Legislature(1993 - 1994)

03/17/1994 03:00 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                    HOUSE LABOR AND COMMERCE                                   
                       STANDING COMMITTEE                                      
                         March 17, 1994                                        
                            3:00 p.m.                                          
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Rep. Bill Hudson, Chairman                                                   
  Rep. Joe Green, Vice Chair                                                   
  Rep. Brian Porter                                                            
  Rep. Bill Williams                                                           
  Rep. Eldon Mulder                                                            
  Rep. Joe Sitton                                                              
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  Rep. Jerry Mackie                                                            
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  HB 413:   "An Act increasing excise taxes on cigarettes,                     
            tobacco products, and alcoholic beverages; and                     
            providing for an effective date."                                  
                                                                               
            HEARD AND HELD IN COMMITTEE                                        
                                                                               
  HB 509:   "An Act relating to the tax on transfers or                        
            consumption of motor fuel, and to the proceeds                     
            from the tax; and providing for an effective                       
            date."                                                             
                                                                               
            PASSED OUT OF COMMITTEE                                            
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  SHELBY STANSBY, Director                                                     
  Office of Management and Budget                                              
  Office of the Governor                                                       
  P.O. Box 110020                                                              
  Juneau, Alaska  99811-0020                                                   
  465-3568                                                                     
  Position Statement:  Supported HB 413 and HB 509                             
                                                                               
  ELMER LINDSTROM, Special Assistant                                           
  Department of Health and Social Services                                     
  P.O. Box 110601                                                              
  Juneau, Alaska 99811-0601                                                    
  465-3030                                                                     
  Position Statement:  Supported HB 413                                        
                                                                               
  RESA JERREL, Lobbyist                                                        
  National Federation of Independent Business                                  
  9159 Skywood Lane                                                            
  Juneau, Alaska  99801                                                        
  789-4278                                                                     
  Position Statement:  Opposed HB 413 and HB 509                               
                                                                               
  RICK LAUBER, Lobbyist                                                        
  Anheuser-Busch Company, Inc.                                                 
  321 Highland Drive                                                           
  Juneau, Alaska  99801                                                        
  586-6366                                                                     
  Position Statement:  Opposed HB 413                                          
                                                                               
  LENNY GORSUCH, Lobbyist                                                      
  Miller Brewing Company                                                       
  213 3rd St., #103                                                            
  Juneau, Alaska  99801                                                        
  463-3531                                                                     
  Position Statement:  Opposed HB 413                                          
                                                                               
  RICK URION, Lobbyist                                                         
  Alaska Wine & Spirits Wholesaler's Association                               
  P.O. Box 20868                                                               
  Juneau, Alaska  99802                                                        
  463-5088                                                                     
  Position Statement:  Opposed HB 413                                          
                                                                               
  LOREN JONES, Director                                                        
  Division of Alcoholism and Drug Abuse                                        
  Department of Health and Social Services                                     
  P.O. Box 110607                                                              
  Juneau, Alaska 99811-0607                                                    
  465-2071                                                                     
  Position Statement:  Supported HB 413                                        
                                                                               
  JOAN DIAMOND                                                                 
  5700 Rabbit Creek Rd.                                                        
  Anchorage, Alaska  99516                                                     
  345-6192                                                                     
  Position Statement:  Supported HB 413                                        
                       (Spoke via teleconference)                              
                                                                               
  PETER MCNUMERA, Director                                                     
  Division of Public Health                                                    
  Department of Health and Social Services                                     
  P.O. Box 110610                                                              
  Juneau, Alaska  99811-0610                                                   
  465-3090                                                                     
  Position Statement:  Supported HB 413                                        
                                                                               
  JIM MURPHY                                                                   
  American Lung Association                                                    
  555 W. Northern Lights                                                       
  Anchorage, Alaska  99503                                                     
  276-5864                                                                     
  Position Statement:  Supported HB 413                                        
                       (Spoke via teleconference)                              
                                                                               
  KATHLEEN DOVE                                                                
  P.O. Box 74048                                                               
  Fairbanks, Alaska  99707                                                     
  458-8000                                                                     
  Position Statement:  Supported HB 413                                        
                       (Spoke via teleconference)                              
                                                                               
  LYNDA ADAMS, Executive Director                                              
  Alaskans for Drug Free Youth                                                 
  2417 Tongass #114                                                            
  Ketchikan, Alaska  99901                                                     
  247-2273                                                                     
  Position Statement:  Supported HB 413                                        
                       (Spoke via teleconference)                              
                                                                               
  FRANCIS YOUNG                                                                
  537 Tower Rd.                                                                
  Ketchikan, Alaska  99901                                                     
  225-3528                                                                     
  Position Statement:  Supported HB 413                                        
                       (Spoke via teleconference)                              
                                                                               
  KATHY STAROSTKA, Executive Director                                          
  Sitka Teen Resource Center                                                   
  P.O. Box 1034                                                                
  Sitka, Alaska  99835                                                         
  747-3500                                                                     
  Position Statement:  Supported HB 413                                        
                       (Spoke via teleconference)                              
                                                                               
  BRUCE CAMPBELL, Commissioner                                                 
  Department of Transportation                                                 
  P.O. Box 110800                                                              
  Juneau, Alaska  99811-0800                                                   
  465-2500                                                                     
  Position Statement:  Supported HB 509                                        
                                                                               
  PAUL DICK                                                                    
  Division of Income and Excise Audit                                          
  Department of Revenue                                                        
  P.O. Box 110420                                                              
  Juneau, Alaska  99811-0420                                                   
  465-3691                                                                     
  Position Statement:  Testified on fiscal note for HB 509                     
                                                                               
  MARK HICKEY, Lobbyist                                                        
  Valdez Creek Mine                                                            
  211 4th St. #108                                                             
  Juneau, Alaska  99801                                                        
  586-2263                                                                     
  Position Statement:  Opposed HB 509                                          
                                                                               
  PREVIOUS ACTION                                                              
                                                                               
  BILL:  HB 413                                                                
  SHORT TITLE: INCREASE TOBACCO & ALCOHOL TAXES                                
  SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                 
                                                                               
  JRN-DATE    JRN-PG                     ACTION                                
  01/28/94      2180    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/28/94      2180    (H)   L&C, STATE AFFAIRS, FINANCE                      
  01/28/94      2180    (H)   -ZERO FISCAL NOTE  (REV)                         
                              1/28/94                                          
  01/28/94      2180    (H)   GOVERNOR'S TRANSMITTAL LETTER                    
  02/24/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
  02/24/94              (H)   MINUTE(L&C)                                      
  03/17/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
                                                                               
                                                                               
  BILL:  HB 509                                                                
  SHORT TITLE: INCREASE MOTOR FUEL TAX                                         
  SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                 
                                                                               
  JRN-DATE    JRN-PG                     ACTION                                
  02/18/94      2458    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/18/94      2458    (H)   L&C, STATE AFFAIRS, FINANCE                      
  02/18/94      2458    (H)   -FISCAL NOTE (REV) 2/18/94                       
  02/18/94      2458    (H)   -2 ZERO FISCAL NOTES (DEC,DOT)                   
                              2/18/94                                          
  02/18/94      2458    (H)   GOVERNOR'S TRANSMITTAL LETTER                    
  03/03/94              (H)   L&C AT 03:00 PM CAPITOL 124                      
  03/17/94              (H)   L&C AT 03:00 PM CAPITOL 17                       
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 94-25, SIDE A                                                           
  Number 001                                                                   
                                                                               
  CHAIRMAN HUDSON convened the House Labor and Commerce                        
  committee meeting at 3:13 p.m.                                               
  HB 413 - INCREASE TOBACCO & ALCOHOL TAXES                                    
                                                                               
  Number 040                                                                   
                                                                               
  SHELBY STANSBY, Director, Office of Management and Budget,                   
  Office of the Governor, reviewed HB 413 for the committee.                   
  He explained that while no one likes taxes, they are a part                  
  of the overall plan the Governor is promoting.                               
                                                                               
  MR. STANSBY stated that compared to the rest of the states,                  
  Alaska is near the bottom in the amount of gas taxes it                      
  levies.  It is still the intention to use the money                          
  generated by the gas tax for the repair and maintenance of                   
  the roads in the State.                                                      
                                                                               
  MR. STANSBY commented that the intention behind the alcohol                  
  and tobacco tax is along the same lines.  Users will pay the                 
  costs through taxes for the health and treatment programs to                 
  combat drug and alcohol abuse.                                               
                                                                               
  MR. STANSBY noted that there is talk that raising revenues                   
  will take the pressure off reducing the budget, but the                      
  amount of revenue raised by the taxes is only about 1/8 the                  
  amount needed.  He further noted that the reserves the state                 
  currently has will only last another two or three years at                   
  the current spending pattern.                                                
                                                                               
  MR. STANSBY finished by suggesting that the committee pass                   
  the two tax bills on so that the Finance Committee can                       
  consider them in the overall financial plan.                                 
                                                                               
  Number 200                                                                   
                                                                               
  CHAIRMAN HUDSON commented that the alcohol and tobacco tax                   
  is estimated at bringing in approximately $15 million and                    
  the motor fuel tax is estimated at raising $82 million.                      
                                                                               
  Number 218                                                                   
                                                                               
  REP. MULDER asked what the Governor's standpoint was on the                  
  constitutional amendment on the dedicated motor fuel tax.                    
                                                                               
  Number 221                                                                   
                                                                               
  MR. STANSBY responded that the Governor supports the                         
  amendment, but whether he's pushing it this year he doesn't                  
  know.  He thought Commissioner Campbell could address that.                  
  He added that his intention was to use the taxes to help                     
  close the fiscal gap and use the money to fix roads.                         
                                                                               
  Number 226                                                                   
                                                                               
  REP. MULDER observed that his constituency is much more                      
  inclined to dedicate funds than to be taxed and have it go                   
  directly into the general fund.                                              
                                                                               
  Number 231                                                                   
                                                                               
  MR. STANSBY stated that he agrees with that observation, but                 
  felt that the scenario has gotten a lukewarm reception by                    
  the legislature.                                                             
                                                                               
  Number 234                                                                   
  CHAIRMAN HUDSON noted that HB 509 is not a dedicated tax.                    
                                                                               
  Number 245                                                                   
                                                                               
  ELMER LINDSTROM, Special Assistant, Department of Health and                 
  Social Services, testified in support of HB 413.  He stated                  
  that his agency doesn't collect the taxes nor do they have                   
  any direct revenue stream from these taxes.  The department                  
  believes HB 413 can stand on its own as a public health                      
  measure and the taxes are a vehicle to provide this.                         
                                                                               
  MR. LINDSTROM stated that history tells us that an increase                  
  in tobacco and alcohol taxes equals a decrease in                            
  consumption, especially among the young.                                     
                                                                               
  Number 285                                                                   
                                                                               
  CHAIRMAN HUDSON noted that the backup showed some high                       
  figures regarding state expenditures for substance abuse and                 
  asked Mr. Lindstrom what those expenditures were.                            
                                                                               
  Number 300                                                                   
                                                                               
  MR. LINDSTROM replied that the figures Mr. Stansby referred                  
  to were simply the funds appropriated for substance abuse                    
  treatment.  The costs of the abuse of alcohol and use of                     
  tobacco show up in all levels of state government.                           
                                                                               
  Number 328                                                                   
                                                                               
  RESA JERREL, National Federation of Independent Business                     
  (NFIB), testified that her group opposes HB 413.  She said a                 
  1993 survey of NFIB members found overwhelming support -- 92                 
  percent -- to reduce state government spending before                        
  increasing taxes.                                                            
                                                                               
  Number 350                                                                   
                                                                               
  REP. WILLIAMS asked Ms. Jerrel if she thought the people who                 
  abuse products should be responsible for paying for the                      
  treatment.                                                                   
                                                                               
  Number 365                                                                   
                                                                               
  MS. JERREL reiterated that the NFIB members uniformly oppose                 
  any new taxes until government spending comes under control.                 
                                                                               
  Number 370                                                                   
                                                                               
  CHAIRMAN HUDSON commented that every time the legislature                    
  comes up with an area to cut spending, out comes advocates                   
  who consider it sacred.  Chairman Hudson assumed that the                    
  NFIB is not opposed to taxes forever but not as the first                    
  thing to go to.                                                              
                                                                               
  Number 388                                                                   
                                                                               
  MS. JERREL responded that the chair was correct in his                       
  assumptions and added that the members of NFIB did have a                    
  priority listing of areas of taxation they would like to see                 
  if raising revenue through taxes is needed.                                  
                                                                               
  Number 400                                                                   
                                                                               
  RICK LAUBER, Lobbyist, Anheuser-Busch Company, Inc.,                         
  testified against HB 413.  Mr. Lauber presented the                          
  following position paper:                                                    
                                                                               
  Anheuser-Busch is proud of it's leadership role in promoting                 
  responsible use of its products.  Our "know when to say                      
  when" educational advertising campaign has been effective.                   
  We have been strong supporters of the designated driver                      
  campaign.  We were the first major brewer to produce a                       
  nonalcoholic malt beverage, O'Douls, and spend millions on                   
  it's promotion as a nonintoxicating alternative to beer.                     
                                                                               
  Anheuser-Busch not only discourages abuse of its products by                 
  adults, but has initiated programs in our schools and                        
  colleges to discourage under-age consumption of all alcohol                  
  and provide alternatives to the use of intoxicating                          
  beverages.                                                                   
                                                                               
  We oppose a tax increase on beer.                                            
                                                                               
  In Alaska beer is already taxed, at a rate nearly 50% higher                 
  than the national average.  As recently as 1991 the federal                  
  government increased the tax on beer drinkers by 100% from                   
  $9.00 to $18.00 per barrel.                                                  
                                                                               
  A 50% increase in the tax on beer that this legislation                      
  proposes will not translate to an increase on 50% in taxes                   
  collected.  If the federal experience is an indication.                      
                                                                               
  Those opposed to the consumption of any beer will tell you                   
  that is a good thing.  Not so.  Price increases discourage                   
  the responsible drinker, mostly in the middle and lower                      
  income groups.  While studies have shown that beer is not                    
  the beverage of choice of the vast majority of alcoholics,                   
  they have shown that a price increase of this magnitude is                   
  not a deterrent to their abuse.  The vast majority of beer                   
  is consumed by responsible users.                                            
                                                                               
  As more and more studies confirm the health benefits of the                  
  daily consumption of moderate amounts alcoholic beverages,                   
  it does not seem appropriate to discourage the use of                        
  moderate amounts of beer.                                                    
                                                                               
  A tax on the wholesale price of beer will be transferred to                  
  the retail purchaser.  The ultimate tax payer will be the                    
  beer drinkers of Alaska.  We do not object to paying taxes                   
  but feel that the current tax, already far higher than the                   
  average of the nation, combined with the recent increase in                  
  federal taxes of 100%, is a more than adequate tax on the                    
  beer drinkers of Alaska.                                                     
                                                                               
  Number 455                                                                   
                                                                               
  CHAIRMAN HUDSON asked if there was a tax on the nonalcoholic                 
  beer Anheuser-Busch promotes.                                                
                                                                               
  Number 465                                                                   
                                                                               
  MR. LAUBER replied that there was no tax on O'Douls.                         
                                                                               
  Number 479                                                                   
                                                                               
  LENNY GORSUCH, Lobbyist, Miller Brewing Company, testified                   
  against HB 413.  Ms. Gorsuch dittoed Mr. Lauber's testimony.                 
                                                                               
  Number 514                                                                   
                                                                               
  REP. WILLIAMS asked for comments on the administration's                     
  view that those who imbibe should help pay the cost to the                   
  state of alcohol abuse.                                                      
                                                                               
  Number 525                                                                   
                                                                               
  MR. LAUBER stated that if you could design a program that                    
  would make the abusers of anything pay for their own                         
  services the industry would support it.  But the vast                        
  majority of users of beer do not abuse the product.                          
                                                                               
  Number 565                                                                   
                                                                               
  RICK URION, Lobbyist, Alaska Wine and Spirits Wholesaler's                   
  Association, testified against HB 413.  Mr. Urion stated                     
  that if HB 413 passes Alaska will be the highest by far in                   
  taxing spirits.                                                              
                                                                               
  MR. URION noted that the Department of Revenue figures in                    
  projecting income from the tax increase did not include the                  
  decrease in consumption that the Department of Health and                    
  Social Services projects.                                                    
                                                                               
  Number 594                                                                   
                                                                               
  CHAIRMAN HUDSON noted that in 1991 the federal government                    
  increased the tax, which resulted in a decrease in actual                    
  revenue and asked if there was also a resulting decrease in                  
  social costs.                                                                
                                                                               
  Number 610                                                                   
                                                                               
  LOREN JONES, Director, Division of Alcohol and Drug Abuse,                   
  Department of Health and Social Services, testified in                       
  support of HB 413.  Mr. Jones stated that he does not know                   
  of any studies that show a correlation between the decrease                  
  in consumption related to the economic costs of abuse.                       
                                                                               
  MR. JONES noted, however, that insurance companies have                      
  looked at the decrease of medical costs after a person has                   
  gone through treatment.                                                      
                                                                               
  TAPE 94-25, SIDE B                                                           
  Number 001                                                                   
                                                                               
  MR. JONES further stated that his office conducted an                        
  economic cost study in 1985 that looked at the costs of                      
  services directly related to alcohol abuse.  These costs                     
  would include enforcement of drunk driving statutes, number                  
  of DFYS cases  of child abuse and neglect by parents who                     
  abuse alcohol, small business losses, and inmates in jails                   
  who committed their offenses while under the influence of                    
  alcohol.                                                                     
                                                                               
  MR. JONES stated he does not believe that the tax would be                   
  disproportionate to the social drinker as it is levied                       
  directly to the volume of alcohol you buy.                                   
                                                                               
  Number 111                                                                   
                                                                               
  JOAN DIAMOND testified via teleconference in support of HB
  413.  Ms. Diamond stated that Alaska has only raised the tax                 
  once since 1960 and has never been adjusted for inflation.                   
  She added that the costs to the public are huge and any                      
  increase in the tax will not only lower consumption but                      
  lower the cost to the public as well.                                        
  Number 192                                                                   
                                                                               
  PETER MCNUMERA, Director, Division of Public Health,                         
  Department of Health and Social Services, testified in                       
  support of HB 413.  Mr. McNumera stated that he is very                      
  concerned about the impact of alcohol on the youth.  He                      
  believes that the increase in taxes will lower the                           
  consumption among youth.                                                     
                                                                               
  Number 234                                                                   
                                                                               
  JIM MURPHY, American Lung Association, testified via                         
  teleconference in support of HB 413.  Mr. Murphy stated that                 
  the legislature has an opportunity now to do two things:                     
  raise some revenue for the state and discourage tobacco use                  
  by Alaskans by passing HB 413.                                               
                                                                               
  Number 262                                                                   
                                                                               
  KATHLEEN DOVE testified via teleconference in support of HB
  413.  She added that she is involved in a prevention program                 
  on alcohol and drug abuse.  She stated that she supports HB
  413 and its efforts to deter young people from using alcohol                 
  and tobacco.                                                                 
                                                                               
  Number 287                                                                   
                                                                               
  LINDA ADAMS, Executive Director, Alaskans for Drug Free                      
  Youth; Advisory Board on Alcoholism and Drug Abuse; and                      
  Mayors Task Force on Substance Abuse in Ketchikan; testified                 
  via teleconference that all three of these groups are in                     
  support of HB 413.                                                           
                                                                               
  MS. ADAMS stated that all the studies have shown that our                    
  youth are very price sensitive and that any increase in                      
  taxes translates to a decrease in consumption among our                      
  youth.                                                                       
                                                                               
  MS. ADAMS dittoed the previous supportive testimony.                         
                                                                               
  Number 374                                                                   
                                                                               
  FRANCIS YOUNG testified via teleconference in support of HB
  413.  She stated that the costs to the public is a big                       
  factor and includes the costs to educate children whose                      
  lives have been impacted by alcohol.                                         
                                                                               
  MS. YOUNG stated that users should be willing to pay the tax                 
  which only covers about 17% of the costs incurred because of                 
  abuse.                                                                       
                                                                               
  Number 395                                                                   
                                                                               
  KATHY STAROSTKA, Executive Director, Sitka Teen Resource                     
  Center, stated via teleconference that the center is                         
  overwhelmingly supportive of HB 413.  Ms. Starostka stated                   
  young people have the least amount of disposable income so                   
  this increase would impact them the most.                                    
                                                                               
  MS. STAROSTKA dittoed the previous supportive testimony.                     
                                                                               
  Number 405                                                                   
                                                                               
  CHAIRMAN HUDSON stated that the committee did not have a                     
  quorum at the table and would not take action at this time.                  
  HB 509 - INCREASE MOTOR FUEL TAX                                             
                                                                               
  Number 425                                                                   
                                                                               
  BRUCE CAMPBELL, Commissioner, Department of Transportation,                  
  testified in support HB 509.  He commented that Mr.                          
  Stansby's figures of $82 million as the amount of revenue                    
  generated by passage of HB 509 is different than the $109                    
  million figure his agency shows.                                             
                                                                               
  COMMISSIONER CAMPBELL stated that the funds generated by HB
  509 are not dedicated funds.  However, he was supportive of                  
  the language the administration calls "pseudo dedicated                      
  funds" that states that the proceeds of the tax shall be                     
  deposited in a special highway fuel tax account within the                   
  general fund.  Commissioner Campbell stated that this type                   
  of language is found in three or four other funds he's                       
  familiar with and the legislature has only appropriated out                  
  of these accounts for the particular purpose they were set                   
  up for.                                                                      
                                                                               
  COMMISSIONER CAMPBELL stated that this type of set-up would                  
  not be truly a dedicated fund in a constitutional sense; at                  
  least it would be in a practical sense.  The administration                  
  felt this scenario could work and would save money by not                    
  having to get a constitutional amendment.                                    
                                                                               
  COMMISSIONER CAMPBELL added that he believes that a major                    
  raise in the fuel tax is important because the revenue                       
  generated would nearly fund the budget of the Department of                  
  Highways.                                                                    
                                                                               
  COMMISSIONER CAMPBELL explained to the committee that the                    
  State of Alaska is considered a recipient state; the state                   
  receives $600.00 for every dollar the state pays in federal                  
  fuel and excise taxes.  He added that Alaska is the highest                  
  state in the union in the disproportionate ratio.  The donor                 
  states are joining together to change the way the federal                    
  monies are proportioned.  Alaska would lose in this                          
  scenario.  Commissioner Campbell noted that one of the                       
  things he hears during meetings with other transportation                    
  and highway officials is that Alaska is the biggest                          
  recipient of federal aid and has one of the lowest gas                       
  taxes.                                                                       
                                                                               
  COMMISSIONER CAMPBELL concluded by saying that this is going                 
  to be an issue our congressional delegation will have to                     
  deal with.                                                                   
                                                                               
  Number 496                                                                   
                                                                               
  RESA JERREL, Lobbyist, National Federation of Independent                    
  Business, testified against HB 509.  She reiterated her                      
  earlier testimony regarding HB 413 and the NFIB's position                   
  that they want the state government spending under control                   
  before any taxes are passed.                                                 
                                                                               
  Number 500                                                                   
                                                                               
  PAUL DICK, Department of Revenue, testified that the fiscal                  
  note the Department of Revenue offered was $82.2 million,                    
  using the current level of consumption.                                      
                                                                               
  Number 521                                                                   
                                                                               
  REP. PORTER asked if the department looked back to 1983 when                 
  the last tax increase took place to see what happened.                       
                                                                               
  MR. DICK responded that he did not.                                          
                                                                               
  CHAIRMAN HUDSON asked what the average Alaskan's cost                        
  increase would be if HB 509 passed.                                          
                                                                               
  Number 545                                                                   
                                                                               
  REP. MULDER asked if Mr. Dick had any idea why there was a                   
  discrepancy between figures of the Departments of                            
  Transportation and Revenue.  He also asked what the total                    
  revenue would be if the tax were doubled and not tripled.                    
                                                                               
  Number 550                                                                   
                                                                               
  MR. DICK replied that he had not had a chance to look at                     
  DOT's figures, but would get together with them to figure                    
  out the differences.  Mr. Dick stated that doubling the                      
  current tax rate would result in revenues of approximately                   
  $40 million.                                                                 
                                                                               
  Number 556                                                                   
                                                                               
  MARK HICKEY, Valdez Creek Mine, testified against HB 509.                    
  Mr. Hickey stated that the mine is located 70 miles on the                   
  Denali Highway about 70 miles east of Cantwell.  He stated                   
  that four years ago they reached an agreement with the                       
  Department of Transportation to share the cost of winter                     
  maintenance of the road.                                                     
                                                                               
  MR. HICKEY stated that the mine is not opposed to a doubling                 
  of the tax, but not a triple increase.  They would also like                 
  to see the tax be dedicated to highway maintenance.                          
                                                                               
  MR. HICKEY noted a side effect of the proposal that is                       
  troubling for the mine and that is called the off-highway                    
  tax.  Currently Alaskans pay an off-highway tax of eight                     
  cents per gallon and receive a rebate of six cents.  He said                 
  HB 509 eliminates the rebate and actually raises the off-                    
  highway tax to 17 cents.  This would be a 3% increase in the                 
  cost of doing business for the mine.                                         
                                                                               
  MR. HICKEY proposed a solution that would eliminate the                      
  increased tax on off-highway usage.                                          
                                                                               
  TAPE 94-26, SIDE A                                                           
  Number 001                                                                   
                                                                               
  CHAIRMAN HUDSON stated that he was leaning towards                           
  supporting the increased gas tax, but not as high as the                     
  administration is asking for.  He added that he liked the                    
  language in the bill that doesn't dedicate the funds but                     
  strongly favors appropriation towards highway facilities.                    
                                                                               
  Number 061                                                                   
                                                                               
  REP. PORTER declared a conflict of interest due to the fact                  
  that he ran a company that provided security for the mine                    
  Mr. Hickey is representing and is still a consultant for                     
  that company.                                                                
                                                                               
  CHAIRMAN HUDSON stated that the committee recognizes that                    
  and does not believe it is in conflict.                                      
                                                                               
  CHAIRMAN HUDSON asked for comments from the committee                        
  regarding passage of HB 509.                                                 
                                                                               
  Number 075                                                                   
                                                                               
  REP. MULDER stated that his constituents want the funds to                   
  be dedicated to highway maintenance and not to go into the                   
  general fund.  He added that he could live with the proposal                 
  of an increase to 17 cents as long as it was dedicated.                      
                                                                               
  Number 113                                                                   
                                                                               
  REP. WILLIAMS stated he didn't have any comment at this                      
  time.                                                                        
                                                                               
  Number 116                                                                   
                                                                               
  REP. SITTON stated that he did not want to see any tax                       
  measures until the budget situation was figured out.                         
                                                                               
  Number 120                                                                   
                                                                               
  REP. PORTER stated that he thinks it's appropriated to move                  
  these bills in order to give the Finance Committee all the                   
  tools required to make their decisions.                                      
                                                                               
  Number 138                                                                   
                                                                               
  CHAIRMAN HUDSON stated that he believes the legislature will                 
  make some significant reductions in the budget this year and                 
  he believes the tax bills should go forward to give the                      
  legislature all the tools necessary.  However, he does not                   
  want to see the gas tax be tripled as this bill calls for.                   
                                                                               
  Number 179                                                                   
                                                                               
  REP. MULDER moved Amendment 1 to HB 509 to reflect a 17 cent                 
  increase as opposed to a 25 cent increase.  No objections                    
  were heard; it was so ordered.                                               
                                                                               
  Number 198                                                                   
                                                                               
  REP. SITTON moved Amendment 2 to HB 509 on page 2, line 21,                  
  adding a new section increasing the refund on the tax for                    
  non-highway use.                                                             
                                                                               
  Number 220                                                                   
                                                                               
  REP. PORTER moved CSHB 509(L&C) with adjusted fiscal note                    
  and individual recommendations.  No objections were heard;                   
  it was so ordered.                                                           
                                                                               
  Number 230                                                                   
                                                                               
  CHAIRMAN HUDSON adjourned the meeting at 4:52 p.m.                           

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