Legislature(2003 - 2004)
05/14/2003 01:41 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 14, 2003
1:41 PM
TAPE HFC 03 - 92, Side A
TAPE HFC 03 - 92, Side A (was not used.)
TAPE HFC 03 - 93, Side A
TAPE HFC 03 - 93, Side B
TAPE HFC 03 - 94, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:41 PM.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Ethan Berkowitz
Representative Mike Chenault
Representative Richard Foster
Representative Mike Hawker
Representative Beth Kerttula
Representative Carl Moses
Representative Bill Stoltze
Representative Jim Whitaker
MEMBERS ABSENT
Representative Croft
Representative Joule
ALSO PRESENT
Representative Vic Kohring; Larry Persily, Deputy
Commissioner, Department of Revenue; Kevin Ritchie,
Executive Director, Alaska Municipal League; John MacKinnon,
Deputy Commissioner, Department of Transportation and Public
Facilities; Robynn Wilson, Department of Revenue; Joanne
Roomsberg, Juneau Sales Tax Administrator; Rod Peck,
President, Alaska Travel Industry Association; Paul Fuhs,
Yukon Pacific; Randy Ruaro, Staff, Co-Chair Williams; Susan
Burke, Attorney, Williams Petroleum; Richard Schmitz, Staff,
Senator Cowdery; Anne Carpeneti, Assistant Attorney General,
Legal Services Section, Criminal Division, Department of
Law.
PRESENT VIA TELECONFERENCE
Bruce Johnson, Utah State Tax Commissioner, Utah; Bill
O'Leary, Vice President, Finance, Alaska Railroad
Corporation.
SUMMARY
HB 216 "An Act relating to municipal taxation of refined
fuel products."
CS HB216 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and three, zero fiscal
notes: two new fiscal notes from Department of
Community and Economic Development (Community
Assistance & Rural Energy Programs) and #2 from
Department of Revenue.
HB 244 "An Act relating to the Code of Criminal
Procedure; relating to defenses, affirmative
defenses, and justifications to certain criminal
acts; relating to rights of prisoners after
arrest; relating to discovery, immunity from
prosecution, notice of defenses, admissibility of
certain evidence, and right to representation in
criminal proceedings; relating to sentencing,
probation, and discretionary parole; amending Rule
16, Alaska Rules of Criminal Procedure, and Rules
404, 412, 609, and 803, Alaska Rules of Evidence;
and providing for an effective date."
HB 244 was heard and HELD in Committee for further
consideration.
HB 267 "An Act relating to the Alaska Railroad;
authorizing the Alaska Railroad Corporation to
provide financing for the acquisition,
construction, improvement, maintenance, equipping,
or operation of facilities for the transportation
of natural gas resources within and outside the
state by others; authorizing the Alaska Railroad
Corporation to issue bonds to finance those
facilities; and providing for an effective date."
CS HB 267 was REPORTED out of Committee with a "do
pass" recommendation and one fiscal impact note:
#1 from Department of Community and Economic
Development.
HB 293 An Act levying and collecting a state sales and
use tax; and providing for an effective date.
HB 293 was heard and HELD in Committee for further
consideration.
CSSB 128(FIN) am
"An Act relating to licensing common carriers to
dispense alcoholic beverages; and providing for an
effective date."
CSSB 128(FIN) am was REPORTED out of Committee
with a "do pass recommendation" and fiscal impact
note #2 from Department of Revenue.
HOUSE BILL NO. 293
An Act levying and collecting a state sales and use
tax; and providing for an effective date.
BRUCE JOHNSON, UTAH STATE TAX COMMISSIONER, observed that he
is the Co-Chair of the Implementing Group of the Streamlined
State Sales Tax group and provided information on the issue.
He stated that whether a sales tax was adopted was an
individual state policy, but encouraged the streamlined
sales tax system. He discussed his experience advising
businesses on local sales tax provisions. He gave the
example of a sales tax provision in New York State that made
a single item either taxed or exempt at the discretion of a
retailer. He explained that the streamlined sales tax system
unified state definitions, making regulations consistent
throughout the country. He expressed his belief that the
streamlined system was beneficial. He speculated that the
number of returns filed would be reduced, and that software
services would be available to help states. He also
maintained that the system was beneficial to local
retailers, since they were otherwise at a disadvantage to
retailers outside the state selling electronically. He
maintained that this system created a level playing field
for local merchants. He also stated that the system would
ensure that the tax would remain a viable revenue source in
the future. He concluded that the streamlined sales tax was
the best system to choose.
Representative Kerttula asked whether he had experienced
other states, which had never had a sales tax, but rather a
number of non-uniform taxes across the state. Mr. Johnson
noted that Colorado, Alabama and Arizona have local
administration of sales tax, where local governments collect
their own tax and in some cases the tax base is not the same
as for the state. He has also practiced in Colorado, which
had different exemptions at a state and municipal level. He
stressed that while the local governments maintained local
rule, since they believed it was superior, that it was a
difficult situation for businesses. He felt that this led to
the Supreme Court's ruling, which required physical
presences in a state before a sales tax could be collected.
He stated that there was no state with situations exactly
like Alaska, but noted other states were working with the
problem. He reiterated the benefits of the system.
Representative Kerttula asked whether the exemptions or
their definitions must be uniform among the states. Mr.
Johnson clarified that a state may choose their own
exemptions, but that the definitions of exemptions would be
uniform.
Mr. Persily asked whether, under the streamlined program,
there would be prohibition in a municipality against an
excise tax, such as bed tax, car rental tax. Mr. Johnson
stated that there would not be. He noted that in Utah, the
state retained the right for excise taxes.
Co-Chair Williams asked what was required to pass the system
into law. Mr. Johnson noted that the system would come into
effect when ten states were participating, but would still
be voluntary for merchandisers that did not have a physical
presence in the state. For it to be mandatory, Congress
would have to take action.
Co-Chair Williams asked how exemptions were decided. Mr.
Johnson responded that Utah made the minimum conforming
decisions, keeping in place their previous exemptions, but
fine-tuning the system to be in conformation with the
unified definitions. He pointed out that Alaska faced a more
daunting task. He concluded that the intent was not for a
uniform task, but to make the tax uniformly convenient.
Representative Hawker asked for clarification that the
statewide sales tax system did not have dominion over local
decisions. Mr. Persily confirmed that the system did not
prohibit existing or new excise taxes in municipalities. He
pointed out that if a municipality desired to tax an item
that was exempt statewide, they would simply adopt an excise
tax.
Vice-Chair Meyer asked whether a bed or car rental tax would
be left up to municipalities. Mr. Persily pointed out that
those cities with current excise taxes, but that under the
bill, the State would also implement its use tax in addition
to those taxes. Vice-Chair Meyer clarified if the State
could implement a statewide excise tax. Mr. Persily
confirmed that this was true.
Co-Chair Williams called a Committee Recess at 2:01 PM.
TAPE HFC 03 - 93, Side A
Co-Chair Williams reconvened the meeting at 9:30 PM.
JOHN MACKINNON, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES provided information on
the motor fuel tax provision of HB 293. The current .08-cent
a gallon would be raised to .20 cents per gallon. The
current .08-cent per gallon tax raises approximately $29
million dollars a year. The increase would generate an
additional $41 million dollars. He noted that the total
raised by the highway user fee would be approximately $70
million. The Department of Transportation and Public
Facilities currently spends $60 million in highway
maintenance and an additional $50 million in federal match
for highway construction, which all comes from the General
Fund. He noted that 38 states would still have a higher fuel
tax than Alaska. The national average is about .20 cents per
gallon.
KEVIN RITCHIE, ALASKA MUNICIPAL LEAGUE provided information.
He noted that a group of municipal officials had met with
the Governor and offered suggestions, which were
subsequently acted upon to lesson the impact on
municipalities. He stated that the rewritten bill was then
reviewed, and a few concerns were raised. The first
objection was to the exemption of sales tax on marine and
motor fuel. He pointed out that currently municipalities tax
marine and motor fuel, equaling millions of dollars for
municipalities. He stated that the exemption was
problematic. The second issue is the concern raised by the
cap. He explained that a number of municipalities had a
variety of caps, put in place to encourage local business in
that particular community. He noted that there was talk of
considering a lower cap, which was then broadened. He noted
that in car sales, the amount of sales tax might effect
where cars are purchased.
JOANNE ROOMSBERG, JUNEAU SALES TAX ADMINISTRATOR, JUNEAU,
spoke in response to a question by Representative Hawker.
She explained that presently Juneau has a fuel flowage fee
that is charged at the municipal airport. Aviation fuel is
exempt from the city's general sales tax. She stated her
understanding that the bill would allow Juneau to continue
to implement a fuel excise tax.
Mr. Ritchie pointed out that Tom Boedeker was the Committee
Chair in the working group that had raised concern about the
effect on fuel taxes.
In response to a question by Representative Berkowitz, Ms.
Roomsberg stated that a non-resident exemption card could be
purchased for a cost of $20 dollars. The card is good for a
year. This allows the purchase of items that would be used
and consumed outside of the city and borough of Juneau. It
would not qualify for items that would be used or consumed
in Juneau, such as a car rental or hotel room. Tangible
personal property can be brought into the city for work or
service, such as service on a car.
Co-Chair Harris asked about the position of communities in
support of a statewide sales tax. He asked what kind of
relief was necessary to garner acceptance from
municipalities. Mr. Ritchie referred to testimony in Senate
Finance, revolving around conflicts foreseen by
municipalities. He pointed out that at this time not all of
the conflicts were apparent. He noted that even in cases
when communities were not in favor, they had suggestions for
making it workable.
Co-Chair Harris asked whether the Alaska Municipal League
foresaw a "roadblock" to working with the sales tax. Mr.
Ritchie maintained that they did not have a history of
blocking legislation. Co-Chair Harris observed that it would
be helpful for the Municipal League to help gather support
for the tax.
Mr. Ritchie pointed out that the organization was committed
to helping meet the budget gap. He stated that the Board had
directed him to work with the Legislature to resolve issues
surrounding the tax.
Representative Berkowitz asked if the Administration had
reviewed other states with overlapping taxes. Mr. Ritchie
observed that Alaska was unique in its taxation, as the only
state with a municipal power to tax sales without a state
sales tax.
Representative Kerttula asked about the level of drop in
revenue sharing. Mr. Ritchie responded that in the past
three years it had remained level, and now it had gone down
by 25%. Municipalities received $40 million in 1986 as
compared to the current $20 million. Representative Kerttula
asked how many municipalities had raised their sales tax in
the last couple of years. Mr. Ritchie thought that three or
four municipalities had raised their sales tax including
Dillingham, and Seward.
Representative Kerttula asked how many communities were at
the cap for property tax, with a fairly high sales tax as
well. Mr. Ritchie observed that there is a statutory cap of
30 mils. Different communities have revenue caps. Petersburg
has a 10-mil property cap, which they are at. Juneau has a
cap of 12 mils, and is currently at 11 mils. In response to
a question by Representative Kerttula, Mr. Ritchie noted
that the state assessor could provide a list of property tax
caps.
Representative Kerttula asked about the range of exemptions.
The city and borough of Juneau has 37 exemptions. Mr.
Ritchie referred to a list of exemptions provided in 1999,
which lays out most of the exemptions. Representative
Kerttula asked if there had been a study on the impacts on
Juneau of a tax such as that contained in the Committee
Substitute. Ms. Roomsberg stated that Juneau has the
difference in the exemptions and the tax base, which would
make it difficult to evaluate the tax impact. She noted that
several aspects of the tax must be more clearly defined
before a more comprehensive study could occur: the
exemptions, incidents and tax base.
Vice-Chair Meyer asked how to rate the three major sources
of revenue, which are before the Legislature: sales tax,
[capping the] permanent fund dividend, and income tax. He
observed that a sales tax and a state income tax would take
disposable income out of the economy, but pointed out that
capping permanent fund dividend would also keep money out of
the economy. He questioned Anchorage's position. Mr. Ritchie
referred to a poll by the Southeast Alaska Municipal and
Business Conference and noted that, as of 2:30 on 5/14/03,
eight municipalities were in favor and 48 were opposed to
the proposed sales tax. Members were asked to list the least
objectionable revenue stream: 30 permanent fund earnings, 25
income tax, and 2 sales.
Representative Hawker asked if municipal revenue sharing
would be increased or decreased as a result of the bill. Mr.
Ritchie noted that the bill allows the state to appropriate
6 cents of the gas tax increase to road revenue sharing,
which would raise revenue sharing by approximately $18
million. He observed that this year's reduction to revenue
sharing was $7 - $8 million. Representative Hawker concluded
that the legislation would increase revenue sharing by a
multiple of the current reduction. He asked the level of
property tax caps in communities relying solely on property
tax. Mr. Ritchie thought that those communities relying
solely on property tax had rates of 18 to 20 percent. Juneau
is at 11.5 - 12 mils.
ROD PECK, PRESIDENT ALASKA TRAVEL INDUSTRY ASSOCIATION
testified in support of the bill. He stated that his
organization represented small businesses in Alaska. He
stated that tourists spent 1.8 billion on visitor related
activities. His industry recognizes the fiscal gap
challenges that the legislature faces, but faces its own
challenges. He observed that there was a reduction of
visitors to the state. He anticipated a further drop of 10
20 percent drop in visitors. He suggested that a revitalized
marketing program would turn around the trend. He stated
support of the bill, if amended to include a tourism tax
revenues to bolster the existing state marketing program. He
presented the committee with amendment language, which would
identify tourism tax revenue by tracking industries
contributing to a marketing program.
Vice-Chair Meyer asked how much revenue was estimated as a
result of the amendment. Mr. Peck observed that their
research indicates that, of the $1.8 billion, they can
identify $920 million in activities over an annualized
period. Vice-Chair Meyer observed that the car rental tax
bill contained a clause to reappropriate funds to the
tourism industry. Mr. Peck stated that his industry was
opposed to targeted taxes, and believed that this was the
fairest tax since it was industry wide.
Representative Kerttula asked about the nature of the
contract with Alaska Travel Industry Association (ATIA). Mr.
Peck observed that ATIA is in the third year of a three-year
plan that would continue into perpetuity. They have a $10
million budget, of which $4 million was in contribution from
the state and $6 million is from matching private funds. The
budget in year one and two was $8.5 and $7 million, with a
greater percentage coming from the state.
Representative Hawker observed that the proposed amendment
would deprive the State of the tax from an entire sector of
the economy. Mr. Peck stated that this was not true, since
the industry generates $1.8 billion. He stated that the
amendment targets segments of activities in the area of $900
million.
Representative Hawker summarized that the proposal by ATIA
would deprive the state of revenue from a sub sector of the
economy, which would benefit solely from revenues collected
from within it. Mr. Peck pointed out that not all gift shops
would contribute due to a definition of seasonality, but
acknowledged the conclusion. Representative Hawker asked if
the amendment was acceptable to the industry, and questioned
why they had not formed a trade association and self-
assessed for the same efforts.
Representative Berkowitz speculated that problems attendant
to tourism marketing also impeded work in this area. Mr.
Peck confirmed that it was difficult to reach industry
consensus.
In response to a question by Representative Kerttula, Mr.
Peck confirmed that there were a variety of excise taxes in
the industry.
Co-Chair Williams stated that a committee substitute would
be available at the next Committee meeting.
HB 293 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 267
"An Act relating to the Alaska Railroad; authorizing
the Alaska Railroad Corporation to provide financing
for the acquisition, construction, improvement,
maintenance, equipping, or operation of facilities for
the transportation of natural gas resources within and
outside the state by others; authorizing the Alaska
Railroad Corporation to issue bonds to finance those
facilities; and providing for an effective date."
REPRESENTATIVE VIC KOHRING, SPONSOR, provided information
about the bill. He observed that the legislation would allow
revenues to be raised in order to build a natural gas
pipeline. He explained that the bill authorizes the Alaska
Railroad Board to generate tax-exempt bonds to raise low
interest rate funds. Bonds would be issued and proceeds
would be lent to potential constructors of the gas line.
There would be no net effect to the State. Bonding
authorization would be available to assist the building of
the pipeline. The debt is non-recourse, which means that the
debt would be the responsibility of the project sponsor. The
builders would be responsible for their debt. The debtor
could not lien any assets of the Railroad, state of Alaska,
or the Permanent Fund. Financing would be issued for
acquisition, construction, improvement, maintenance,
equipping, and operation of facilities associated with
transportation of natural gas. Up to $17 billion would be
authorized, which would provide the majority of proceeds
needed for building a $20 - $25 billion pipeline. The Alaska
Railroad would issue the bonds, but neither the Railroad nor
the state of Alaska would be liable for the debt. The bill
requires that prior to issuing bonds, proof of ability to
repay must be demonstrated. Representative Kohring noted
that there was a history in other states of railroads
helping to finance pipeline projects. He also pointed out
the mission of the Railroad to facilitate economic
development.
Representative Kohring referred to a letter by George K Baum
& Company, which indicated the feasibility of issuing bonds.
He stressed that the current low interest rates would allow
the capital to be raised. He noted that the bonds were tax
exempt. The Railroad's ability to issue tax-exempt bonds was
initiated when purchased by the federal government. He
concluded that the bill presented an important facet toward
completion of the pipeline.
Co-Chair Harris asked for an update of discussions with
North Slope producers.
PAUL FUHS, YUKON PACIFIC, stated that the Administration
might have more information on specific negotiations. In
response to a question by Co-Chair Harris, Mr. Fuhs stated
that the intent is to get tax-exempt bonding through the
Railroad. He observed that the Alaska Railroad Corporation
does not have the authority in its organic act. The state of
Alaska must give it the authority.
TAPE HFC 03 - 93, Side B
In response to a question by Representative Hawker, Mr. Fuhs
noted that a similar bill was in the last legislative
session: HB 423, which was rolled into HB 519.
Representative Whitaker referred to the difference between
tax exempt and taxable bonds. Mr. Fuhs encouraged the
Committee to read the letter from George K. Baum and
Company, which has sold $2 billion in bonds in the state.
Representative Whitaker asked who was the holder of the
bonds in Valdez. Mr. Fuhs observed that they are municipal
bonds.
Mr. Fuhs pointed out that George K Baum and Company was
asked to verify Yukon Pacific's numbers look at the
difference in tax-exempt bonds and estimate if the bonds
could be sold. The letter concludes that the project could
be financed in the bond market if the railroad vehicle is
available. He pointed out that this pertains to either
project: Trans Canada or all Alaskan. He referred to the
spreadsheet attached to the letter, indicating that the rate
difference between non-taxable and taxable was two full
points (copy on file.) He added that they indicated that
there were sufficient revenues under the Alaska Natural Gas
Development Act. He observed that estimated revenues for a
private project would be $350 - $400 million to the state of
Alaska and $50 - $100 for municipalities. A public model
shows up to a billion dollar return to the state of Alaska.
Mr. Fuhs observed that the George K Baum and Company has as
much experience in selling bonds as anyone in Alaska.
Representative Kohring referred to his experience with the
company while on the Alaska Railroad Board. Representative
Whitaker expressed hid support of the bill.
Mr. Fuhs discussed changes proposed in an amendment by Co-
Chair Harris (Amendment 1), which would confirm the
authority of the Railroad to what is actually stated in the
authorization.
Representative Hawker observed that there was no information
in the packet from the Department of Revenue, and pointed
out that the Department had bond experience. Mr. Fuhs stated
that the Department of Revenue had responded in other
committee meetings.
Representative Whitaker pointed out that he had testimony by
former Department of Revenue Commission Wilson Condon.
BILL O'LEARY, VICE PRESIDENT, FINANCE, ALASKA RAILROAD
CORPORATION testified via teleconference in support of the
bill. Representative Hawker observed that the investment
community's view of Alaskan bonds might not be the same as
it was a year ago. He asked if Committee should obtain a
more current view of the bond rating before proceeding.
Mr. O'Leary stated that he had viewed the information from
the state financial advisor, and pointed out that the model
being used would not affect the State's bond ratings; only
the project would be affected.
Representative Whitaker stressed that there is no inherent
liability for the state of Alaska or the Alaska Railroad
Corporation. The liability lies with the feasibility of the
project.
Representative Hawker expressed concern about the extent of
the bonds ($17 billion), and asked if the Department of
Revenue had reviewed the project.
LARRY PERSILY, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE
noted that the idea had been discussed the previous year, in
regards to how the state could help bring about a natural
gas project to commercialize stranded gas in the North
Slope. He noted that it was discovered that under federal
legislation the Alaska Railroad Corporation has the ability
to issue tax-exempt bonds. There is no explicit provision
requiring the bonds to be used to support railroad function.
Discussions with bond counselors indicated that if there is
enabling legislation the Alaska Railroad Corporation would
be in a position to issue financing bonds. The payment of
the bonds would not be the responsibility of the state of
Alaska or the Corporation. Investors would have to
demonstrate sufficient revenue from the project to repay the
bonds. A determination was made that [the investors] could
realize a savings of $1 billion by issuing tax-exempt bonds.
He noted the argument that the federal regulations were
unclear, and might dissuade investors. This would be
resolved by an IRS opinion or further legal research prior
to the bond purchases.
Representative Hawker concurred that the funding seemed
viable, but observed that the bill had not been a high
priority previously. Mr. Persily clarified that a change in
[state] statute is needed to give the Railroad the authority
to issue the bonds. He concluded that tax-exempt bonding
could be a viable funding source.
Mr. Fuhs stressed that this bonding authority was
specifically intended for the gas pipeline, and speculated
that this was the reason for the delay.
Representative Hawker noted the correlation with Proposition
3 in the last election. Mr. Fuhs speculated that the
legislation does not discriminate against potential
sponsors.
Representative Berkowitz pointed out that this authority
could be used for other purposes such as a portion of the
capital budget.
Co-Chair Harris noted that the bill is project and site
neutral. He referred to Amendment 1, which conforms the
powers granted to ARRC in Sec. 2 of the bill with the
specific provisions in the legislative authorization and
approval section. It clarifies that the act is intended to
facilitate a natural gas pipeline form the North Slope of
Alaska.
Mr. Persily agreed that the amendment made it explicit that
[the bonds are intended] for a natural gas pipeline in the
North Slope, replacing a more broad authority, which could
have been used for other projects. He noted that this
applied to commercializing and transporting gas from the
North Slope.
In response to a question by Co-Chair Harris, Mr. Persily
acknowledged that if amendment would assist North Slope gas
development. He observed that using the authority for other
purposes might risk its ability to be used for [the natural
gas pipeline] if problems were encountered before it was
needed for the project. He pointed out that a potential
sponsor could be anyone who can show sufficient revenue to
cover the bonds.
Representative Whitaker expressed his support of the bill.
Vice-Chair Meyer also expressed his support of the bill, and
asked if the State was ultimately responsible. Mr. Persily
noted that the bonds were revenue bonds, based on the belief
in sufficient repayment revenue. The state of Alaska would
not be responsible.
Mr. Fuhs referred to the letter by George K. Baum and
observed that the bonds would be non-recourse conduit bonds.
The minimum debt service ratios are calculated at fifty
percent higher revenues than needed to make the payments, in
order for the market to have confidence in purchasing the
bonds.
Representative Hawker referred to a letter from Conoco
Phillips, stating: "while it is too early to select
financing vehicles, HB 267 will add a potentially valuable
option". He asked why the bill was proposed in the current
year. He suggested that there were still hurdles to overcome
to truly view the viability of the funding. He asked why a
specific amount ($17 billion) was selected and why the
legislation should be passed now.
Mr. Persily noted the specific financing vehicle depends on
who builds the project. The specific amount was necessary to
attract pipeline sponsors, and if the statute was not on the
books, it might delay negotiations. He maintained that there
was no harm in having the statute. Mr. Fuhs maintained that
federal factors in the negotiations would become clear this
year.
Representative Hawker asked the Department of Revenue's
position. Mr. Persily stated that he believed the Department
of Revenue was supportive of the bill, since they had worked
on various aspects of the legislation over the years.
Representative Kerttula referred to the importance of the
legislation to potential buyers. Mr. Persily confirmed that
it was also important to show good faith to the federal
government and demonstrate that [the state of Alaska] is
moving forward.
In response to a question by Representative Whitaker, Mr.
Persily responded that the most current estimates of funding
needs were reflected in the $17 billion figure.
Co-Chair Harris MOVED Amendment #1. There being NO
OBJECTION, it was so ordered.
Representative Berkowitz MOVED to ADOPT Amendment #2 a title
amendment: delete "relating to the Alaska Railroad". There
being NO OBJECTION, it was so ordered.
Representative Foster MOVED to report CSHB 267 (FIN) out of
Committee with individual recommendation and the
accompanying fiscal note. There being NO OBJECTIONS, it was
so ordered.
CS HB 267 was REPORTED out of Committee with a "do pass"
recommendation and one fiscal impact note: #1 from
Department of Community and Economic Development.
HOUSE BILL NO. 216
"An Act relating to municipal taxation of refined fuel
products."
Co-Chair Harris MOVED to ADOPT Work Draft 23-LS0822\V
(5/8/03). There being NO OBJECTION, it was so ordered.
RANDY RUARO, STAFF, CO-CHAIR WILLIAMS provided information
on the bill. He explained that the committee substitute is
an attempt to address concerns expressed by Representatives
Croft and Whitaker regarding prohibition of taxation of
fuels transiting through a borough or municipality on its
way to another destination. The Sponsor had expressed his
support of the bill. The bill also prohibits taxation of
wholesale sales of fuels refined in a borough and the
transit of fuel through a borough unless that activity
currently exists, in which case it would be grand fathered
in. Mr. Rauro observed that the Alaska Municipal League
indicated that it would neither oppose nor advocate for the
legislation.
Representative Chenault MOVED to ADOPT Amendment #2. Co-
Chair Williams OBJECTED. Representative Chenault noted the
technical nature of the amendment: insert "or transfers" on
page 2, line 7.
SUSAN BURKE, ATTORNEY, WILLIAMS PETROLEUM provided
information on the Committee Substitute. She noted that
Amendment #2 would correct an oversight making sections
congruent in language.
Co-Chair Williams WITHDREW his OBJECTION. There being no
other objections, Amendment #2 was ADOPTED.
Representative Hawker pointed out that the legislation would
restrict a municipality's ability to collect local excise
tax. Ms. Burke noted that they were attempting to prevent
the type of municipal taxation that initiative sponsors in
Fairbanks tried to get enacted: the physical transfer of
refined fuel from one container to another.
Representative Hawker questioned if Alaska Municipal League
would support the legislation.
Representative Foster noted that in 1993 he sponsored a bill
to respond to a community that was charging a transfer tax
for goods traveling through a variety of municipalities.
Representative Foster MOVED to report CSHB 216 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTIONS it was
so ordered.
CSHB 216 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and three, zero fiscal notes: two new
fiscal notes from Department of Community and Economic
Development (Community Assistance & Rural Energy Programs)
and #2 from Department of Revenue.
CS FOR SENATE BILL NO. 128(FIN) am
"An Act relating to licensing common carriers to
dispense alcoholic beverages; and providing for an
effective date."
RICHARD SCHMITZ, STAFF, SENATOR COWDERY, provided
information on the bill. He noted that the legislation deals
with the fact that common carriers can dispense alcohol and
are licensed by the Alcoholic Beverage Control Board. He
observed that concern was expressed that airlines would have
to license all of their planes because it would be
impossible to guarantee which plane would make a run. The
legislation was amended to enact a biannual fee of $2,000
dollars per location that Alaska Airlines serves. Pan Air
Aviation would be allowed to pay a $1,000 dollar fee for the
first aircraft and $100 fee for each additional plane. A bar
car on a train would be individually licensed. The Alcoholic
Beverage Control Board supports the bill as it cuts back on
paperwork and makes it easier to license aircraft.
Representative Berkowitz asked if on board alcohol was
taxed. After discussion, it was speculated that it was not
taxed.
Representative Foster asked if the fee pertains to each
carrier. Mr. Schultz explained that carriers can chose by
location served or by the first 10 aircraft.
Representative Foster asked why the choice was necessary.
Mr. Schultz observed that the option would affect carriers
with less than ten 10 aircraft.
TAPE HFC 03 - 94, Side A
Representative Kerttula referred to the fiscal note. She
pointed out that the choice would cost the State $39
thousand. Mr. Schultz stated that the goal, in talking with
the Alcoholic Beverage Control Board, was to lower the
paperwork cost and prevent a situation where a carrier would
have to register each of its aircraft as it expanded.
Representative Kerttula asked how much the planes made from
liquor sales each year. Representative Berkowitz asked if a
rate level had been examined to make the bill fiscally
neutral. Mr. Schultz noted that it had been discussed. He
did not think that there was opposition to making the
program revenue neutral.
LARRY PERSILY, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE
provided information. He observed that alcohol tax in Alaska
is an excise tax, not a sales tax. It is assessed at the
wholesale level. He assumed that airlines would buy from an
out-of-state distributor. The question is whether there
would be tax liability for importing the alcohol into the
state of Alaska. He did not think an excise tax had been
collected.
In response to a question by Representative Berkowitz, Mr.
Persily responded that the sale would occur in the air and
may be subject to federal law.
Representative Foster observed that airlines do not make
their profit from alcohol sales.
Mr. Schmitz noted that ERA sells alcohol on their flights.
Representative Berkowitz proposed an amendment to make the
legislation revenue neutral by increasing fees by 10
percent; insert 1,100 on page 2 line 4.
Mr. Schmitz responded that ERA Aviation would be the only
airline affected serving intrastate routes.
Vice-Chair Meyer OBJECTED for discussion. He asked if the
amount would be in line with charges by other states. Mr.
Schmitz indicated that the fee would cover the cost to
implement.
Mr. Persily recalled that many other states have lower fees
but that they have a higher volume of planes licensed. He
did not think the fee was grossly out of line with other
states.
Vice-Chair Meyer questioned if the amendment would be within
the range. Mr. Persily noted that Alaska would not be at the
highest end. He added that Alaska Airlines has considered
the issue and has been looking for a solution.
Representative Berkowitz MOVED to AMEND Amendment 1: Page 2,
line 8, delete "2,000" and insert "$3,000". Mr. Schmitz
questioned if page 2, line 4 should be amended to be in line
with the amended amendment. He did not support the
amendment.
Representative Chenault suggested that $3,000 would be $500
more than the bi-annual bar fee.
Representative Stoltze questioned if the increase was
justified.
A roll call vote was taken on the motion.
IN FAVOR: Kerttula; Meyer; Whitaker; Berkowitz, Hawker
OPPOSED: Stoltze; Chenault; Foster; Williams; Harris
The MOTION FAILED (5-5).
Representative Foster MOVED to report CSSB 128(FIN)am out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSSB 128(FIN)am was REPORTED out of Committee with a "do
pass recommendation" and fiscal impact note #2 from
Department of Revenue.
HOUSE BILL NO. 244
"An Act relating to the Code of Criminal Procedure;
relating to defenses, affirmative defenses, and
justifications to certain criminal acts; relating to
rights of prisoners after arrest; relating to
discovery, immunity from prosecution, notice of
defenses, admissibility of certain evidence, and right
to representation in criminal proceedings; relating to
sentencing, probation, and discretionary parole;
amending Rule 16, Alaska Rules of Criminal Procedure,
and Rules 404, 412, 609, and 803, Alaska Rules of
Evidence; and providing for an effective date."
Vice-Chair Meyer MOVED Amendment #1: work draft 23
GH1024|D.1, dated 5/14/03. Representative Berkowitz
OBJECTED.
ANNE CARPENETI, ASSISTANT ATTORNEY GENERAL, LEGAL SERVICES
SECTION, CRIMINAL DIVISION, DEPARTMENT OF LAW discussed
changes proposed by the amendment. She noted that Amendment
1 would change defense for "heat of passion" charges from a
defense that the state is obliged to disprove beyond a
reasonable doubt to an affirmable defense, which the person
claiming the defense is obliged to prove by a preponderance
of evidence. "Heat of passion" only applies to murder in the
first degree and murder in the second degree, and only works
to reduce the charge to manslaughter. Under "heat of
passion" a person claims that they acted in such excitement
aroused by the intended victim that they were unable to
prevent the crime. The claim is that a homicide occurred
during a situation beyond one's control. It is similar to
temporary insanity. The person committing the crime is
unable to control him or herself, and thus feels that they
should be charged with manslaughter rather than murder. She
noted that in Alaska, insanity is an affirmative defense,
which the defendant has to prove through a preponderance of
the evidence. She spoke in support of the shift.
Representative Berkowitz pointed out that the presumption of
innocence and burden of proof are the two essential precepts
in any trial. He maintained that the amendment would turn
these precepts on their head. He maintained that the
amendment overturns this premise and spoke against it.
Vice-Chair Meyer asked if the "heat of passion" placed these
cases in the same vein as an insanity case. Representative
Berkowitz explained that there are two parts of doing
something illegal; there needs to be a guilty mind and a
guilty act. When there is an insanity defense the guilty act
is conceded. An insanity situation is distinct from a "heat
of passion" defense. He noted that the State would have
prior knowledge of a "heat of passion" defense and should be
able to prove its case. Vice-Chair Meyer maintained that a
defendant should be required to prove that they were
irrational in the heat of passion.
In response to a question by Representative Kerttula, Ms.
Carpenti confirmed that "heat of passion" is not equivalent
to insanity. Representative Kerttula asked if the burden of
proof remained the same. Ms. Carpenti noted that the change
would be to an affirmative defense. She noted that other
things, such as duress, support an affirmative defense,
since the defendant is in a better position to provide
information about the situation.
Representative Kerttula pointed out that if the defense had
not been raised, then it would not have been the same burden
on the defendant. Ms. Carpenti noted the State is currently
obliged to disprove it beyond a reasonable doubt. The
amendment would require the defendant to prove it by
preponderance of evidence and the charge would be reduced to
manslaughter.
In response to a question by Representative Whitaker, Ms.
Carpenti noted that a defense places the burden on the State
to prove the guilt of a defendant, whereas an affirmative
defense places the burden of proof on the defendant.
Representative Whitaker observed that it amounted to a case
of life and death and stated that he was uncomfortable with
an amendment of this magnitude being heard in these
conditions.
Representative Foster observed that he had experienced the
weight of the government under indictment. He asserted that
most citizens couldn't afford to defend themselves.
HB 244 was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 11:32 PM
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