Legislature(2003 - 2004)

01/29/2004 01:41 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                      January 29, 2004                                                                                          
                         1:41 P.M.                                                                                              
                                                                                                                                
TAPE HFC 04 - 16, Side A                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:41 P.M.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Hugh Fate                                                                                                        
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Reggie Joule                                                                                                     
Representative Bill Stoltze                                                                                                     
                                                                                                                                
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Carl Moses                                                                                                       
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Bruce Weyhrauch;  Peter Ecklund, House Finance                                                                   
Committee   Staff,   Representative    Bill   Williams;   Sue                                                                   
Stancliff,  Staff, Representative  Speaker  Pete Kott;  Linda                                                                   
Sylvester,  Staff,  Representative Bruce  Weyhrauch;  Michael                                                                   
                                                     th                                                                         
Kendall,  Commander,  Chief of  Search  & Rescue,  17   Coast                                                                   
                                     th                                                                                         
Guard  District; Michael  Swanson, 17   Coast Guard  District                                                                   
Boating Safety Assistant                                                                                                        
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Janis Hales,  Department of  Revenue, Anchorage;  Sue Hargis,                                                                   
United States Coast Guard, Juneau                                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 93     An Act relating to boating safety; repealing secs.                                                                    
          3, 5, 7, 9, 11, 14, 16, 18, 20, 23, 26, 27, and                                                                       
          30, ch. 28, SLA 2000; and providing for an                                                                            
          effective date.                                                                                                       
                                                                                                                                
          CS HB 93 (FIN) was reported out of Committee with                                                                     
          a "no recommendation" recommendation and with a                                                                       
          new    fiscal   note    by   the   Department    of                                                                   
          Administration and a new zero note by Department                                                                      
          of Revenue.                                                                                                           
                                                                                                                                
HB 347    An  Act  exempting   taxicabs  from  the  passenger                                                                   
          vehicle rental tax; and providing for an effective                                                                    
          date.                                                                                                                 
                                                                                                                                
          HB 347 was HEARD and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HOUSE BILL NO. 93                                                                                                             
                                                                                                                                
     An Act relating to boating safety; repealing secs. 3,                                                                      
     5, 7, 9, 11, 14, 16, 18, 20, 23, 26, 27, and 30, ch.                                                                       
     28, SLA 2000; and providing for an effective date.                                                                         
                                                                                                                                
Co-Chair Williams inquired if  the sponsor of the bill wanted                                                                   
to   make  a   statement  of   clarification  regarding   the                                                                   
legislation.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BRUCE  WEYHRAUCH noted  that  the U.S.  Coast                                                                   
Guard was present to answer any questions of the Committee.                                                                     
                                                                                                                                
Co-Chair Harris referenced language  on Page 2, Section 4, "a                                                                   
boat that  is not  equipped with  mechanical propulsion"  and                                                                   
asked if a sailboat of any length would be exempt.                                                                              
                                                                                                                                
                                                            TH                                                                  
MICHAEL  KENDALL, COMMANDER,  CHIEF OF  SEARCH & RESCUE,  17                                                                    
COAST  GUARD DISTRICT,  JUNEAU,  responded that  it would  be                                                                   
exempt and  would not be a problem  for the Coast Guard.   If                                                                   
the boat had  a kicker or dysfunctional motor,  it could fall                                                                   
under the provision.                                                                                                            
                                                                                                                                
Co-Chair Harris questioned why  the Coast Guard would want to                                                                   
exempt them.   Commander Kendall  responded that it  does not                                                                   
make  a difference  to  the  Coast  Guard.   Co-Chair  Harris                                                                   
acknowledged that it would not  be affecting the Coast Guard.                                                                   
                                                                                                                                
Co-Chair Harris  asked why the  sunset is not  being extended                                                                   
so the law remains as currently written.                                                                                        
                                                                                                                                
                    TH                                                                                                          
MICHAEL  SWANSON, 17   COAST  GUARD DISTRICT  BOATING  SAFETY                                                                   
ASSISTANT, JUNEAU,  noted that would not be  a problem except                                                                   
that it  would need  to be  "revisited" again  at the  end of                                                                   
that sunset.                                                                                                                    
                                                                                                                                
Co-Chair  Harris asked  if consideration  had  been given  to                                                                   
extending only the sunset.  Representative  Weyhrauch advised                                                                   
that the  reason he  introduced the bill  was because  of the                                                                   
large  presence of  the Coast  Guard in this  region and  the                                                                   
requested  it.   He  pointed out  that  he  also had  assumed                                                                   
Representative   Bill  Hudson's   seat   who  supported   the                                                                   
legislation.   The  program  demonstrates  a positive  fiscal                                                                   
impact on Alaska.  The law has been proven to save lives.                                                                       
                                                                                                                                
Co-Chair Harris warned that the  issue goes beyond the sunset                                                                   
concern and that the bill does  indicate some exemptions.  He                                                                   
referenced  the   correspondence  from  the   Alaska  Outdoor                                                                   
Council  (AOC),  voicing concern  regarding  the  exemptions.                                                                   
(Copy on File).   He inquired  if it would be better  to deal                                                                   
with a  "no sunset" provision  as the exemptions will  end up                                                                   
costing the State money.                                                                                                        
                                                                                                                                
LINDA  SYLVESTER,  STAFF,  REPRESENTATIVE   BRUCE  WEYHRAUCH,                                                                   
advised that  the exemption  is projected  to cost  the State                                                                   
$30 thousand  dollars.   She pointed  out that  the issue  of                                                                   
including or not including the  motorized boats has become an                                                                   
emotional  concern for everyone  and suggested  that it  is a                                                                   
"sensibility  issue".   Some  people  feel strongly  that  it                                                                   
would not  be good  policy to  require registration  of boats                                                                   
not used often.                                                                                                                 
                                                                                                                                
Ms.  Sylvester added  that from  the  federal perspective,  a                                                                   
portion of  the proceeds  come from  motor fuel taxes,  which                                                                   
connects it and makes sense that  it is a federal regulation.                                                                   
She advised that the priority  was to keep the Boating Safety                                                                   
Program in  tact.   She reiterated  that the legislation  has                                                                   
picked up heated opposition in the Interior.                                                                                    
                                                                                                                                
Co-Chair  Harris   questioned  how  the  Interior   would  be                                                                   
affected.  Ms. Sylvester mentioned  the inclusion requirement                                                                   
for the non-motorized  boats.  She added  that Representative                                                                   
Holm,  Chairman for  the House  Transportation Committee  had                                                                   
added that exemption.                                                                                                           
                                                                                                                                
Representative  Stoltze MOVED  to  AMEND Page  2, Section  3,                                                                   
                                        th                                                                                      
changing the  effective date to  June 30,  2008, making  it a                                                                   
five-year  effective date  and  then making  the  appropriate                                                                   
change to the title.                                                                                                            
                                                                                                                                
Co-Chair Williams  OBJECTED for  discussion purposes,  asking                                                                   
that if the  law takes effect immediately, would  that be the                                                                   
date used.                                                                                                                      
                                                                                                                                
Representative  Weyhrauch  explained  that  it  would  become                                                                   
effective by signature  of the Governor and  noted that there                                                                   
is  no effective  date  listed in  Section  4.   It would  be                                                                   
immediate.                                                                                                                      
                                                                                                                                
Co-Chair Harris  pointed out that  it would require  a three-                                                                   
quarter vote otherwise, it would  be 90-days from the time of                                                                   
the signature.                                                                                                                  
                                                                                                                                
Representative Hawker asked Representative  Stoltze about the                                                                   
amendment  and if  the  current Section  30  would trigger  a                                                                   
different repealor,  taking effect based  on one of  two sets                                                                   
of circumstances, either the passage  of July 1,  2005 or the                                                                   
90-days after the  signature.  He asked if it  was the intent                                                                   
                                               th                                                                               
that  the repealor  trigger  only the  June  30,  2008  date.                                                                   
Representative Stoltze believed  that there was a complicated                                                                   
series of effective dates and  that the way in which the bill                                                                   
was  drafted reflects  that.   He hoped  that the  conceptual                                                                   
amendment  was "broad"  enough  to provide  "leeway" for  the                                                                   
drafter.                                                                                                                        
                                                                                                                                
PETER ECKLUND, HOUSE FINANCE COMMITTEE  STAFF, REPRESENTATIVE                                                                   
BILL  WILLIAMS, explained  that  in current  law, the  sunset                                                                   
                st                                                                                                              
date  is July  1,   2005.   The  conceptual  amendment  would                                                                   
                       st                                                                                                       
change that  to July  1,  2008,  leaving the second  repealor                                                                   
that  deals  with  receipt  of  the  federal  receipts.    He                                                                   
reiterated  that  there  would  still be  two  mechanisms  in                                                                   
place.                                                                                                                          
                                                                                                                                
Representative   Stoltze  MOVED   to  AMEND  the   amendment,                                                                   
                               st                                                                                               
changing  the  date to  July  1,   2010.   Co-Chair  Williams                                                                   
WITHDREW his OBJECTION.                                                                                                         
                                                                                                                                
Representative  Hawker OBJECTED  to ask  the sponsor  if that                                                                   
would be an  acceptable amendment.  Representative  Weyhrauch                                                                   
replied it would.                                                                                                               
                                                                                                                                
Representative Hawker WITHDREW his OBJECTION.                                                                                   
                                                                                                                                
Representative  Croft OBJECTED.   He  disagreed with  keeping                                                                   
the  bill  in its  current  form  with  the  2010 date.    He                                                                   
emphasized  that the  bill should  not  have a  sunset as  it                                                                   
clearly is saving lives.                                                                                                        
                                                                                                                                
Representative Croft WITHDREW  his OBJECTION and Amendment #1                                                                   
was ADOPTED.                                                                                                                    
                                                                                                                                
Representative Foster  MOVED to report CS HB 93  (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal notes.  There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CS  HB 93  (FIN) was  reported out  of Committee  with a  "no                                                                   
recommendation" and with a new  fiscal note by the Department                                                                   
of Administration  and a new zero  note by the  Department of                                                                   
Natural Resources.                                                                                                              
                                                                                                                                
HOUSE BILL NO. 347                                                                                                            
                                                                                                                                
     An Act exempting taxicabs from the passenger vehicle                                                                       
     rental tax; and providing for an effective date.                                                                           
                                                                                                                                
Representative  Croft  MOVED  to  ADOPT  Amendment  #1,  #23-                                                                   
LS1311\D.7, Kurtz, 1/29/04.  Co-Chair Williams OBJECTED.                                                                        
                                                                                                                                
Representative  Croft  explained  that  the  amendment  would                                                                   
address  the  concern  with  the  U-Hauls.    He  noted  that                                                                   
vehicles over 10,000# would be  exempt not only the ones over                                                                   
26,000#, primarily used commercially.   The amendment removes                                                                   
a  narrow  category  of  trucks   and  provides  a  "tighter"                                                                   
definition.                                                                                                                     
                                                                                                                                
                                                                                                                                
At-Ease:       2:03  P.M.                                                                                                     
Reconvene:     2:06  P.M.                                                                                                     
                                                                                                                                
                                                                                                                                
Representative  Croft   corrected,  Amendment  #1   does  not                                                                   
address the U-Haul  issue, but primarily changes  the 26,000#                                                                   
to the 10,000# limit.  A new class  of trucks would be exempt                                                                   
and  it  would  solve the  concern  brought  forward  by  the                                                                   
Trucking Association.   He added, apparently,  U-Hauls do not                                                                   
fit into the commercial motor vehicle category.                                                                                 
                                                                                                                                
Co-Chair Williams maintained his objection.                                                                                     
                                                                                                                                
Co-Chair Harris asked how much  revenue the State would loose                                                                   
through  adoption of  the  amendment.   Representative  Croft                                                                   
responded  that  the  taxpayers   would  save  $400  thousand                                                                   
dollars.                                                                                                                        
                                                                                                                                
SUE  STANCLIFF,  STAFF,  REPRESENTATIVE  SPEAKER  PETE  KOTT,                                                                   
deferred to Co-Chair William objection.                                                                                         
                                                                                                                                
Co-Chair  Williams reminded  members that  the intent  of the                                                                   
legislation was to  help taxi cab drivers.   He was concerned                                                                   
with the repercussions of changing language in the bill.                                                                        
                                                                                                                                
Co-Chair Harris asked  if the amendment would  only deal with                                                                   
vehicles that are  rented and without inclusion  of a driver.                                                                   
Representative Croft  did not know.  Co-Chair  Harris thought                                                                   
that  would  make a  big  difference.    He believed  that  a                                                                   
vehicle with a driver would be excluded.                                                                                        
                                                                                                                                
Vice  Chair  Meyer  asked  what type  of  trucks  were  being                                                                   
addressed  in the amendment.   Representative  Croft  did not                                                                   
want to  exempt big 6,000#-7,000#  vehicles.  The  bill would                                                                   
not change  that as  it only effects  those between  10,000#-                                                                   
26,000#.                                                                                                                        
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Joule, Chenault, Croft                                                                                           
OPPOSED:       Hawker, Meyer, Stoltze, Fate, Williams,                                                                          
               Harris                                                                                                           
                                                                                                                                
Representative  Foster  and  Representative  Moses  were  not                                                                   
present for the vote.                                                                                                           
                                                                                                                                
The MOTION FAILED (3-6).                                                                                                        
                                                                                                                                
Representative Croft MOVED to ADOPT Amendment #2, #23-                                                                          
LS1311\D.6, Kurtz, 1/29/04.  Co-Chair Williams OBJECTED.                                                                        
                                                                                                                                
Representative  Croft  explained   that  Amendment  #2  would                                                                   
address  concerns   with  the   U-Hauls  used  primarily   to                                                                   
transport personal property.                                                                                                    
                                                                                                                                
Co-Chair Williams reminded members  that the bill is intended                                                                   
to be  a revenue generating  measure and  that the  choice to                                                                   
use a U-Haul would be personal.                                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Joule, Croft                                                                                                     
OPPOSED:       Hawker, Meyer, Stoltze, Chenault, Fate,                                                                          
               Foster, Williams, Harris                                                                                         
                                                                                                                                
Representative Moses was not present for the vote.                                                                              
                                                                                                                                
The MOTION FAILED (2-9).                                                                                                        
                                                                                                                                
Co-Chair  Harris  referenced   the  letter  from  the  Alaska                                                                   
Trucking  Association, Inc.   (Copy  on File).   He read  the                                                                   
definition that the bill uses  for commercial motor vehicles:                                                                   
"All vehicles  over 26,000#  are exempt  from the user  fee".                                                                   
He noted that  large portions of equipment within  that pound                                                                   
range  would be subject  to the  user fee.   Co-Chair  Harris                                                                   
asked if the bill would tax semi-trucks  or trailers used for                                                                   
commerce in the 10,000#-26,000# range.                                                                                          
                                                                                                                                
Ms.  Stancliff did  not believe  they  would be  taxed.   She                                                                   
noted  that the  Department of  Revenue provided  information                                                                   
regarding the  10,000#-26,000# range  with a small  number of                                                                   
vehicles falling into  it such as the Ford F-350  and the Ram                                                                   
3500.   There are  a small number  of commercial  pick-ups on                                                                   
the North  Slope that fall into  that category, as do  the U-                                                                   
Hauls.   She  did  not know  about  semi-trucks  or flat  bed                                                                   
trucks and recommended that the  Department of Revenue answer                                                                   
that question.                                                                                                                  
                                                                                                                                
Co-Chair  Harris asked  if he  owned a  trucking company  and                                                                   
wanted to rent a semi-truck, weighing  that amount, would the                                                                   
company pay a rental tax on that  semi even though they are a                                                                   
trucking company.   Ms.  Stancliff did  not know the  answer.                                                                   
Co-Chair Harris stressed that  this is important information.                                                                   
                                                                                                                                
Ms. Stancliff recommended calling  the Department of Revenue.                                                                   
Co-Chair   Harris  interjected   that   those  truck   owners                                                                   
currently pay  tax and  that the proposed  tax should  not be                                                                   
added.                                                                                                                          
                                                                                                                                
JANIS HALES,  (TESTIFIED VIA  TELECONFERENCE), DEPARTMENT  OF                                                                   
REVENUE,  ANCHORAGE,   noted  that  in  AS   28.4100,  it  is                                                                   
clarified that a commercial motor  vehicle is a motor vehicle                                                                   
that is  a combination  of a  motor vehicle  and one  or more                                                                   
vehicles.   A  semi-truck is  a motorized  car as  well as  a                                                                   
semi-trailer and would weigh over 26,000#.                                                                                      
                                                                                                                                
Co-Chair  Harris  asked  what  would  happen  if  the  second                                                                   
trailer was  not rented.  Ms.  Hales did not know how  much a                                                                   
semi alone would  weigh.  Usually, the Department  would look                                                                   
at the entire unit.  Co-Chair  Harris stressed that there are                                                                   
a number  of  trucking companies  in the  State that  provide                                                                   
their own trailers.   Ms. Hales stated that if  only the semi                                                                   
was  rented, it  would be  taxable  as the  law is  currently                                                                   
written.                                                                                                                        
                                                                                                                                
Co-Chair Harris  clarified that  if the  vehicle was  used to                                                                   
haul commerce around the State,  would it then be taxed.  Ms.                                                                   
Hales  reiterated that  it  would as  the  bill is  currently                                                                   
written.                                                                                                                        
                                                                                                                                
Representative Croft pointed out  that Amendment #1 addresses                                                                   
not only  the poundage but  also the concern  for "commercial                                                                   
purposes".   He believed that  the amendment could  provide a                                                                   
"fix".                                                                                                                          
                                                                                                                                
Representative  Hawker  understood that  the  facts could  be                                                                   
easily  determined  and  reminded   members  that  the  Gross                                                                   
Vehicle Weight  (GVW), which is  greater than the  dry weight                                                                   
of the vehicle, was being discussed.                                                                                            
                                                                                                                                
Vice Chair  Meyer commented that  the car rental tax  was not                                                                   
unique to the State  of Alaska.  He thought that  it would be                                                                   
easy to document.                                                                                                               
                                                                                                                                
Co-Chair Harris  MOVED to  HOLD the  bill in Committee  until                                                                   
that information  is  clarified.  There  being NO  OBJECTION,                                                                   
the bill was held.                                                                                                              
                                                                                                                                
HB 347 was HELD in Committee for further consideration.                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 2:24 P.M.                                                                                          
                                                                                                                                
                                                                                                                                

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