulting a
representative from Department of Natural Resources to
discuss that concern. She emphasized that extensive leasing
process under Title 38 would not be diminished. Each
leasing policy is separate and distinct and each should be a
policy call made by the Legislature.
Representative Kerttula noted that Section 16 related to the
Regulatory Commission of Alaska (RCA) and asked if they had
input regarding elimination of their newspaper information.
Ms. Behr noted that the drafting attorney had checked in
with the RCA to determine if it was appropriate to include
that language. The legislation only addresses the
regulations.
Representative Berkowitz advised that there was an
administrative order from the Governor that if any agency
wanted to exceed the minimal amount of public notice
required by law, they would need to get approval from the
Governor's office.
A roll call vote was taken on the motion to adopt Amendment
#1.
IN FAVOR: Moses, Berkowitz, Kerttula
OPPOSED: Stoltze, Chenault, Foster, Hawker, Meyer,
Williams
Co-Chair Harris and Representative Whitaker were not present
for the vote.
The MOTION FAILED (3-6).
Representative Kerttula MOVED to DELETE Sections 11 and 16.
Co-Chair Williams OBJECTED noting that he would not accept
the motion, as it was the same as Amendment #1.
Representative Kerttula stated that she would speak with
representatives from the Department of Natural Resources and
offer the amendment on the House Floor.
Representative Foster MOVED to report CS HB 295 (STA) out of
Committee with individual recommendations and with the
accompanying fiscal notes. Representative Berkowitz
OBJECTED.
Representative Berkowitz noted that he does not like it when
the government does away with public notice requirements.
He stated that it goes against the direction and that the
public should know what is occurring with government.
Representative Stoltze noted that he would support the bill.
Vice-Chair Meyer commented that the bill was a step in the
right direction in getting the State to use Internet
services more extensively. Representative Berkowitz
countered that the State of Alaska has won awards for being
on the cutting edge of technology. The State is not behind
in the area of technology.
Representative Kerttula pointed out that four years ago, her
first piece of legislation was the Internet notice.
Nevertheless, for the areas that do not have computer
access, this legislation will be detrimental.
A roll call vote was taken on the motion.
IN FAVOR: Stoltze, Chenault, Foster, Hawker, Meyer,
Moses, Williams
OPPOSED: Berkowitz, Kerttula
Co-Chair Harris and Representative Whitaker were not present
for the vote.
The MOTION PASSED (7-2).
CS HB 295 (STA) was reported out of Committee with
"individual recommendations" and with indeterminate note #1
by the Office of Management and Budget (OMB) and fiscal note
#2 by the Office of Management and Budget.
HOUSE BILL NO. 244
An Act relating to the Code of Criminal Procedure;
relating to defenses, affirmative defenses, and
justifications to certain criminal acts; relating to
rights of prisoners after arrest; relating to
discovery, immunity from prosecution, notice of
defenses, admissibility of certain evidence, and right
to representation in criminal proceedings; relating to
sentencing, probation, and discretionary parole;
amending Rule 16, Alaska Rules of Criminal Procedure,
and Rules 404, 412, 609, and 803, Alaska Rules of
Evidence; and providing for an effective date.
Co-Chair Harris MOVED to report CS HB 244 (JUD) out of
Committee with individual recommendations and with the
accompanying fiscal notes. Representative Kerttula
OBJECTED.
Representative Kerttula stated that there are major
constitutional questions about the right to trial. She
spoke about concerns with the "here say testimony" and
pointed out that in the disclosure of information section,
the bill precludes some case witnesses. She warned that the
constitutional issues were very "heavy" in the bill.
Representative Kerttula WITHDREW her OBJECTION.
CS HB 244 (JUD) was reported out of Committee with
"individual recommendations" and with zero fiscal note #1 by
the Department of Law, fiscal note #2 by the Department of
Corrections and fiscal note #3 by the Department of
Administration.
CS FOR SENATE BILL NO. 106(FIN)
An Act relating to tires; and providing for an
effective date.
LANDA BAILY, SPECIAL ASSISTANT TO THE COMMISSIONER,
DEPARTMENT OF REVENUE, explained the bill. According to a
1996 report by the Department of Transportation & Public
Facilities, the use of studded tires in Alaska causes
approximately $5 million dollars damage to the roads per
year. Most of the damage occurs in the high traffic urban
centers where rutting is often severe and causes unsafe
driving conditions.
The Department of Transportation & Public Facilities repairs
the worst of the damage. Due to limited maintenance
funding, much of it is added to the State's deferred
maintenance backlog. The bill would impose a fee of $10
dollars for each studded tire sold, resulting in $2 million
dollars in increased revenue.
Ms. Baily continued, new tire technology has been developed
in the last ten years to create stud-less winter tires.
Those tires use softer rubber compounds and specific tread
patterns to improve their performance in snow and ice
conditions. The technology has continued to improve and is
widely available as an alternative to studded winter tire.
Representative Berkowitz questioned why a flat rate had been
established rather than a percentage cost. Ms. Bailey
replied that it was easier to access a flat rate for the
retailer than a percentage tire cost.
Co-Chair Harris inquired if the sales tax becomes law, would
the sales tax be charged on the cost of the tire or would
the fee be added to that number. Ms. Bailey did not know
how that would work but offered to find out the answer. She
recommended that the Department be consulted.
Representative Kerttula asked what percentage of the money
raised would actually be used for maintaining the highways.
JOHN MACKINNON, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION & PUBLIC FACILITIES, responded that the
Department currently spends $60 millions dollars a year to
maintain the highways and that studded tires alone cause an
estimated $5 million dollars damage per year.
Representative Stoltze MOVED to ADOPT Amendment #1, 23-
GS1127\WA.1, Crawford/Kurtz, 5/14/03. Co-Chair Williams
OBJECTED.
Representative Stoltze explained that the amendment would
guarantee that the tax was not being taxed.
Ms. Bailey noted that there is no formal opposition to the
amendment. She cautioned that it could cause some confusion
for businesses. Representative Stoltze pointed out that
Subsection © indicates that the fees would be itemized
separately on the sales receipt. He proposed that
Subsection © be removed. Mr. MacKinnon interjected that
sometimes when there are fees, the other fees and sales tax
is not cumulative.
Representative Hawker did not believe that as written, the
current sales tax proposal would be cumulative. He added
that he supported the amendment as a clarification for
anyone reading the bill.
Representative Berkowitz voiced his support of the
amendment, advising that it is not a good public policy when
government "boot straps" a tax on the top of a fee. Co-
Chair Williams agreed. Co-Chair Harris added his support
for the amendment.
A roll call vote was taken on the motion.
IN FAVOR: Whitaker, Chenault, Berkowitz, Foster,
Hawker, Kerttula, Stoltze, Harris, Williams
OPPOSED: none
Vice Chair Meyer and Representative Moses were not present
for the vote.
The MOTION PASSED (9-0).
Representative Kerttula MOVED to ADOPT Amendment #2. Co-
Chair Harris OBJECTED.
Representative Kerttula explained that Amendment #2 would
add a new section to repeal of the prohibition for dedicated
funds and then dedicate these funds for road and highway
maintenance.
Co-Chair Harris spoke to his objection, claiming that it
would eliminate the fee. Representative Kerttula apologized
that she had misstated the information and that it would not
take effect until passage of the dedicated fund.
Ms. Bailey stressed that the proposed legislation was one
element put forward by the Governor to address the current
fiscal problems of the State. If the amendment is adopted,
those elements could "fall out" of the overall plan.
Representative Stoltze pointed out that the amendment fails
to change the title and the effective date.
A roll call vote was taken on the motion.
IN FAVOR: Moses
OPPOSED: Chenault, Berkowitz, Foster, Hawker,
Kerttula, Stoltze, Whitaker, Harris, Williams
Vice Chair Meyer was not present for the vote.
The MOTION FAILED (1-9).
Representative Foster MOVED to report HCS CS SB 106 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note. Representative Berkowitz
OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Foster, Hawker, Meyer, Stoltze, Whitaker,
Chenault, Williams, Harris
OPPOSED: Berkowitz, Kerttula, Moses
The MOTION PASSED (8-3).
HCS CS SB 106 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal note #2 by the
Department of Revenue.
ADJOURNMENT
The meeting was adjourned at 10:17 A.M.
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