04/29/1997 10:10 AM House RLS
| Audio | Topic |
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE RULES STANDING COMMITTEE
April 29, 1997
10:10 a.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Gail Phillips
Representative Irene Nicholia
Representative Al Vezey
Representative Brian Porter
Representative Bill Williams
Representative Kim Elton
MEMBERS ABSENT
All members present
OTHER HOUSE MEMBERS PRESENT
Representative Terry Martin
COMMITTEE CALENDAR
HOUSE BILL NO. 63
"An Act extending the motor fuel tax exemption for fuel sold for
use in jet propulsion aircraft to fuel used in those aircraft for
flights that continue from a foreign country; and providing for an
effective date."
- MOVED CSHB 63(2d RLS)OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 63
SHORT TITLE: MOTOR FUEL TAX EXEMPTION
SPONSOR(S): REPRESENTATIVES(S) THERRIAULT, Davies, Kelly, Brice,
Kubina
Jrn-Date Jrn-Page Action
01/13/97 48 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 48 (H) TRANSPORTATION, FINANCE
01/22/97 126 (H) COSPONSOR(S): DAVIES
02/12/97 (H) TRA AT 1:00 PM CAPITOL 17
02/12/97 (H) MINUTE(TRA)
02/12/97 325 (H) COSPONSOR(S): KELLY
02/17/97 (H) TRA AT 1:00 PM CAPITOL 17
02/17/97 (H) MINUTE(TRA)
02/18/97 388 (H) COSPONSOR(S): BRICE
02/24/97 (H) TRA AT 1:00 PM CAPITOL 17
02/24/97 (H) MINUTE(TRA)
02/26/97 (H) MINUTE(TRA)
02/27/97 504 (H) TRA RPT CS(TRA) NT 4DP 2NR
02/27/97 504 (H) DP: ELTON, KOOKESH, SANDERS, WILLIAMS
02/27/97 504 (H) NR: COWDERY, MASEK
02/27/97 504 (H) FISCAL NOTE (REV)
03/11/97 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/12/97 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/12/97 (H) MINUTE(FIN)
03/20/97 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/02/97 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/02/97 (H) MINUTE(FIN)
04/04/97 986 (H) FIN RPT CS(FIN) NT 4DP 3NR 1AM
04/04/97 986 (H) DP: THERRIAULT, DAVIES, FOSTER, KELLY
04/04/97 986 (H) NR: HANLEY, MARTIN, DAVIS;
AM: KOHRING
04/04/97 986 (H) FISCAL NOTE (REV)
04/22/97 (H) RLS AT 5:00 PM CAPITOL 120
04/22/97 (H) MINUTE(RLS)
04/23/97 1287 (H) RLS RPT CS(RLS) NT 2DP 4NR
04/23/97 1287 (H) DP: PHILLIPS, PORTER
04/23/97 1287 (H) NR: KOTT, WILLIAMS, NICHOLIA, ELTON
04/23/97 1287 (H) FISCAL NOTE (REV) 4/4/97
04/28/97 (H) RLS AT 5:00 PM CAPITOL 120
04/28/97 (H) MINUTE(RLS)
04/29/97 (H) RLS AT 10:00 AM CAPITOL 120
WITNESS REGISTER
JACK CHENOWETH, Attorney
Legislative Legal and Research Services
Legislative Affairs Agency
130 Seward Street, Suite 409
Juneau, Alaska 99801-2105
Telephone: (907) 465-2450
POSITION STATEMENT: Answered questions on CSHB 63(2d RLS).
REPRESENTATIVE GENE THERRIAULT
Alaska State Legislature
Capitol Building, Room 511
Juneau, Alaska 99801
Telephone: (907) 465-3884
POSITION STATEMENT: Sponsor of HB 63.
BOB BARTHOLOMEW, Deputy Director
Income and Excise Audit Division
Department of Revenue
P.O. Box 110420
Juneau, Alaska 99811-0420
Telephone: (907) 465-2375
POSITION STATEMENT: Answered questions on CSHB 63(2d RLS).
ACTION NARRATIVE
TAPE 97-14, SIDE A
Number 001
CHAIRMAN PETE KOTT called the House Rules Standing Committee to
order at 10:10 a.m. Members present at the call to order were
Representatives Elton, Williams, Porter, Nicholia and Kott.
Representative Phillips arrived at 10:11 a.m., and Representative
Vezey arrived at 10:31 a.m.
HB 63 - MOTOR FUEL TAX EXEMPTION
Number 0035
CHAIRMAN KOTT announced the committee would address HB 63, "An Act
extending the motor fuel tax exemption for fuel sold for use in jet
propulsion aircraft to fuel used in those aircraft for flights that
continue from a foreign country; and providing for an effective
date." He noted the committee would address Version R, which is
the version the committee members had before them the previous day.
He indicated there is a new committee substitute (CS) and asked Mr.
Chenoweth to explain the contents of the amendment offered the
previous day, which has been rolled into Version X, dated 4/29/97.
Number 0082
JACK CHENOWETH, Attorney, Legislative Legal and Research Services
Legislative Affairs Agency, came before the committee to explain
Version X. He said the current draft deals with the exemption from
the motor fuel tax in several ways. The first is on page 4, lines
29 and 30. There is presently an exemption for motor fuel that is
at least 10 percent alcohol by volume. The amendment on page 4,
lines 29 and 30, would delete that exemption and makes that
"gasohol" fully taxable.
MR. CHENOWETH informed the committee members a second point is that
currently in law there is special handling for bunker fuel. It was
enacted in Chapter 42, SLA 1994. He noted his recollection is that
it provides for a full application of the motor fuel tax until the
state takes in $205,000 in a fiscal year, at which point the tax
either drops to nothing or drops down to a penny. He noted he
couldn't remember which one it was. He said that will be gone and
the special handling of it will also be gone. In place of it, a
complete exemption from taxation of bunker fuel would be provided.
He informed the committee members that the elimination of the
special handling is on page 5, line 20. The full exemption of
bunker fuel is on page 5, lines 12 through 19.
MR. CHENOWETH explained also included in the bill is a proposal to
exempt from taxation motor fuel used in jet propulsion aircrafts
that start out in a foreign country, refuels in Alaska and then
continues on. There is currently an exemption that goes the other
way for airplanes that take off from Seattle, refuels in Anchorage
and continues on to the Far East. If an aircraft comes from Japan,
China or the Far East, lands in Anchorage and goes on, there is no
exemption and that fuel is subject to taxation. He referred to
page 4, lines 19 through 23, and said, "It exempts from taxation
sales of motor fuel that are in conjunction with flights that
originate elsewhere in a foreign country, land and refuel in Alaska
and continue on. What the exemption then has is a contingency and
that begins with the words, 'unless exemption of the motor fuel
from taxation is disallowed because of the refiner's failure to
comply with the provisions of a voluntary agreement under [AS]
43.40.092 in conjunction with expansion of refinery capacity.'"
Mr. Chenoweth referred the committee to page 2, Section 2, and said
that is the disallowance referred to. He informed the committee
if a refiner operating in Alaska makes a determination that the
refiner wants to expand its capacity and voluntarily commits by
agreement to do the things that are laid out on the bottom of page
2, in subsections (A) and (B), and at the top page 3, subsection
(C), and then fails to perform in accordance with that voluntary
agreement, then motor fuel refined as jet fuel at that refinery
can no longer be claimed for exemption. He said, "One of things
that the refiner may voluntarily commit to do, and the failure of
which to do would cost him the exemption, and those are 'use the
refiners' -- and I'm on page 2, line 25, 'use the refiner's best
efforts to advertise for, recruit, and employ in the construction
activities associated with expanding refinery capacity resident
workers who have experience in the specific fields in which they
are hired to work.'" Mr. Chenoweth explained the second is a
requirement to contract with Alaska licensed firms to prepare
materials used in construction activities. The third is to enter
into contracts with Alaska-licensed vendors, contractors, and
suppliers for supplies and services used on conjunction with the
expanded refinery capacity. Mr. Chenoweth noted the provisions are
the same provisions the committee saw the previous year relating to
the Northstar lease, but are slightly reworded. He stated the
definitions of "resident worker, Alaska licensed contractor and
Alaska firms," are on the bottom of page 3 and on the top of page
4.
MR. CHENOWETH said, "The point of this exercise is this: The
exemption for motor fuel used in jet aircraft that come from
another country, are refueled in this state and continue on would
be exempt unless the refiner, deciding to expand in capacity, makes
a voluntary commitment to use these or adhere to these three
provisions and then fails to do so. At that point, the exemption
could be lost."
Number 0428
REPRESENTATIVE BRIAN PORTER said the legislation does not affect
the taxation rate on fuel used for a plane that started in Seattle,
comes to Alaska and then goes on to Japan.
MR. CHENOWETH said that is already exempt.
Number 0445
REPRESENTATIVE KIM ELTON informed the committee he is puzzled by
the use of the word "voluntarily" on page 2, line 21 and on page 4,
line 21. He said "voluntarily" seems to be a strange word if you
enter into an agreement, you have to have that agreement before you
get the exemption.
MR. CHENOWETH said that is incorrect. He explained if the proposed
legislation passes, those dealers and users who are subject to the
tax and buy their jet fuel from an Alaskan refiner can claim the
exemption on that fuel. It is only if the refiner decides to
expand and says, "I think it's a good idea, for whatever reason, to
hire locally and to use Alaska contractors and so forth - so on, so
I am going to write a letter to the commissioner of Revenue and
commit to doing that..." If the refiner sends the letter and then
doesn't carry through on it, the exemption is lost.
Number 0514
REPRESENTATIVE ELTON said the exemption would be lost if the
refiner doesn't send that letter. The commissioner has no role in
determining what the contents of that letter are, and the
commissioner can remove the fuel tax exemption of in fact he/she
doesn't agree with the contents of the letter or if he/she makes a
determination that the refiner didn't live up to the contents of
the letter.
Number 0553
MR. CHENOWETH said that is not what the bill says. He said it
relies upon the refiner to come forward and say, "It's good for
business - it's good for my business in Alaska for me to enter into
this voluntary agreement and to do this."
Number 0570
REPRESENTATIVE ELTON said if a refiner decides to expand in
capacity, they would send the letter to the commissioner. He asked
if the commissioner is required to accept the letter regardless of
the contents of that letter.
MR. CHENOWETH explained the letter would have to stipulate an
agreement to do the things that are outlined in AS 43.40.092 (A),
(B) and (C). He said he would assume that if one of those points
is not met, then the commissioner would not be under any
obligation. If the refiner agrees to all of the points, then the
letter would stand.
Number 0617
REPRESENTATIVE ELTON said assume that happens and the commissioner
determines at a later date that the refiner did not adhere to the
provisions of paragraph (A), then the fuel tax exemption allowed to
that refiner for that product would go away.
MR. CHENOWETH indicated that is correct.
REPRESENTATIVE ELTON said that doesn't sound very voluntary to him.
MR. CHENOWETH said suppose the refiner just expands capacity and
doesn't write the letter.
REPRESENTATIVE ELTON said that doesn't sound very voluntary to him
either because they wouldn't be given the exemption.
MR. CHENOWETH pointed out they have the exemption. He explained
that the exemption does not turn upon the sending of the letter.
The exemption turns upon the sending of the letter coupled with the
failure to perform as agreed to.
Number 0657
REPRESENTATIVE ELTON said if they expand capacity and don't send
the letter, the expectation would be that the commissioner would
revoke the exemption.
MR. CHENOWETH explained if a letter isn't sent, the commissioner is
without the ability to revoke the exemption.
REPRESENTATIVE ELTON said if the refiner does decide not to send
the letter, there is nothing in statute that allows the revocation
of the exemption that's granted in the provisions of the bill.
MR. CHENOWETH stated that is correct.
Number 0747
REPRESENTATIVE PORTER pointed out it doesn't prohibit a future
legislature from taking whatever action it so chooses to take.
Number 0762
REPRESENTATIVE TERRY MARTIN referred to a new provision being added
that pertains to Alaska hire and said there is a case already in
court. He asked if the bill would basically be mute if the same
provision was in another local hire bill. He asked what the
situation is if the legislature tried to force a company to do
something that has been ruled unconstitutional.
Number 0956
MR. CHENOWETH explained he thinks Representative Martin's reference
pertains to the Northstar litigation. He said when the Northstar
litigation was commenced, his understanding was there were four
arguments put forward by the people who were challenging the lease.
One went to an equal protection-based challenge to the resident
hire requirements in the Northstar legislation of last year. He
said as he understands, that one challenge has been dropped and has
been set aside. It is not before the judge for resolution. Mr.
Chenoweth said the judge has to deal with other challenges. He
said there won't be a decision from the superior court on the
resident or local hire in the context of the Northstar issue. He
stated equal protection-based challenges are challenges that are
made to action by government. It is true somebody could say that
this is removed from government, this is the refiner making a
voluntary decision to engage in resident hire. There is no
governement coercion or government involvement. Mr. Chenoweth
said, "It is possible that down the road somebody could say look,
the reason that a - that might trip up a refiner on a local hire -
on enforcing the local hire or adhearing to the local hire
requirement of this is in order to maintain the tax exemption, the
refiner doesn't have to do it, but having committed himself by
agreement, the refiner must go through with this. And therefore,
there is a tradeoff here involving state action, mainly the
protection of the tax exemption. Therefore, the state is involved,
therefore, there is a basis to assert that this has -- that a valid
equal protection-based argument could be brought against this
provision. It's a complicated argument. There aren't too many
direct cases that are helpful on this, but I think that I would be
uncomfortable in saying that this thing would be free and clear of
any equal protection-based challenge."
Number 0949
REPRESENTATIVE MARTIN said, "The one prediction that you mentioned
had to do with the permanent fund - was it? A person had to be a
year qualified. Is that the one they dropped out of their case of
the four provisions - the Northstar? What provision did they
drop?"
MR. CHENOWETH responded, "The Northstar challenge goes forward on
the Article VIII claim and -- I didn't bring the file. I don't
know what the other two are, but they do not involve questions of
residence as I recall. They are apart from resident. And I don't
know -- we did not put into this, we did not build into this a tie-in that you
option."
MR. CHENOWETH read from page 3, line 14, "the term 'resident
worker' means an individual who (C) possesses a resident fishing,
trapping, or hunting license, or receives a permanent fund
dividend; and'." He said if you have one of those licenses or
receive a dividend, you would meet that qualification. He noted it
is not necessary that you qualify for the dividend.
Number 1021
REPRESENTATIVE MARTIN said, "I'm glad that the permanent fund is
out because that one really worried me there. A lot of people stay
in this state and about 60,000 don't sign up for permanent fund
dividends and are eligible. That was my major question -- this
local hire bit. I personally think we go overboard on local hire.
If we can get anybody to work, I think we should, but as long as we
keep saying 'Alaskans only,' all you have to do is be here one day
to be an Alaskan and get your drivers' license and unions do it all
the time. They hire out of hall from 302 in Seattle, come up - get
their drivers' license and get their plate on that car then your
okay."
Number 1066
REPRESENTATIVE PORTER moved to adopt CSHB 63, Version X, dated
4/29/97. There being no objection, CSHB 63, Version X was adopted.
CHAIRMAN KOTT asked Mr. Chenoweth to make a comparison between
Version X and the previous Version T that wasn't adopted by the
House Rules Committee.
Number 1129
MR. CHENOWETH explained the significant change is in the way the
exemption was treated. He referred to Version T and said it could
be argued that the exemption could be lost for failure of a refiner
to make a commitment or make an agreement to carry through on the
three things. He said with Version X, he tried to make it clear
that the agreement is truly voluntary. He said, "In other words,
the motor fuel produced by a refiner has the exemption from the
time the bill becomes law, and it's only under the unique
circumstances of a commitment made by the refiner, voluntarily made
by the refiner, and not carried through on that the exemption of
motor fuel out of that refinery would be lost." He said that
seemed to be less clear in Version T. He noted "resident worker"
was also substituted for "resident" in both the substantive
provisions and in the definition. He said, "I think we tried to
rewrite the statement of the exemption so it was a little bit
clearer, so that the exemption adhered unless it was lost by
failure to comply with this voluntary agreement and things of that
sort."
Number 1220
REPRESENTATIVE ELTON referred to wording on page 3, line 16, "has
a home in the state;". He said he is interested in what the
definition of "a home" would be. He asked if it is barracks on a
construction site, a campground or if you have a spouse, it is
where your spouse is.
Number 1239
MR. CHENOWETH said he doesn't know if it means any more than the
definition of a resident that is generally used in Title I. As he
recalls from the Northstar provisions was to make clear that a
person had some formal tie into the state, a formal commitment or
allegiance. He said this is a cumulative thing. You could have a
home in the barracks in this state, but you also have to maintain
a residence, you have to have one of the licenses or a permanent
fund dividend and you may be required to state, under oath, that
you are not claiming residence or taking advantage of some benefits
from outside the state. He said he isn't sure he would want to get
hung up on whether a home means anything more than some sort of
place that you consider your place to which you'd always return
when you finish temporary duty away somewhere.
Number 1302
REPRESENTATIVE MARTIN indicated concern about the residency
requirement. He said, "We have a lot of people up here because the
husband is doing a job with the federal government, with the
military, FCC, FAA, and the wife also needs work because she wants
to work. And so therefore, they may still be carrying their out-of-state voter
these people would be disqualified.
MR. CHENOWETH referred to the debate over Northstar last year and
said he was left with the impression that the effort to tighten up
the definition of "resident" was to try and draw as clear of a line
as possible as to who could generally claim to be an Alaskan by
showing this evidence of being associated with the state. He
referred to page 3, lines 21 through 23, "(D) may be required to
state under oath that the individual is not claiming residency
outside of the state or obtaining benefits under a claim of
residency outside of the state;". He said if somebody suspects
that you're here still operating under a California divers license,
they could ask you to sign that oath that you're not claiming
residency outside of the state. He said it would be very
interesting to see whether a person in his/her own mind would say,
"I have all of these ties to Alaska and yet I've maintained my
California drivers' license or I've maintained a California voting
residence," and where they would come out on that. In a sense,
we've put the burden both in the Northstar effort and in the
current legislation on the individual.
Number 1452
REPRESENTATIVE MARTIN said, "What would happen if every state made
anybody from anywhere across the line -- Texas and Louisiana, every
day crossing the line -- Oregon and Washington people cross the
line back and forth. What about if they had an oath swearing
allegiance to the state they work rather than what state they live?
Article -- what is it -- Amendment Number XIV end of Civil War that
all people will be treated equally. But if your Alaskan, no, it's
a little different."
MR. CHENOWETH said he doesn't know the answer to that question. He
said, "We have enough of that going on where people will claim a
residence in state and work in another, and that comes up in tax
questions all the time as to whether and to what extent you're
required to pay a state income tax in the place where you work or
only in the place that you live. I'm no expert on residence. All
I'm saying is that in the context of trying to decide a resident
for purposes of North Star and resident worker for purposes of this
draft, we tried to build into this thing some clearer ways to try
to pin down whether a person was or was not a bonafide resident
without relying entirely upon the gray definition in Title 1 of
this Act."
Number 1514
REPRESENTATIVE MARTIN asked, "Would it be best to make -- instead
of just for specific jobs, could we settle with all and any
contract in Alaska from state monies or any benefits of taxation
(indisc.) employ these residency laws?"
MR. CHENOWETH said, "In this bill on motor fuel taxes? No."
REPRESENTATIVE MARTIN said this bill is just one and questioned why
it isn't done for all contracts and all taxes in Alaska.
MR. CHENOWETH stated that is a policy call.
REPRESENTATIVE PORTER said he doesn't know if that's a fair
question to ask.
Number 1538
REPRESENTATIVE IRENE NICHOLIA asked why exempt bunker fuel
(indisc.).
Number 1555
REPRESENTATIVE GENE THERRIAULT, sponsor of HB 63, referred
Representative Nicholia to page 5, line 20, and said Chapter 42,
SLA 1994, was an attempt by the legislature, in 1994, to foster
more of an industry in the refueling of ships. He said there is
sort of a provisional tax break for the sale of bunker fuel in the
state of Alaska which didn't work. Bunker fuel is a very low
quality fuel. Currently, most cruise ships, tugboats, freighters,
et cetera, fill up out of state because they can purchase the fuel
tax-free. He said the tax that was generated and reported to the
Department of Revenue over the last fiscal year was between $5,000
and $6,000. He said the larger percentage of the product was
actually being used by some of the refiners in their own ships to
move their own product. He said, "We just felt like, you know,
this was perhaps a tax where we were driving business out of the
state or the only people that we were able to tax were people that
produced the product for their own consumption and it was
questionable whether that made sense. And so that's why the bunker
fuel language was put in there."
Number 1649
REPRESENTATIVE THERRIAULT referred to the possible constitutional
problems with the previous committee substitute and said there was
much more of an ability to constitutionally challenge it because in
order to get the tax exemption, you would be required to expand
your refinery and you would absolutely be required to do the local
hire provisions. He referred to the Constitution of the United
States and said when you have the outright requirement to do those
things, that's where you clearly cross that constitutional line.
He said, "The problem with the way the language was in the previous
CS is that Mapco, Tesoro, or whoever, could agree to do all of
those things and then some disgruntled contractor in Seattle could
sue because Mapco, in order to get the tax exemption, was doing
these things -- could sue and could have the law thrown out on
constitutional grounds, even though Mapco or Tesoro, or whoever,
agreed to hire Alaskan firms, hire Alaskan workers, hire - use
Alaska vendors. The tax could go away and part of our tax policy
would be directed by some out-of-state firm who chose to sue on the
language in the law and I don't think that that's something that we
wanted to have happen. Certainly, it's much cleaner to not have
the language in the bill. And if the refiners in the state of
Alaska start building a track record where the benefit of those
jobs - the benefit of the construction - the benefit of the jobs of
people who are actually employed at the refinery are not accruing
to the state of Alaska and the citizens of Alaska. A future
legislature could consider some way of making sure that the
citizens of Alaska do benefit either through, you know, imposing
some new tax regime or something else of that nature."
Representative Therriault noted the refineries located in his
district or right outside his district have a fairly good record
for hiring residents for operations and expansions. He said he has
a letters from the United Association of Journeymen and the
plumbers and pipefitters in Fairbanks that says that Mapco, in
particular, has done a very good job hiring out the union halls
when they do work at their refinery. He also noted there was
testimony before the House Finance Committee from Alaskan venders
who have done business with the refineries. Representative
Therriault said, "I felt that if we were going to have something,
we'd at least make it as constitutionally defendable as possible
and not allow an out-of-state firm basically to control or direct
our taxation policy in the state."
Number 1813
REPRESENTATIVE NICHOLIA asked if the bill wouldn't be
constitutional by including the wording "voluntary."
REPRESENTATIVE THERRIAULT said because it is voluntary, it is not
an absolute requirement by the state of Alaska. It moves it more
into a gray area. He said whether the courts would look at that
and say that "In order to have good PR (public relations), the
company went this voluntary route." He said whether that is enough
to trigger constitutional invalidation is questionable.
Representative Therriault stated he believes that the refineries,
on their own accord, do employ local union hands and contractors.
He said he believes the previous committee substitute would have
crossed the line.
Number 1872
REPRESENTATIVE THERRIAULT said, "I've had some conversations with
a representative from the Administration and I believe, and he
should probably speak for himself, the cleanest way of course is to
go with the original Rules bill that passed out. Absent that, I
think the CS today is the way to go."
Number 1889
REPRESENTATIVE VEZEY said as he understands the bill, the idea is
that we are going to try and remove a tax on an Alaskan export
which is Alaskan produced and is a value-added product. In the
future, if for any reason, the legislature doesn't like people that
are doing the work or doesn't like the business, they can come back
and tax it out of business. He said if a bill is passed that is to
have some sort of standard that had to be audited, there will be a
fiscal note for additional auditors to make sure people are
complying.
Number 1940
BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division,
Department of Revenue, came before the committee. He said he would
echo Representative Vezey's comments. He stated, "We've gotten so
far from the original intent of the bill and I'm not here, and no
one from the Administration is opposed to local hire, resident
hire, Alaska businesses. But when you read through what we're
trying to do with the CS and try to tell the Department of Revenue
to go implement this, it's not very clear. It's not a simple task
and you're going to pull resources away. So we're not opposed to
the idea, but I think the approach of having a clear bill that
takes the actions that we're trying to do with tax policy and then
if something isn't working out and, Representative Porter
referenced earlier, we'll come back and change the policy (indisc.)
to a (indisc.) command and they don't meet what's acceptable to the
legislature, you take action. And trying to do that through this
bill -- I mean the law of unintended consequences is going to be
amazing. We don't know what's going to happen with this and who is
going to challenge it. How does it affect an out of state refiner
in Washington State. We are a net importer of jet fuel and even
though we're trying to get instate refiners to epand so we have
Alaska workers, we import a lot of fuel. And exactly how does
imported fuel be affected and how does -- if they expand in
Washington or California, are we not going to be able to buy that
fuel or get it for the same price? You know, so we've got air
carriers that we have to worry about. So I'm not saying that the
bill does that. I don't know. We've read it. Is it limited to
just instate refiners? It doesn't say that anywhere, but it might
be." Mr. Bartholomew said he thinks the legislation opens up a
huge hornets nest. If Version X becomes law, the department will
work with Legislative Legal Services to make sure it is understood
what is to be done. He said he belives the original version
achieved the primary objectives of helping an instate buiness deal
with motor fuel taxes. Mr. Bartholomew said there may be a better
way to have Alaska hire than trying to create legal challenges or
administrative and legislative confusion over it will be achieved.
Number 2060
REPRESENTATIVE THERRIAULT said the language that has been alluded
to came from the Northstar contract. He said, "The big difference
is that are though we were dealing with one company and we couldn't
require them to enter into that agreement before we passed the
enabling legislation and if they didn't follow through, there was
consequences. What we're dealing with here are there are a number
of different refiners in the state of Alaska. Some have started
and committed to expansions. Some may expand. Others have no
plans to expand and so that's where you start coming up with
complications in trying to take the language from last year, in
that issue dealing with one company that you could come into an
agreement with, and apply that to this multifaceted -- and the
refining industry in the state of Alaska.
Number 2101
REPRESENTATIVE MARTIN asked Mr. Bartholomew if Mapco and Tesoro
file as out-of-state companies.
Number 2112
MR. BARTHOLOMEW explained that basically all businesses have to
file tax returns in Alaska. They are businesses that have solely
Alaska offices and there are businesses that have out-of-state
offices. He said he can't say who is in what category. He noted
those two businesses have both offices in Alaska and in other
states. They may even have their headquarters in another state.
REPRESENTATIVE MARTIN asked if they would be applicable. He said
maybe they would be prohibited from participating in the new law.
MR. BARTHOLOMEW said he doesn't see where anyone would be
prohibited. He said it's hard to say exactly what's going to
happen. The (indisc.) refiners will get a tax exemption under the
bill. If they expand and agree to do something else, things will
start changing. Mr. Bartholomew said, "If somebody challenges
whether you do or don't enter into an agreement, I don't think we
know what's going to happen and I don't think it matters whether
you are a Alaska headquartered operation or headquartered
elsewhere. There is a lot of gray."
Number 2172
REPRESENTATIVE BILL WILLIAMS made a motion to move CSHB 63(2d RLS),
Version X, dated 4/29/97, out of committee with individual
recommendations and the accompanying fiscal notes.
Number 2185
REPRESENTATIVE VEZEY objected. He said he doesn't believe that the
current version of the bill is the best version that has been
before the committee.
Number 2209
CHAIRMAN KOTT called for a brief at-ease at 10:50 a.m. He called
the meeting back to order at 10:52 a.m.
Number 2214
REPRESENTATIVE PORTER informed the committee that he intends to
support the motion. He said there has been a couple of questions
raised that he believes can be resolved by the time the bill goes
to the Senate. He stated his personal philosophy is that we should
make every effort to inspire local hire and the use of resident
businesses to the extent that this is another attempt, let's try
it. He stated, "If it is that a couple of these questions come
down falling on a situation where we would have a greater chance of
failure than success with this particular language, and that's
developed when we get over to the other body, then I wouldn't
totally opposed to losing it, but right now this sounds reasonably
good. I don't know the effect on outside refineries and I think
that question should be answered before they finally get it fixed
over there." He indicated he intends to support the legislation.
Number 2254
REPRESENTATIVE ELTON informed the committee that he is going to
support Version X, but will do it with the notion that the
committee is suggesting that this is the best approach that they
can take to use Alaska vendors, workers, contractors and
businesses. He said he can't help but note that it is like adding
a bunch of chrome to a car. He referred to the question about out-of-state ref
the refiners won't want to use Alaska contractors to do work in the
Bay area. If they don't want to do that, they just won't send
their letter and they won't have a problem.
Number 2309
REPRESENTATIVE THERRIAULT said the potential problem is the title.
He said, "I know in the previous CS, the title was brought in
(indisc.) concern that because it was dealing with taxes (indisc.)
somehow be amended onto the bill in the House floor which I
certainly, as the prime sponsor of the bill, would make a
commitment that that would not happen. I have commitments from the
Senate President and the prime sponsor of the tobacco tax bill on
the Senate side that that would not be amended in here. So if you
do want further committees to massaging the language, we may
restrict what they can do by having a very tight title. So you may
want to consider going back to the broad title with my assurance
that if tobacco tax is put on here, I will pull my own bill
(indisc.) so that that won't happen, but it still does give a
leeway for the committee process to work."
Number 2365
CHAIRMAN KOTT said there is a motion before the committee to move
CSHB 63(2d RLS), Version X, from committee with individual
recommendations and the accompanying fiscal note. He said there is
an objection.
A roll call vote was taken. Representatives Nicholia, Elton,
Porter, Williams and Kott voted in favor of moving the bill.
Representatives Vezey and Phillips voted against moving the bill.
Representative Phillips then changed her vote from "no" to "yes."
Therefore, CSHB 63(2d RLS), version 0-LS0262\X, Chenoweth, dated
4/29/97, moved out of the House Rules Standing Committee by a vote
of 6-1.
ADJOURNMENT
CHAIRMAN KOTT adjourned the House Rules Standing Committee meeting
at 10:58 a.m.
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