Legislature(2019 - 2020)ADAMS 519

03/20/2020 09:00 AM House FINANCE

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Audio Topic
09:04:58 AM Start
09:05:41 AM SB115
09:51:55 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 102 RENTAL VEHICLE BY PRIVATE OWNER TELECONFERENCED
<Bill Hearing Canceled>
+ SB 115 MOTOR FUEL TAX; EV REG. FEE TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 20, 2020                                                                                            
                         9:04 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:04:58 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Johnston called the House Finance Committee                                                                            
meeting to order at 9:04 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Jennifer Johnston, Co-Chair                                                                                      
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick (Via Teleconference)                                                                               
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
Representative Adam Wool                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator Click Bishop, Sponsor; Darwin Peterson, Staff,                                                                          
Senator Click Bishop.                                                                                                           
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Brandon Spanos, Deputy Director, Department of Revenue; Rob                                                                     
Carpenter,     Deputy     Commissioner,    Department     of                                                                    
Transportation and Public Facilities.                                                                                           
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSSB 115(FIN)(efd fld)                                                                                                          
     MOTOR FUEL TAX; EV REG. FEE                                                                                                
                                                                                                                                
     CSSB 115(FIN)(efd fld) was HEARD and HELD in committee                                                                     
     for further consideration.                                                                                                 
                                                                                                                                
CS FOR SENATE BILL NO. 115(FIN)(efd fld)                                                                                      
                                                                                                                                
     "An Act relating to vehicle registration fees; and                                                                         
     relating to the motor fuel tax."                                                                                           
                                                                                                                                
9:05:41 AM                                                                                                                    
                                                                                                                                
SENATOR CLICK  BISHOP, SPONSOR, reported that  the state had                                                                    
not  raised its  base excise  tax rate  on motor  fuel since                                                                    
1970. In  1970, the motor  fuel tax accounted for  6 percent                                                                    
of  the  state's  operating   budget.  After  adjusting  for                                                                    
inflation, an $.08  fuel tax rate in 1970  was equivalent to                                                                    
the purchasing  power of  $.52 at  present. In  other words,                                                                    
Alaska's  fuel tax  had lost  82 percent  of its  purchasing                                                                    
power since 1970. Senate Bill  115 proposed to raise the tax                                                                    
rate of  fuel from $.08 to  $.16 per gallon and  marine fuel                                                                    
from  $.05 to  $.10 per  gallon. He  reported that  with the                                                                    
increase,  Alaska would  still have  the lowest  marine fuel                                                                    
tax in  the nation and would  move from last to  41st in its                                                                    
ranking on highway  fuel. Senate Bill 115 did  not impose an                                                                    
aviation  fuel increase.  Prior  legislatures had  discussed                                                                    
raising  the aviation  fuel tax  and determined  that Alaska                                                                    
was  competitive with  its  cargo planes  and  wanted it  to                                                                    
remain that way. The aviation fuel tax was left alone.                                                                          
                                                                                                                                
Senator  Bishop  continued  that  the  bill  would  generate                                                                    
approximately $33  million in  additional state  revenue and                                                                    
could potentially  take effect as  soon as July 1,  2020. He                                                                    
thought the bill  was a meaningful step  towards the state's                                                                    
ability  to fund  maintenance and  operations. He  mentioned                                                                    
that state motor fuel tax  revenue had declined by more than                                                                    
$800,000 over the previous three years  from FY 19 to FY 21.                                                                    
In  the prior  year,  the Department  of Transportation  and                                                                    
Facilities Maintenance  (DOT) was  given hollow  leg receipt                                                                    
authority for $1.2 million. He requested a brief at ease.                                                                       
                                                                                                                                
9:08:59 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:09:14 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator Bishop  continued that the  money did  not transpire                                                                    
because the  trend was going  down because of a  greater use                                                                    
of higher fuel  mileage automobiles. It also had  to do with                                                                    
more  electric  and  hybrid  vehicles  being  on  the  road.                                                                    
Meanwhile,  maintenance was  not  keeping up.  He noted  his                                                                    
district  had  lost 5  maintenance  stations.  A station  at                                                                    
Silvertip, which  served one of  the most traveled  roads in                                                                    
Alaska,  was   also  lost.  He   asked  members   for  their                                                                    
consideration  on  the  bill.   His  staff  would  review  a                                                                    
presentation.                                                                                                                   
                                                                                                                                
Co-Chair  Johnston thanked  the bill  sponsor for  coming to                                                                    
the meeting.                                                                                                                    
                                                                                                                                
Senator  Bishop  commented  that his  office  had  scheduled                                                                    
appointments with each lawmaker.                                                                                                
                                                                                                                                
9:11:15 AM                                                                                                                    
                                                                                                                                
DARWIN  PETERSON, STAFF,  SENATOR  CLICK BISHOP,  introduced                                                                    
the  PowerPoint Presentation:  "Senate Bill  115 Motor  Fuel                                                                    
Tax."                                                                                                                           
                                                                                                                                
Co-Chair Johnston  indicated the  committee had  been joined                                                                    
by Representative Tilton.                                                                                                       
                                                                                                                                
Mr.  Peterson began  with a  review  of the  history of  the                                                                    
motor fuel tax in Alaska on  slide 2. In 1945 Alaska's first                                                                    
motor fuel tax was levied at  $.01 per gallon. The last time                                                                    
the  motor  fuel  tax  was increased,  raised  to  $.08  per                                                                    
gallon,  was  in 1970.  In  1977  the  marine fuel  tax  was                                                                    
increased  to  its  current  rate of  $.05  per  gallon.  He                                                                    
reported that  the aviation fuel  tax was raised in  1984 to                                                                    
$.047 per gallon. From September  1, 2008 through August 31,                                                                    
2009  the state  suspended the  motor fuel  tax on  all fuel                                                                    
types. He  continued that 2015  was the last time  there was                                                                    
any change to  the motor fuel tax component.  House Bill 158                                                                    
[Legislation  passed in  2015    Short  Title: Refined  Fuel                                                                    
Surcharge; Motor Fuel  Tax] added a surcharge  on motor fuel                                                                    
of  $.0095   per  gallon  which   was  intended   for  spill                                                                    
prevention and response.                                                                                                        
                                                                                                                                
Mr. Peterson  indicated slide 3  reviewed the  current motor                                                                    
fuel tax  rates and  the rates proposed  in SB  115. Highway                                                                    
fuel was  currently $.08 per  gallon. Under  the legislation                                                                    
the amount  would increase to  $.16 per gallon.  Marine fuel                                                                    
was currently $.05 per gallon.  He explained that in Senator                                                                    
Bishop's original proposal marine  fuel increased to $10 per                                                                    
gallon. However, the  House Transportation Committee amended                                                                    
the marine  fuel tax  whereby licensed  commercial fishermen                                                                    
could submit a  refund request to the department  by the end                                                                    
of the  year for  a refund  for the  increase in  the marine                                                                    
fuel tax they  paid. In other words, they  would continue to                                                                    
pay the original  $.05 per gallon tax but  could be refunded                                                                    
for  the $.05  increase.  The change  was  reflected in  the                                                                    
House  Transportation  version  (version   E)  of  the  bill                                                                    
currently under  review. Aviation  fuel was  currently $.047                                                                    
per gallon  and remained  the same  in the  legislation. Jet                                                                    
fuel was currently $.032 per  gallon with no change proposed                                                                    
in SB 115.                                                                                                                      
                                                                                                                                
Mr. Peterson reported  there was a proposal  to increase the                                                                    
off-road  use  refund  from  $.06 per  gallon  to  $.12  per                                                                    
gallon.  The reason  for the  change  was because  currently                                                                    
there was  an off-road  use refund.  A person  could qualify                                                                    
for a refund when they  purchased fuel for snow machines, 4-                                                                    
wheelers,  or  anything not  used  on  a public  highway  or                                                                    
public  road. Individuals  had to  keep  their receipts  and                                                                    
submit  them  to the  department  for  a refund.  Currently,                                                                    
everyone paid $.02  per gallon whether or  not they received                                                                    
a  refund. He  clarified  that since  the  bill proposed  to                                                                    
double  the  tax,  it  would also  double  the  refund.  For                                                                    
instance, under  the legislation, if  a person paid  $16 per                                                                    
gallon for highway fuel used  for a snow machine, they could                                                                    
submit  their  receipt  for  a   tax  refund.  People  would                                                                    
continue to pay an off-road fuel tax of $.04 per gallon.                                                                        
                                                                                                                                
Representative Wool  asked about commercial  fishermen being                                                                    
able to  apply for  a $.10 per  gallon refund.  Mr. Peterson                                                                    
corrected  Representative  Wool  that  commercial  fishermen                                                                    
could apply for a refund of $.05 per gallon.                                                                                    
                                                                                                                                
Representative Wool clarified that  fishermen would still be                                                                    
paying  the current  $.05  per gallon  marine  fuel tax.  He                                                                    
wondered what  percentage of marine  fuel was  purchased for                                                                    
commercial use. He  thought it would be the  majority of the                                                                    
marine fuel sold.                                                                                                               
                                                                                                                                
Mr. Peterson responded that the  Department of Revenue (DOR)                                                                    
did not  have the percentage.  He had asked  what percentage                                                                    
of  the  marine fuel  revenue  was  paid for  by  commercial                                                                    
fishermen.  He  thought  it  was   a  large  percentage.  He                                                                    
indicated  that  cruise  ships   and  sport  fishermen  also                                                                    
purchased  marine fuel.  It was  difficult to  determine the                                                                    
percentage.  In  2019,  the   marine  fuel  tax  brought  in                                                                    
$5.6 million,   of    which   commercial    fishermen   were                                                                    
responsible  for  about  $3  million.  He  admitted  he  was                                                                    
guessing. The numbers were not broken down by industry.                                                                         
                                                                                                                                
9:16:04 AM                                                                                                                    
                                                                                                                                
Representative Knopp  asked about  the off-road  use refund.                                                                    
He  asked  what  department  people would  apply  to  for  a                                                                    
refund.  Mr.  Peterson  responded that  the  refund  request                                                                    
would be submitted to DOR.                                                                                                      
                                                                                                                                
Representative Knopp asked if  federal taxes were removed at                                                                    
the time of  purchase. He also queried if  the state portion                                                                    
was also removed at the time of purchase.                                                                                       
                                                                                                                                
Mr.  Peterson did  not know  the answer  to the  federal tax                                                                    
question. He indicated that there  was a federal base excise                                                                    
tax  on all  fuel  nationwide  of $.18  per  gallon. He  was                                                                    
unsure  whether  the federal  excise  tax  was withheld.  He                                                                    
guessed it  was not but would  check. The state tax  was not                                                                    
withheld at the time of purchase.  A person had to apply for                                                                    
a refund of  $.06 per gallon with DOR if  using the fuel for                                                                    
off-road use.  He reported  that the  same thing  applied to                                                                    
large  scale industrial  mines that  had equipment  that was                                                                    
not being used  for anything but onsite.  He understood that                                                                    
most  mine   corporations  sent  in  their   refund  request                                                                    
quarterly. He  stipulated that the  equipment could  only be                                                                    
used onsite and not on any public roads.                                                                                        
                                                                                                                                
Mr. Peterson  continued to slide  4 which showed  the impact                                                                    
on the average  Alaska consumer through the  increase in the                                                                    
motor  fuel tax  being proposed  in SB  115. The  number was                                                                    
determined by  calculating the  following. The  bill sponsor                                                                    
looked  at the  number of  registered passenger  vehicles in                                                                    
the  state  (cars  and  trucks  only).  There  were  654,826                                                                    
registered vehicles  per the Division of  Motor Vehicles. He                                                                    
considered the average miles per  year per vehicle selecting                                                                    
15,000  miles per  year  as stated  in  Kelly Bluebook.  The                                                                  
average  miles per  gallon was  20.85  miles (cars  averaged                                                                    
24.2 miles  per gallon and,  trucks averaged 17.4  miles per                                                                    
gallon).  The information  was provided  by DOT.  Gallons of                                                                    
fuel  purchased by  the average  consumer per  year was  719                                                                    
gallons (15,000  miles per year  divided by 20.85  miles per                                                                    
gallon). The annual increased tax  cost per vehicle would be                                                                    
719  gallons multiplied  by $.08  totaling $57.52  per year.                                                                    
Currently, the  average Alaskan  consumer paid  about $57.00                                                                    
per year.  The increase would essentially  double the amount                                                                    
to $115.04 per year.                                                                                                            
                                                                                                                                
9:19:37 AM                                                                                                                    
                                                                                                                                
Mr. Peterson turned  to slide 5 which  reviewed the proposed                                                                    
new electric  vehicle registration  fee. The  Senate Finance                                                                    
Committee  amended  the  bill to  add  an  electric  vehicle                                                                    
registration   fee.  The   amendment  was   offered  because                                                                    
electric  vehicles, becoming  increasingly popular,  did not                                                                    
pay  any fuel  tax but  drove on  the roads  contributing to                                                                    
wear  and tear.  The other  body thought  it was  prudent to                                                                    
include  an additional  registration fee.  The bill  sponsor                                                                    
had looked  at other ways  of possibly capturing  that group                                                                    
of  vehicles  potentially  metering the  electric  usage  on                                                                    
vehicles. However,  it was not  feasible. Most  other states                                                                    
charged an  additional registration  fee similar to  the fee                                                                    
proposed in SB 115.                                                                                                             
                                                                                                                                
Mr.  Peterson reported  that the  definition of  an electric                                                                    
vehicle was  included in  the legislation  - a  vehicle that                                                                    
was  powered solely  by an  electric  motor drawing  current                                                                    
from rechargeable  batteries, fuel cells, or  other portable                                                                    
sources  of electrical  current  and manufactured  primarily                                                                    
for  use  on  public   streets,  roads,  and  highways.  The                                                                    
vehicles had  to be 100  percent electric.  Presently, there                                                                    
was a  biennial registration fee for  all passenger vehicles                                                                    
of $100. The proposed change  would increase the fee to $200                                                                    
($50 biennially). The revenue  was collected by the Division                                                                    
of Motor Vehicles  just like a regular  registration fee was                                                                    
collected.  However, the  addition would  be deposited  into                                                                    
the highway maintenance fund. The  intent was clear that the                                                                    
additional  registration  fee was  to  be  used for  highway                                                                    
maintenance.  There  were  approximately 600  pure  electric                                                                    
vehicles in  Alaska at present.  He noted the  population of                                                                    
electric cars would continue to grow.                                                                                           
                                                                                                                                
Mr. Peterson reported  that the other body  also proposed an                                                                    
additional  registration fee  for  plug-in hybrid  vehicles.                                                                    
Plug-in hybrids  were those electric vehicles  that operated                                                                    
on  gasoline  and  electricity.   Hybrids  were  defined  as                                                                    
vehicles  capable   of  using  gasoline,  diesel   fuel,  or                                                                    
alternative  fuel  and was  powered  in  part by  electrical                                                                    
energy  using  a battery  storage  system  capable of  being                                                                    
recharged  from  an  external   source  of  electricity  and                                                                    
manufactured  primarily for  use on  public streets,  roads,                                                                    
and highways.  He continued  that the  biennial registration                                                                    
fee   increase  proposed   for  plug-in   hybrids  was   $50                                                                    
biennially  ($25 per  year). The  sponsor came  up with  the                                                                    
amount  based on  the fact  that  hybrid vehicles  purchased                                                                    
gasoline and paid some motor  fuel tax. The funds would also                                                                    
be deposited  into the highway maintenance  fund. There were                                                                    
approximately  300  hybrid  vehicles in  Alaska.  The  total                                                                    
revenue generated  from the  increased registration  fee was                                                                    
about $100,000 per year.                                                                                                        
                                                                                                                                
Co-Chair Johnston  asked if the senator's  office had talked                                                                    
about  other types  of  alternative  vehicles. Mr.  Peterson                                                                    
responded  that   the  senator  had  not   considered  other                                                                    
alternatively fueled vehicles. He  would be happy to address                                                                    
a change to the bill for  vehicles that did not use gasoline                                                                    
or electricity for power.                                                                                                       
                                                                                                                                
9:23:56 AM                                                                                                                    
                                                                                                                                
Representative LeBon  asked whether the marine  tax revenues                                                                    
would be used for marine purposes.                                                                                              
                                                                                                                                
Mr.  Peterson responded  in the  affirmative. He  elaborated                                                                    
that  there were  currently four  funds  within the  general                                                                    
fund  that   were  designated.  All  highway   fuel  revenue                                                                    
proceeds  were   deposited  into  the   highway  maintenance                                                                    
account. All  marine fuel revenues  were deposited  into the                                                                    
watercraft account.  He indicated  there was an  account for                                                                    
jet  and aviation  fuel and  an account  for off-road  fuel.                                                                    
Whether  or not  a refund  request  was made,  the $.02  per                                                                    
gallon amount would be deposited  into the off-road account.                                                                    
He reported that the highway  maintenance account had always                                                                    
been   appropriated   by   the   legislature   for   highway                                                                    
construction and  maintenance. The statute also  allowed for                                                                    
the funding to be used  for ferries. The watercraft fund was                                                                    
used  for  ports  and harbors.  The  harbor  matching  grant                                                                    
program was used for the  upkeep and maintenance on Alaska's                                                                    
harbors. The jet and aviation  fuel taxes were used strictly                                                                    
for airports. The Federal  Aviation Administration (FAA) had                                                                    
a requirement that any revenue  raised from aviation and jet                                                                    
fuel  went  back into  the  airport.  It was  essentially  a                                                                    
dedicated fund because the state  was not allowed to use the                                                                    
revenue  for  anything  other than  airports.  The  off-road                                                                    
account was designated for trails.                                                                                              
                                                                                                                                
Representative  LeBon  asked  about  the  highway  fuel  tax                                                                    
increase. He  wondered if  the tax  applied to  both private                                                                    
and commercial  uses. Whereas,  the off-road  use tax  had a                                                                    
separate designation between commercial  and private use. He                                                                    
clarified  that no  matter whether  a person  was using  the                                                                    
highway  for   personal  or   business  travel,   they  were                                                                    
responsible for  paying the additional  tax. He  asked about                                                                    
the marine fuel tax and  whether it only applied to personal                                                                    
use. Commercial users could apply  for a refund. He asked if                                                                    
he was  accurate. Mr. Peterson  replied, "That's  correct as                                                                    
proposed by  the House Transportation  Committee Substitute.                                                                    
The proposal did not come from the Senate."                                                                                     
                                                                                                                                
Representative  Sullivan-Leonard noted  that  when the  bill                                                                    
came  through the  previous year  she had  protested loudly.                                                                    
She indicated  that at  least a third  of the  Mat-Su Valley                                                                    
population of  110,000 traveled  as commuters  to Anchorage.                                                                    
They would  see a  significant increase in  gasoline charges                                                                    
on a  weekly basis. She  could not support the  bill because                                                                    
of  a  large  disparity   between  her  district  and  other                                                                    
districts.  People living  in Anchorage  did not  commute to                                                                    
the Valley. Folks living in the  Mat-Su were a large part of                                                                    
Anchorage's workforce. She wondered  if the bill sponsor had                                                                    
considered the issue when developing the legislation.                                                                           
                                                                                                                                
Mr. Peterson responded that it  had been discussed. He noted                                                                    
that a  member of  the other  body had  spoken on  the floor                                                                    
about how everyone made choices  about where they lived. The                                                                    
Mat-Su Borough  was an attractive  place to live  because of                                                                    
the lower real  estate and the availability  of land. People                                                                    
who lived  there choose to  work in Anchorage  because there                                                                    
were more jobs  and the salaries were  higher. He reiterated                                                                    
that it was an attractive choice to live in the Valley.                                                                         
                                                                                                                                
Representative Josephson  asked if the maintenance  fund had                                                                    
historically  received  help  from   the  general  fund.  He                                                                    
queried  whether it  was  totally reliant  on  the tax.  Mr.                                                                    
Peterson   deferred   to    a   representative   from   DOR.                                                                    
Representative Josephson restated his question.                                                                                 
                                                                                                                                
9:29:38 AM                                                                                                                    
                                                                                                                                
BRANDON SPANOS, DEPUTY DIRECTOR,  DEPARTMENT OF REVENUE (via                                                                    
teleconference),  responded  that  the  department  did  not                                                                    
track the  information only the  revenue the  state received                                                                    
and  deposited into  the fund.  He  suggested directing  the                                                                    
question to DOT or the  Department of Administration for the                                                                    
specifics of the fund.                                                                                                          
                                                                                                                                
9:30:13 AM                                                                                                                    
                                                                                                                                
ROB   CARPENTER,   DEPUTY    COMMISSIONER,   DEPARTMENT   OF                                                                    
TRANSPORTATION AND  PUBLIC FACILITIES  (via teleconference),                                                                    
responded that  the total budget  for highways  and aviation                                                                    
was about $130  million. The highway fuel tax  money for $35                                                                    
million,  a  mere  portion of  the  total  maintenance  cost                                                                    
needed for the state's three regions.                                                                                           
                                                                                                                                
Representative  Josephson was  concerned with  the Senator's                                                                    
report that  five maintenance stations  in his  district had                                                                    
been shuttered.  He wondered if  the closures were  partly a                                                                    
reflection of  SB 115 and  the overall lack of  revenue. Mr.                                                                    
Peterson  thought Representative  Josephson  had provided  a                                                                    
fair assessment.                                                                                                                
                                                                                                                                
Representative  Wool  recalled  the   fuel  tax  raised  $35                                                                    
million. He  thought if the  tax was doubled,  the estimated                                                                    
revenue would  be about $70  million. He was looking  at the                                                                    
calculation for  the annual cost  per vehicle of  $57.00. He                                                                    
would  ask a  related  question later.  He  wondered if  the                                                                    
refund was  proposed in the House  Transportation Committee.                                                                    
Mr. Peterson  asked if the  representative was  asking about                                                                    
the  off-road   use  refund  or  the   refund  available  to                                                                    
commercial fishermen.  Representative Wool was  asking about                                                                    
both.  He  wondered  if  the  taxes  existed  prior  to  the                                                                    
proposed SB 115.                                                                                                                
                                                                                                                                
Mr.  Peterson   responded  that  the  off-road   use  refund                                                                    
currently  existed in  statute.  The  refund for  commercial                                                                    
fishermen had never existed in  statute. It was new from the                                                                    
House Transportation Committee.                                                                                                 
                                                                                                                                
Representative Wool commented  that commercial vehicles paid                                                                    
into the fund. He asked  the number on port maintenance. Mr.                                                                    
Carpenter  wondered if  Representative  Wool's question  was                                                                    
how much  of the motor  fuel tax was  currently appropriated                                                                    
towards ports and harbors.                                                                                                      
                                                                                                                                
Representative Wool  responded partially. He also  asked how                                                                    
much was spent  on ports and harbors. He had  been told that                                                                    
the marine  tax generated about  $5.6 million. He  asked for                                                                    
the total. Mr. Carpenter responded  that as the FY 20 budget                                                                    
was laid  out there  was approximately  $3.6 million  of the                                                                    
motor fuel tax  would go towards the  marine highway system.                                                                    
There  was nothing  from the  motor fuel  tax going  towards                                                                    
ports and  harbor maintenance or  the Port and  Harbor Grant                                                                    
Program.                                                                                                                        
                                                                                                                                
Representative Wool  asked if ports  and harbors  fell under                                                                    
the  responsibility  of  the state  or  municipalities.  Mr.                                                                    
Carpenter responded that state  owned ports and harbors were                                                                    
under  the responsibility  of DOT.  He  noted the  municipal                                                                    
harbor matching grant program where  a local community would                                                                    
put up 50  percent of the amount necessary  for their harbor                                                                    
and  the  state would  match  the  amount.  As part  of  the                                                                    
matching   grant   program   there  was   a   general   fund                                                                    
appropriation  for  a  project  in Cordova  in  the  capital                                                                    
budget. The  motor fuel  tax could be  used for  the program                                                                    
but was not being used currently.                                                                                               
                                                                                                                                
Representative  Wool  asked  whether  a  commercial  fishing                                                                    
vessel docked in a coastal  community would be using a state                                                                    
or  municipal harbor.  Mr. Carpenter  responded that  he did                                                                    
not currently  have a list  of state-owned harbors  in front                                                                    
of him.  He suggested  that the City  and Borough  of Juneau                                                                    
had its own harbors. Some harbors were state-owned.                                                                             
                                                                                                                                
9:35:44 AM                                                                                                                    
                                                                                                                                
Representative  Knopp  asked   if  only  commercial  fishing                                                                    
vessels  would qualify  for the  refund  or whether  charter                                                                    
boats  would as  well.  Mr. Peterson  replied  that it  only                                                                    
applied to  registered CFEC vessels.  The amendment  did not                                                                    
include sport fishing charter boats or cruise ships.                                                                            
                                                                                                                                
Representative Knopp asked  if the marine fuel  tax was used                                                                    
exclusively  for ports  and  harbors.  Mr. Peterson  replied                                                                    
that the intent would be  for the additional funds generated                                                                    
from the  marine fuel tax  to be  used to upgrade  the state                                                                    
and  municipalities ports  and  harbors. The  state was  100                                                                    
percent responsible  for state ports and  harbors. Municipal                                                                    
ports  and  harbors  would  be  funded  through  the  Harbor                                                                    
Matching Grant  Program which was  a 50 percent  state match                                                                    
with local municipalities.                                                                                                      
                                                                                                                                
Co-Chair  Johnston  reported  Representative  Carpenter  had                                                                    
joined the meeting.                                                                                                             
                                                                                                                                
Vice-Chair Ortiz asked if there  was a figure reflecting the                                                                    
amount of deferred maintenance for  highways. He wondered if                                                                    
there was  a way  to determine if  the amount  had increased                                                                    
over the  years. Mr. Carpenter  relayed that  the department                                                                    
had an  accounting of its  deferred maintenance for  all its                                                                    
assets statewide including highways.  He believed the amount                                                                    
had  increased  over  the previous  few  years  as  deferred                                                                    
maintenance  money had  declined  in the  budget similar  to                                                                    
other agencies.                                                                                                                 
                                                                                                                                
Vice-Chair  Ortiz wondered  if Mr.  Carpenter had  a figure.                                                                    
Mr.   Carpenter  responded   that  he   could  provide   the                                                                    
information.  A  hearing was  supposed  to  be scheduled  at                                                                    
which time the department would provide great detail.                                                                           
                                                                                                                                
Co-Chair Johnston  asked what road  maintenance encompassed.                                                                    
She was  aware snow removal was  a part of it.  She wondered                                                                    
if  resurfacing  for  ruts  was  included.  She  asked  what                                                                    
defined maintenance was for the  highway fund. Mr. Carpenter                                                                    
replied  that  maintenance  included   items  such  as  road                                                                    
plowing,  brush cutting,  and road  striping  to ensure  the                                                                    
roads were in safe condition.  He continued that any kind of                                                                    
reconstruction  or  major  construction would  be  paid  for                                                                    
through federal highway funds or  a federally funded program                                                                    
rather than  state road maintenance funds.  Rut repair would                                                                    
be considered major reconstruction.                                                                                             
                                                                                                                                
Co-Chair  Johnston asked  if  the funds  were  used to  keep                                                                    
Alaska's  roads  open  through  the  winter.  Mr.  Carpenter                                                                    
clarified if  Co-Chair Johnston was  referring to  the motor                                                                    
fuel tax. Co-Chair Johnston  responded, "Yes." Mr. Carpenter                                                                    
answered that  the motor  fuel tax was  part of  the funding                                                                    
used to  keep the roads  open in the winter.  The department                                                                    
also  had a  considerable  undesignated  general fund  (UGF)                                                                    
component that went towards highway maintenance.                                                                                
                                                                                                                                
Co-Chair Johnston clarified that the  motor fuel tax was one                                                                    
of  the funding  sources besides  general funds  for keeping                                                                    
all   highways  open.   Mr.  Carpenter   responded  in   the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
9:40:11 AM                                                                                                                    
                                                                                                                                
Mr.  Peterson  reviewed  a comparison  of  Alaska  to  other                                                                    
states on slide  6. Currently, Alaska had  the lowest marine                                                                    
fuel  tax in  the nation.  If the  bill passed  Alaska would                                                                    
rank  41st rather  than 50th.  Alaska currently  had a  more                                                                    
competitive  ranking  among  other  states for  jet  fuel                                                                       
                                    th                                                                                          
Alaska ranked 36th. Alaska Ranked 40 in Aviation fuel.                                                                          
                                                                                                                                
Mr. Peterson explained that slide  7 was a graphic depiction                                                                    
of how  Alaska compared to  other states. The  far left-hand                                                                    
side of the bar graph  showed where Alaska currently sat and                                                                    
was  the   lowest.  The  numbers  came   from  the  American                                                                    
Petroleum Institute.  They published state motor  fuel taxes                                                                    
every year.  The information was  from January 1,  2020. The                                                                    
blue line  on the graph showed  the base excise tax  in each                                                                    
state. The orange  showed other state fees  and local taxes.                                                                    
He explained  that many  states had  other state  fees which                                                                    
were charged at  the pump for highway  fuel including county                                                                    
and municipal taxes and any  other additional fees the state                                                                    
placed on marine fuel.                                                                                                          
                                                                                                                                
Mr. Peterson  continued that  the federal  government levied                                                                    
an  $.184 per  gallon federal  excise tax  on all  50 states                                                                    
which was not  reflected in the slide.  Alaska's base excise                                                                    
tax shown in  blue included $.95 per gallon  for the refined                                                                    
fuel surcharge. The  other taxes for Alaska  shown in orange                                                                    
included a 1.1  percent weighted average for  sales tax from                                                                    
cities  and boroughs.  Under  SB 115  Alaska  would move  10                                                                    
slots to the right and would rank 41st in the nation.                                                                           
                                                                                                                                
Representative Josephson  was only looking at  the base tax.                                                                    
If  the bill  became law,  Alaska  would be  ranked 49th  or                                                                    
50th. Mr.  Peterson agreed. However,  he used Vermont  as an                                                                    
example.  Although  it   had  a  lower  base   tax,  it  had                                                                    
substantial  other  state  and local  fees.  He  highlighted                                                                    
Pennsylvania. It had the second  highest ranking only behind                                                                    
California. It had  no base excise tax  but had considerable                                                                    
other  state taxes  and local  fees.  Ultimately, the  taxes                                                                    
paid by Pennsylvanians was quite  high even though the state                                                                    
had no excise tax. Every  state did things differently which                                                                    
could be seen in the graph.                                                                                                     
                                                                                                                                
Representative  Wool   commented  that   Anchorage  recently                                                                    
instated a motor  fuel tax. He wondered if he  would pay the                                                                    
same motor fuel tax if he  were to purchase marine fuel from                                                                    
the Port of Anchorage. Mr.  Peterson, was unsure but thought                                                                    
it would only apply to highway  fuel, not to marine fuel. If                                                                    
a person purchased marine fuel  at a port in Anchorage, they                                                                    
would be paying $.05 per gallon towards tax.                                                                                    
                                                                                                                                
Mr. Peterson  concluded his  presentation. He  was available                                                                    
to answer  questions. He also  had a sectional  analysis, if                                                                    
the committee wanted him to review it.                                                                                          
                                                                                                                                
9:45:03 AM                                                                                                                    
                                                                                                                                
Representative  LeBon  asked  how  the  bill  would  address                                                                    
permanent  registration   on  vehicles.  He  asked   how  an                                                                    
electric vehicle would be treated under the bill.                                                                               
                                                                                                                                
Mr. Peterson  responded that there  was currently  a program                                                                    
in statute called Permanent Registration  and applied to all                                                                    
vehicles  in  an unorganized  borough.  It  also applied  to                                                                    
municipalities that had opted  in. He further explained that                                                                    
if a vehicle was 8 years  old or older, a person could apply                                                                    
for a  permanent registration. The  fee was $25  in addition                                                                    
to the regular biannual  registration fee. Upon registration                                                                    
a Z-Tag was  provided. A person would no longer  have to pay                                                                    
a  biannual  vehicle  registration fee.  The  municipalities                                                                    
that had opted  into the program included  Yakutat, the City                                                                    
of  Nenana,  the Denali  Borough,  the  Mat-Su Borough,  the                                                                    
Fairbanks North Star  Borough, the City of  Valdez, the City                                                                    
of   Hoonah,   and   the  Kenai   Peninsula   Borough.   The                                                                    
Municipality  of Anchorage  elected  to  participate in  the                                                                    
Permanent Registration  Program for  non-commercial trailers                                                                    
only,  not passenger  vehicles. The  remainder of  the state                                                                    
did not have a permanent registration option.                                                                                   
                                                                                                                                
Representative  LeBon  asked   how  electric  vehicles  were                                                                    
treated regarding permanent registration.  He wondered if an                                                                    
owner  of an  electric vehicle  8 years  old or  older could                                                                    
apply  for   a  permanent  registration  and   avoid  future                                                                    
biennial fees.                                                                                                                  
                                                                                                                                
Mr.  Peterson  responded  that   he  was  correct.  Electric                                                                    
vehicles  were  treated  the same  as  any  other  passenger                                                                    
vehicle. If a person owned  an electric vehicle and lived in                                                                    
an unorganized borough  or one of the  municipalities he had                                                                    
mentioned,  a  person could  also  qualify  for a  permanent                                                                    
registration for  an additional $25  as long as  the vehicle                                                                    
was 8  years old or  older. He  noted that the  batteries on                                                                    
electric  vehicles had  a  life  of about  8  years. He  had                                                                    
spoken to a representative  from the Juneau Electric Vehicle                                                                    
Association. He reported that half  of the electric vehicles                                                                    
in Alaska were  in Juneau. He found out that  when a vehicle                                                                    
was 8  years old  and the  batteries needed  replacing, most                                                                    
people   simply  purchased   a   new   vehicle  because   of                                                                    
replacement costs.                                                                                                              
                                                                                                                                
Co-Chair   Johnston  indicated   amendments   were  due   by                                                                    
5:00 p.m.  on  Saturday, March  21,  2020.  She relayed  the                                                                    
agenda for  the afternoon  meeting and  the list  of invited                                                                    
testifiers.                                                                                                                     
9:50:56 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:51:37 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Johnston announced that bills previously heard or                                                                      
scheduled would be on the agenda for the afternoon meeting.                                                                     
                                                                                                                                
CSSB 115(FIN)(efd fld) was HEARD and HELD in committee for                                                                      
further consideration.                                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
9:51:55 AM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 9:51 a.m.                                                                                          

Document Name Date/Time Subjects
SB 115 - FAQs 031320.pdf HFIN 3/20/2020 9:00:00 AM
SB 115
SB 115 Explanation of Changes in HTRA CS 031320.pdf HFIN 3/20/2020 9:00:00 AM
SB 115
SB 115 Sectional Analysis 3.13.20.pdf HFIN 3/20/2020 9:00:00 AM
SB 115
SB 115 Sponsor Statement 3.13.20.pdf HFIN 3/20/2020 9:00:00 AM
SB 115
Senate Bill 115 PowerPoint 3.20.2020.pdf HFIN 3/20/2020 9:00:00 AM
SB 115
SB 115 Leg. Research MFT revenue 1993-2018.pdf HFIN 3/20/2020 9:00:00 AM
SFIN 2/3/2020 9:00:00 AM
SB 115
SB 115 Federation of Tax Administrators motor fuel tax rates January 2019.pdf HFIN 3/20/2020 9:00:00 AM
SFIN 2/3/2020 9:00:00 AM
SB 115
SB 115 LFD FundSources_Motor Fuel Tax_2018.pdf HFIN 3/20/2020 9:00:00 AM
SFIN 2/3/2020 9:00:00 AM
SB 115
SB 115 Motor Fuel Tax by State Graph 2.12.2020.pdf HFIN 3/20/2020 9:00:00 AM
HTRA 3/10/2020 1:00:00 PM
HTRA 3/12/2020 1:00:00 PM
SB 115
SB 115 Fall 2019 Revenue Sources Book Chapter 5.pdf HFIN 3/20/2020 9:00:00 AM
HTRA 3/12/2020 1:00:00 PM
SFIN 2/3/2020 9:00:00 AM
SB 115
SB 115 Letter of Support ASCE 3.13.20.pdf HFIN 3/20/2020 9:00:00 AM
SB 115
SB 115 Support Letter_ASCE 031320.PDF HFIN 3/20/2020 9:00:00 AM
SB 115
SB 115 DOT&PF Ports & Harbors 032020.pdf HFIN 3/20/2020 9:00:00 AM
SB 115
SB 115 Deferred maintenance Backlog 123119.pdf HFIN 3/20/2020 9:00:00 AM
SB 115