Legislature(2011 - 2012)HOUSE FINANCE 519

03/30/2012 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 313 STUDENT COUNT ESTIMATES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 64 PERMANENT MOTOR VEHICLE REGISTRATION TELECONFERENCED
Moved CSHB 64(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 30, 2012                                                                                            
                         9:13 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:13:23 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 9:13 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Co-Chair                                                                                        
Representative Anna Fairclough, Vice-Chair                                                                                      
Representative Mia Costello                                                                                                     
Representative Mike Doogan                                                                                                      
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Mark Neuman                                                                                                      
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Reggie Joule                                                                                                     
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative   Eric   Feige;  Michael   Paschall,   Staff,                                                                    
Representative  Feige;  Lauren Burch,  Superintendent,  Long                                                                    
Island  School  District;  Darrell Breese,  Staff,  Co-Chair                                                                    
Stoltze.                                                                                                                        
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Ken  Forrest,  Chief  Business  Official,  Matanuska-Susitna                                                                    
School;  Duncan Ware,  Superintendent,  Delta Greely  School                                                                    
District; Pete  Lewis, Superintendent, Fairbanks  North Star                                                                    
Borough;  Whitney  Brewster,  Director,  Division  of  Motor                                                                    
Vehicles.                                                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 64          PERMANENT MOTOR VEHICLE REGISTRATION                                                                             
                                                                                                                                
               CSHB  64(FIN) was  REPORTED out  of committee                                                                    
               with a  "do pass"  recommendation and  with a                                                                    
               new  fiscal  note   from  the  Department  of                                                                    
               Administration.                                                                                                  
                                                                                                                                
HB 313         STUDENT COUNT ESTIMATES                                                                                          
                                                                                                                                
               HB 313 was HEARD and HELD in committee for                                                                       
               further consideration.                                                                                           
                                                                                                                                
9:13:29 AM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 313                                                                                                            
                                                                                                                                
     "An Act  relating to student  counts and  estimates for                                                                    
     public school  funding; and providing for  an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
9:14:29 AM                                                                                                                    
                                                                                                                                
Vice-chair Fairclough MOVED the committee substitute HB                                                                         
313(EDC) 27-LS1223\B as the working document.                                                                                   
                                                                                                                                
REPRESENTATIVE ERIC FEIGE, read from the sponsor statement:                                                                     
                                                                                                                                
     Our school  districts need effective tools  to plan and                                                                    
     budget for the education of our children.                                                                                  
                                                                                                                                
     Under  HB   313  --  subject   to  the   hold  harmless                                                                    
     provisions, changes in the  Base Student Allocation, or                                                                    
     other legislative changes --  districts will be able to                                                                    
     complete  the  budget  process and  determine  staffing                                                                    
     levels earlier,  eliminate unnecessary  layoff notices,                                                                    
     and  execute   employment  contracts  to   improve  the                                                                    
     stability of the education climate in the state.                                                                           
                                                                                                                                
     The  purpose of  the bill  is to  base the  funding for                                                                    
     each school  district in the  state on the  count under                                                                    
     A.S.  14.17.600  for  the preceding  fiscal  year.  For                                                                    
     example, the  count conducted in Fiscal  Year 2013 will                                                                    
     establish the  funding level for  the district  for the                                                                    
     2014 Fiscal Year.                                                                                                          
     The  new  funding formula  will  not  change the  "hold                                                                    
     harmless" clause currently in  existence. If a decrease                                                                    
     in  enrollment  of five  percent  or  more occurs,  the                                                                    
     district will  continue to  receive funding  based upon                                                                    
     the Average Daily Membership  plus the 75/50/25 percent                                                                    
     addition  over   the  succeeding  three   years.  Other                                                                    
     provisions  of the  foundation formula  will remain  as                                                                    
     well.                                                                                                                      
                                                                                                                                
     If a district  has an increase in student  count of 200                                                                    
     students  or  three  percent over  the  previous  year,                                                                    
     supplemental funding  will be provided to  the district                                                                    
     for  the current  fiscal year.  Helping districts  deal                                                                    
     with large changes in population.                                                                                          
                                                                                                                                
     The new funding method will  implement with the FY 2014                                                                    
     year. Thus,  the count  conducted in  the fall  of 2012                                                                    
     will provide the funding level  for both FY 2013 and FY                                                                    
     2014, subject to the hold harmless provisions.                                                                             
                                                                                                                                
     HB 313 also increases  transparency in the governmental                                                                    
     budgeting process  by prohibiting the  current practice                                                                    
     that  allows municipalities  to  take  funds back  from                                                                    
     school districts at the end of the fiscal year.                                                                            
                                                                                                                                
9:17:14 AM                                                                                                                    
                                                                                                                                
MICHAEL  PASCHALL,  STAFF, REPRESENTATIVE  FEIGE,  explained                                                                    
that the proposed legislation was  spurred by a request from                                                                    
the Rural  Education Attendance Area (REAA).  The intent was                                                                    
to determine  how the daily  membership applied to  the Base                                                                    
Student Allocation (BSA).                                                                                                       
                                                                                                                                
Co-Chair  Stoltze queried  the  number  of school  districts                                                                    
involved.                                                                                                                       
                                                                                                                                
Ms.  Paschall   replied  that  one  district   was  involved                                                                    
initially  and other  districts began  participating in  the                                                                    
discussions. He  noted that modifications were  made to meet                                                                    
the needs  of all of  the districts.  He was unaware  of any                                                                    
objection from a  district to the bill. He  hoped to address                                                                    
concerns of any interested district.                                                                                            
                                                                                                                                
Representative Wilson  requested a definition for  REAA. Mr.                                                                    
Paschall  responded Rural  Education Attendance  Area, which                                                                    
included   the   school   districts   located   outside   of                                                                    
municipalities.                                                                                                                 
                                                                                                                                
Mr.  Paschall   provided  a  presentation  titled   "HB  313                                                                    
Application  of  Average  Daily  Membership  (ADM)  to  Base                                                                    
Student  Allocation (BSA)"  (copy  on  file). He  identified                                                                    
slide 1: "Application of ADM  to BSA." He explained that the                                                                    
budget process  occurred in the  spring. The  actual student                                                                    
count was released in October,  and confirmed in January. He                                                                    
noted that between July and  March, an estimated payment was                                                                    
made  based on  January's estimate.  Payments were  adjusted                                                                    
between April and June to  compensate for any under or over-                                                                    
payments. He  stated that  HB 313  used the  confirmed count                                                                    
and made  actual payments July through  March. April through                                                                    
June  would  incur  actual  payments  unless  hold  harmless                                                                    
supplemental provisions of the bill applied.                                                                                    
                                                                                                                                
9:20:19 AM                                                                                                                    
                                                                                                                                
Mr.  Paschall  continued with  slide  2:  "Variation of  ADM                                                                    
Projections." He explained  the differences between extremes                                                                    
that led to budget issues.                                                                                                      
                                                                                                                                
             · For FY 2011, Variations ranged from                                                                              
                  o 743 students too high (1.5%) to                                                                             
                  o 192 students too low (0.84%)                                                                                
                                                                                                                                
                  o 9.8 % too high (3.35 students)                                                                              
                  o 15.8% too low(16.25 students)                                                                               
                                                                                                                                
Representative  Costello asked  about the  terms "too  high"                                                                    
and "too low." She asked if  slide 2 referred to the current                                                                    
situation or the application of the legislation.                                                                                
                                                                                                                                
Mr.  Paschall  responded  that  the  slide  exemplified  the                                                                    
current   process.  The   purpose  of   the  slide   was  to                                                                    
demonstrate the extreme variations for FY 11.                                                                                   
                                                                                                                                
Representative Costello queried the statement "too high."                                                                       
                                                                                                                                
Mr. Paschall replied that the  estimate provided was greater                                                                    
than the actual number of  students. He added that the slide                                                                    
demonstrated   extremes,   but   in  fact,   many   district                                                                    
projections were accurate.                                                                                                      
                                                                                                                                
Co-Chair Thomas asked  how the large number  of students was                                                                    
derived when REAA districts tended  to be small. He imagined                                                                    
that REAAs were comprised of small village schools.                                                                             
                                                                                                                                
Mr. Paschall  responded that  some REAAs  encompassed larger                                                                    
districts.                                                                                                                      
                                                                                                                                
Representative   Doogan  asked   about  slide   1  and   its                                                                    
variations.  He asked  if the  differences were  detailed in                                                                    
the ADM confirmation row of the slide.                                                                                          
                                                                                                                                
Mr. Paschall replied in the affirmative.                                                                                        
                                                                                                                                
Representative  Doogan clarified  that  he  was seeking  the                                                                    
data regarding the variation amounts.                                                                                           
                                                                                                                                
Mr.  Paschall  replied  that   the  difference  between  the                                                                    
estimate and the confirmation equaled the variation amount.                                                                     
                                                                                                                                
9:24:20 AM                                                                                                                    
                                                                                                                                
Representative Gara  expressed concern about the  budget. He                                                                    
wondered  about the  establishment of  the budget  using the                                                                    
prior  year's  student  counts.   He  asked  if  the  school                                                                    
received funding at the beginning of the year.                                                                                  
                                                                                                                                
Mr. Paschall responded that funding  arrived during the last                                                                    
quarter of  the year. He  elaborated that the  actual amount                                                                    
was  derived after  the confirmation  count. He  stated that                                                                    
provisions existed in the bill to address the issue.                                                                            
                                                                                                                                
Representative Neuman  commented on  slide 2.  He considered                                                                    
the  information more  valuable if  committee members  could                                                                    
discern which districts were too high and which too low.                                                                        
                                                                                                                                
Mr. Paschall offered to provide the information.                                                                                
                                                                                                                                
9:26:27 AM                                                                                                                    
                                                                                                                                
Mr.  Paschall continued  with  slide  3: "Statewide  Average                                                                    
Daily   Membership  Fiscal   Year   1988-2011."  The   graph                                                                    
displayed that  "statewide ADM has been  relatively flat for                                                                    
over  a decade."  He noted  the  lack of  volatility in  the                                                                    
statewide enrollment.                                                                                                           
                                                                                                                                
Mr. Paschall discussed slide 4: "Statewide ADM FY 2002-                                                                         
2011."  He  noted  the  "decrease   of  2.7  percent  (3,627                                                                    
students) statewide in past decade."                                                                                            
                                                                                                                                
Mr. Paschall  continued with slide 5:  "The Biggest Losers."                                                                    
He noted that 42 districts dropped in enrollment.                                                                               
                                                                                                                                
Mr. Paschall  continued with slide  6: "The  Biggest Gains."                                                                    
He noted  that 12 districts increased  enrollment. He stated                                                                    
that  the  two  districts  at   the  bottom  of  the  screen                                                                    
exemplified their electronic scores.                                                                                            
                                                                                                                                
Mr.  Paschall referred  to slide  7:  "Returned Funds."  The                                                                    
slide detailed the reallocation  of unspent funds. The money                                                                    
was returned to the borough  and reallocated to the district                                                                    
in  a future  budgeting process.  The slide  exemplified two                                                                    
districts. The process depleted  reserves leading to a lower                                                                    
balance.                                                                                                                        
                                                                                                                                
             · Fairbanks North Star Borough School District                                                                     
                  o FY 2012 $2.1 million                                                                                        
                  o FY 2011 $1.2 million                                                                                        
             · Mat-Su Borough School District                                                                                   
                  o FY 2010 $1.3 million                                                                                        
                  o FY 2011 $268 thousand                                                                                       
                                                                                                                                
Mr.  Paschall continued  with slide  8: "Best  Fund Balance:                                                                    
Best Practices." He  noted that a provision of  the bill was                                                                    
to  increase the  reserve  balance from  10  percent of  the                                                                    
current year's  fund to  15 percent as  a maximum  amount of                                                                    
unrestricted  reserves.  The   change  would  allow  greater                                                                    
flexibility to acquire funds for projects.                                                                                      
                                                                                                                                
9:29:43 AM                                                                                                                    
                                                                                                                                
Co-Chair Thomas  shared his experience  working on  a school                                                                    
board where a budget reserve led to negotiations.                                                                               
                                                                                                                                
Mr. Paschall responded that  districts had options regarding                                                                    
reserves. Some  districts preferred to retain  the reserves.                                                                    
He spoke to the flexibility  allowed by the increase from 10                                                                    
to 15 percent maximum unrestricted reserve.                                                                                     
                                                                                                                                
Co-Chair  Stoltze  commented  on  "hidden  money"  that  was                                                                    
addressed during negotiations on the subject.                                                                                   
                                                                                                                                
Representative Neuman  added that  Mat-Su had 50  percent of                                                                    
unspent  funds  reincorporated  into the  borough's  general                                                                    
fund. A  fund was  thus created for  the purchase  of future                                                                    
schools with the unspent funds.                                                                                                 
                                                                                                                                
Mr. Paschall  noted the  variety of  uses for  unspent funds                                                                    
among Alaskan districts. He added  that some districts had a                                                                    
good relationship  with their borough  regarding the  use of                                                                    
reserves.                                                                                                                       
                                                                                                                                
9:32:20 AM                                                                                                                    
                                                                                                                                
KEN  FORREST,  CHIEF  BUSINESS  OFFICIAL,  MATANUSKA-SUSITNA                                                                    
SCHOOL  (via teleconference),  testified in  support of  the                                                                    
bill.  He  spoke  about the  provision  that  would  provide                                                                    
supplemental  funding   for  growing  districts   and  would                                                                    
directly  impact the  Mat-Su district.  He  stated that  the                                                                    
average annual  growth was 425  students. He cited  that the                                                                    
level of  growth seen  in his district  led to  greater than                                                                    
normal operational  expenditures. He mentioned  the abundant                                                                    
modular  units  used  to house  the  growing  population  of                                                                    
students  in  the  district. The  modular  units  cost  $100                                                                    
thousand  to purchase  and equip.  He added  that technology                                                                    
and infrastructure  improvements increase costs  above those                                                                    
provided  in  the  foundation   formula.  He  mentioned  the                                                                    
possibility of bond issues to  contribute funding from local                                                                    
citizens.                                                                                                                       
                                                                                                                                
Representative Gara supposed that  a growing school district                                                                    
would be  underfunded, since the  figures were based  on the                                                                    
prior year's data.                                                                                                              
                                                                                                                                
Mr.  Forest agreed  that the  district would  be underfunded                                                                    
when  using the  prior year's  counts if  the district  fell                                                                    
behind the  200 per  pupil increase, but  supplemental funds                                                                    
would be acquired in years  where the district was above the                                                                    
200  per  pupil increase.  He  mentioned  that the  historic                                                                    
average  encouraged predictions  of  balance  over time.  He                                                                    
agreed that the  district would be deficient  in funding for                                                                    
one fiscal year only, under HB 313.                                                                                             
                                                                                                                                
Representative Gara  understood that the  foundation formula                                                                    
in   existence  allowed   additional   students  money.   He                                                                    
expressed  concern  that  district  would  not  receive  the                                                                    
additional money unless they were 200 students off.                                                                             
                                                                                                                                
Mr.  Forest understood  that the  intent of  the legislation                                                                    
was to  provide a  planning window  for school  districts to                                                                    
eliminate the variance.                                                                                                         
                                                                                                                                
Co-Chair Thomas  noted frequent testimony  regarding funding                                                                    
deficiencies,   making   the  discussion   about   surpluses                                                                    
confusing. He added information  about a list of communities                                                                    
who neglected to contribute to the cap.                                                                                         
                                                                                                                                
9:38:41 AM                                                                                                                    
                                                                                                                                
Representative   Neuman  echoed   confusion  regarding   the                                                                    
conflicting testimony.  He agreed that most  statements from                                                                    
school districts  pleaded for additional funding  to address                                                                    
shortages, while Mr. Forest spoke  about reserves swept back                                                                    
into  the municipality.  He  agreed  that personal  services                                                                    
were  separate,   but  opined  that  additional   needs  for                                                                    
education existed.                                                                                                              
                                                                                                                                
Mr.   Forest   responded   that   it   would   be   fiscally                                                                    
irresponsible  to  spend  the  majority  of  the  district's                                                                    
budget.  He  noted  that the  operational  fund  budget  was                                                                    
approximately  $190 million.  He stated  that only  $268,460                                                                    
went   to  the   borough.  The   ending  fund   balance  was                                                                    
$1,400,000.  He stated  that the  reserves were  limited. He                                                                    
noted the recommendation for two  months of reserve on-hand,                                                                    
but  his district  had approximately  one and  one-half days                                                                    
reserve on-hand.                                                                                                                
                                                                                                                                
Representative  Neuman recalled  testimony  from the  Mat-Su                                                                    
district stating a $13 million shortfall.                                                                                       
                                                                                                                                
Representative Guttenberg  queried a resolution  from Mat-Su                                                                    
district, which would prevent the  fund balance rolling back                                                                    
into the  borough. He requested  more information  about the                                                                    
resolution.                                                                                                                     
                                                                                                                                
Mr.  Forest  replied  that  the   school  board  prepared  a                                                                    
resolution  requesting allowance  for  the  fund balance  to                                                                    
remain with the school  district. The resolution failed with                                                                    
one  vote.  The  board  of  education  submitted  a  similar                                                                    
regulation  in  2012. The  resolution  would  allow for  the                                                                    
recommended amount  of operating  funds in  the event  of an                                                                    
unanticipated need. He recalled a  school fire that led to a                                                                    
need  for   approximately  $1  million  to   equip  the  new                                                                    
building.  He noted  the ideal  of small  class size,  which                                                                    
pushed the limits of the budget.                                                                                                
                                                                                                                                
Representative   Guttenberg   asked  about   the   borough's                                                                    
responsibility to the school board.                                                                                             
                                                                                                                                
Mr.  Forest believed  that the  borough's position  was that                                                                    
the school district should operate without reserve.                                                                             
                                                                                                                                
9:44:17 AM                                                                                                                    
                                                                                                                                
Co-Chair Thomas  pointed out  documentation that  the Mat-Su                                                                    
district  fell   $12  million   below  the   required  local                                                                    
contribution.                                                                                                                   
                                                                                                                                
9:44:38 AM                                                                                                                    
                                                                                                                                
DUNCAN  WARE, SUPERINTENDENT,  DELTA GREELY  SCHOOL DISTRICT                                                                    
(via   teleconference),   noted   that  his   district   was                                                                    
classified as REAA,  and therefore did not  have the benefit                                                                    
of local funding  from a borough. He voiced  his support for                                                                    
the bill. He explained  his district's budgetary process. He                                                                    
noted  the stability  of his  district's student  population                                                                    
over  the  last  two  fiscal   years,  but  he  shared  that                                                                    
decreases ranging from  5 percent to 2 percent  were seen in                                                                    
the  last  decade.  He  understood   that  HB  313  provided                                                                    
effective  planning to  optimize  for  program delivery  and                                                                    
allow for student services.                                                                                                     
                                                                                                                                
Co-Chair    Thomas   understood    that   forward    funding                                                                    
accomplished a similar task.                                                                                                    
                                                                                                                                
PETE  LEWIS, SUPERINTENDENT,  FAIRBANKS  NORTH STAR  BOROUGH                                                                    
(via teleconference),  supported the bill. He  believed that                                                                    
the  legislation   provided  another  tool  in   the  budget                                                                    
planning process. He echoed the  testimony of Mr. Forest and                                                                    
Mr. Ware.                                                                                                                       
                                                                                                                                
Representative Wilson  asked about the practice  of sweeping                                                                    
reserves into municipal funds.                                                                                                  
                                                                                                                                
Mr. Lewis  believed that  Representative Wilson  referred to                                                                    
the  lapse ordinance,  which placed  operating dollars  in a                                                                    
fund for major maintenance.                                                                                                     
                                                                                                                                
Representative  Wilson asked  if  the bill  would alter  the                                                                    
effective date of the ordinance.                                                                                                
                                                                                                                                
Mr. Lewis  responded in the  affirmative. He added  that the                                                                    
June 30, unassigned balance was zero.                                                                                           
                                                                                                                                
Representative  Gara  asked  if  school  districts  retained                                                                    
reserves for the purpose of  retaining teachers when funding                                                                    
was inadequate.  He understood that the  purpose of reserves                                                                    
was to limit course and staff disruptions.                                                                                      
                                                                                                                                
Mr.  Lewis  agreed  and  added  that  his  district  had  an                                                                    
assigned fund balance in the form of inventories.                                                                               
                                                                                                                                
Representative Gara  referred to  page 8 of  the legislation                                                                    
which  indicated  that  funding  was based  on  last  year's                                                                    
student  count.  He understood  that  a  discrepancy of  200                                                                    
students led to  an adjustment and queried  the action taken                                                                    
if the discrepancy  was less than 200. He asked  if a change                                                                    
in bill  language would  be acceptable  where the  3 percent                                                                    
threshold was eliminated.                                                                                                       
                                                                                                                                
Mr. Lewis stated  that his district approved of  the bill as                                                                    
written. He  cited line  25 stating that  if a  district was                                                                    
unable to  meet the fiscal year  needs, supplemental funding                                                                    
was available  upon application.  He informed  the committee                                                                    
that his district  could manage changes in  student count of                                                                    
100  or  more.  He  maintained that  the  legislation  would                                                                    
provide a tool to address the issue.                                                                                            
                                                                                                                                
Co-Chair  Thomas   stated  that  Fairbanks   contributed  15                                                                    
million  below  the  cap  and   were  therefore  sitting  on                                                                    
reserves.                                                                                                                       
                                                                                                                                
9:51:23 AM                                                                                                                    
                                                                                                                                
LAUREN BURCH,  SUPERINTENDENT, LONG ISLAND  SCHOOL DISTRICT,                                                                    
supported  the  bill.  He  stated   that  his  district  was                                                                    
classified as REAA. He echoed  the testimony of the previous                                                                    
speakers. He agreed that a  reserve was important. He shared                                                                    
stories about the difficulty of planning and projecting.                                                                        
                                                                                                                                
Co-Chair Thomas closed public testimony.                                                                                        
                                                                                                                                
HB  313  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
9:54:48 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:59:05 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 64                                                                                                             
                                                                                                                                
     "An   Act   relating   to   permanent   motor   vehicle                                                                    
    registration; and providing for an effective date."                                                                         
                                                                                                                                
Vice-chair   Fairclough   MOVED  committee   substitute   HB                                                                    
64(FIN), 27-LS0327/S.                                                                                                           
                                                                                                                                
Co-Chair Thomas OBJECTED for purpose of discussion.                                                                             
                                                                                                                                
DARRELL  BREESE,  STAFF,  CO-CHAIR  STOLTZE,  explained  the                                                                    
Committee  Substitute (CS).  He explained  that the  changes                                                                    
included an  adjustment of the  fee for  acquiring permanent                                                                    
registration  for  vehicles  older   than  eight  years  and                                                                    
trailers.  The  previous version of the  bill included three                                                                    
times  the   biannual  fee.  The   goal  was  to   make  the                                                                    
registration affordable  for all Alaskans interested  in the                                                                    
option.  Another   change  related  to  the   motor  vehicle                                                                    
registration  tax   collected  by  the  Division   of  Motor                                                                    
Vehicles  (DMV).  He  explained   that  the  change  allowed                                                                    
municipalities  to adopt  a motor  vehicle registration  tax                                                                    
fee for vehicles that were  permanently registered. He noted                                                                    
the change made to the  collection of the tax, which allowed                                                                    
DMV  to collect  the tax  one time  unless the  municipality                                                                    
raised  the  fee  above  $100  hundred,  the  city  will  be                                                                    
responsible for the collection of the fee.                                                                                      
                                                                                                                                
Co-Chair Stoltze explained the  intent of the legislation to                                                                    
allow  Alaskans to  avoid the  nuisance of  taxes for  older                                                                    
cars.                                                                                                                           
                                                                                                                                
10:05:12 AM                                                                                                                   
                                                                                                                                
Co-Chair Thomas asked about restrictions for non-residents.                                                                     
                                                                                                                                
Mr. Breeze responded that there  was no restriction for non-                                                                    
residents.                                                                                                                      
                                                                                                                                
Representative   Gara   appreciated   the  intent   of   the                                                                    
legislation,  but  expressed  difficulty  understanding  the                                                                    
fiscal note.                                                                                                                    
                                                                                                                                
WHITNEY BREWSTER, DIRECTOR, DIVISION  OF MOTOR VEHICLES (via                                                                    
teleconference), responded  that the fiscal  note for  FY 15                                                                    
and FY  16 showed  an increase  in revenue,  which accounted                                                                    
for  the $25  in additional  fees collected  by the  DMV for                                                                    
permanent  registration, in  and  above  the bi-annual  fee.                                                                    
Following FY  16, the vehicles  would no longer  be eligible                                                                    
for  the bi-annual  registration fees  collected leading  to                                                                    
the significant decrease in collected revenue.                                                                                  
                                                                                                                                
Representative Gara  asked if the  losses continued  past FY                                                                    
18 at a similar rate.                                                                                                           
                                                                                                                                
Ms.  Brewster   responded  that   the  rates   would  remain                                                                    
consistent  until  approximately  $1 million  in  loss.  She                                                                    
noted  the difficulty  in projecting  for future  years. The                                                                    
projections  relied on  citizens  operating vehicles  beyond                                                                    
eight  years. She  estimated that  approximately 28,400  new                                                                    
vehicles would  be eligible each  year based on  the current                                                                    
vehicle count.  She pointed out the  significant decrease in                                                                    
revenue in FY  17 and FY 18 because the  fiscal note assumed                                                                    
that all registered vehicles were eligible.                                                                                     
                                                                                                                                
Co-Chair Stoltze  opined that the legislation  would lead to                                                                    
increased compliance with registration  for trailer and snow                                                                    
machine owners.                                                                                                                 
                                                                                                                                
10:10:36 AM                                                                                                                   
                                                                                                                                
Vice-chair  Fairclough  expressed  that  she  herself  would                                                                    
qualify for the benefits of the legislation.                                                                                    
                                                                                                                                
Co-Chair Thomas shared the sentiment.                                                                                           
                                                                                                                                
Representative Guttenberg  asked Ms. Brewster about  the 700                                                                    
hours  of  programing  time required  to  make  the  changes                                                                    
outlined in the bill.                                                                                                           
                                                                                                                                
Mr. Brewster responded  that the changes to  the 30 year-old                                                                    
database  required  approximately  700  hours  of  technical                                                                    
labor. The bill would  require programming for two potential                                                                    
scenarios.  One scenario  would exist  for taxpayers  opting                                                                    
for  permanent vehicle  registration and  another for  those                                                                    
who chose  against. The  700 programming  hours incorporated                                                                    
changes from HB 64 and HB 10.                                                                                                   
                                                                                                                                
Co-Chair  Thomas commented  on computer  upgrades for  other                                                                    
agencies.                                                                                                                       
                                                                                                                                
Vice-chair  Fairclough asked  how many  people accessed  DMV                                                                    
counters in person.                                                                                                             
                                                                                                                                
Ms. Brewster  replied that she  would provide  the requested                                                                    
information to the committee.  She stated that approximately                                                                    
11 percent  of customers  visit DMV  public offices  for in-                                                                    
person registration.                                                                                                            
                                                                                                                                
Vice-chair  Fairclough  pointed  out that  the  fiscal  note                                                                    
might  better reflect  a deduction  for  Alaskans who  would                                                                    
defer  registration.  She   predicted  cost-savings  to  the                                                                    
consumer and the department. She  utilized the online option                                                                    
provided by DMV herself, which saved her $10.                                                                                   
                                                                                                                                
10:14:29 AM                                                                                                                   
                                                                                                                                
Representative   Neuman   asked   about   the   department's                                                                    
operating costs and revenues.                                                                                                   
                                                                                                                                
Ms.  Brewster  replied  that DMV  received  $66  million  in                                                                    
revenue  per  year  and   operated  on  approximately  $16.5                                                                    
million.   The   revenue    included   the   motor   vehicle                                                                    
registration tax.                                                                                                               
                                                                                                                                
Representative Neuman opined that  the state did not require                                                                    
revenue from DMV.                                                                                                               
                                                                                                                                
Ms.  Brewster agreed  that customer  fees  could be  reduced                                                                    
without affecting the department's operations.                                                                                  
                                                                                                                                
Representative  Neuman was  interested in  reducing customer                                                                    
fees further.                                                                                                                   
                                                                                                                                
10:16:40 AM                                                                                                                   
                                                                                                                                
Vice-chair Fairclough  asked if municipalities  were charged                                                                    
an administrative fee.                                                                                                          
                                                                                                                                
Ms. Brewster replied  that the DMV did collect  8 percent of                                                                    
the motor  vehicle registration taxes, which  become part of                                                                    
the general fund.                                                                                                               
                                                                                                                                
Representative  Edgmon   believed  that  the   state  lacked                                                                    
eligibility for federal funds.                                                                                                  
                                                                                                                                
Ms. Brewster replied in the affirmative.                                                                                        
                                                                                                                                
Representative  Edgmon   asked  about  the  impact   of  the                                                                    
legislation on community revenue.                                                                                               
                                                                                                                                
Ms.  Brewster  specified  that the  local  communities  that                                                                    
elected to collect motor vehicle  registration tax would not                                                                    
be eligible until 2017. She  noted the statute's requirement                                                                    
that  local communities  provide the  DMV written  notice of                                                                    
the change  by January  1, 2015 of  the preceding  year. The                                                                    
DMV would not  collect a motor vehicle  registration tax for                                                                    
permanent  vehicles  until  2017 because  of  the  statutory                                                                    
requirement for  notice. Local  governments would  set their                                                                    
own  rates regarding  departmental collections.  She thought                                                                    
that the  question regarding municipality  loss or  gain was                                                                    
better answered by the local governments.                                                                                       
                                                                                                                                
Representative  Edgmon  pointed  out the  plethora  of  non-                                                                    
resident  vehicles that  travel in  his district  during the                                                                    
summer months.                                                                                                                  
                                                                                                                                
Co-Chair  Thomas WITHDREW  his  OBJECTION  to the  committee                                                                    
substitute. There  being No further OBJECTION  the committee                                                                    
substitute was adopted.                                                                                                         
                                                                                                                                
Co-Chair Stoltze pointed  out that the fiscal  note from the                                                                    
Department  of Environmental  Conservation  had zero  fiscal                                                                    
impact.                                                                                                                         
                                                                                                                                
Vice-chair Fairclough MOVED  to report CSHB 64  (FIN) out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note(s).                                                                                                    
                                                                                                                                
CSHB 64(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation  and   with  a  new  fiscal   note  from  the                                                                    
Department of Administration.                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:22 AM                                                                                           

Document Name Date/Time Subjects
HB 313 Sponsor Statement 2012-03-12.pdf HFIN 3/30/2012 9:00:00 AM
HB 313
HB 313 Sectional Analysis Ver 27-LS1223B (EDU).pdf HFIN 3/30/2012 9:00:00 AM
HB 313
HB 313 Fund Balance Letter Mat-Su Resolution 12-006.pdf HFIN 3/30/2012 9:00:00 AM
HB 313
HB 313 Presenation to House Finance.pdf HFIN 3/30/2012 9:00:00 AM
HB 313
CH HB64 version S.pdf HFIN 3/30/2012 9:00:00 AM
HB 64
Summary of new version hb64.docx HFIN 3/30/2012 9:00:00 AM
HB 64
CS HB64 sponsor statement.doc HFIN 3/30/2012 9:00:00 AM
HB 64
HB313 Relevant Statute.pdf HFIN 3/30/2012 9:00:00 AM
HB 313
HB313 Amendment 1 Gara.pdf HFIN 3/30/2012 9:00:00 AM
HB 313