Legislature(1993 - 1994)
02/15/1994 08:00 AM House STA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
February 15, 1994
8:00 a.m.
MEMBERS PRESENT
Representative Al Vezey, Chairman
Representative Pete Kott, Vice Chairman
Representative Gary Davis
Representative Harley Olberg
Representative Jerry Sanders
MEMBERS ABSENT
Representative Bettye Davis
Representative Fran Ulmer
COMMITTEE CALENDAR
*HB 406: "An Act relating to municipal sales
and use taxes involving air carriers; and
providing for an effective date."
PASSED OUT OF COMMITTEE
*HB 368: "An Act relating to reapplication for the
1993 permanent fund dividend when the United
States Postal Service documents the loss of mail
during the 1993 application period; and
providing for an effective date."
PASSED OUT OF COMMITTEE
HB 363: "An Act repealing an additional fee for motor
vehicle registration not conducted by mail."
PASSED OUT OF COMMITTEE
SB 128: "An Act relating to legislative audits."
HELD OVER
(* First public hearing)
WITNESS REGISTER
REPRESENTATIVE RICHARD FOSTER
Alaska State Legislature
Alaska State Capitol, Room 420
Juneau, AK 99811
Phone: 465-3789
POSITION STATEMENT: Sponsor of HB 406
REED STOOPS
Alaska Air Carriers Association
240 Main St. Suite #600
Juneau, AK 99801
Phone: 463-3223
POSITION STATEMENT: Testified in favor of HB 406
DEBORAH ALSTROM
Interim City Manager of St. Mary's
P.O. Box 163
St. Mary's, AK 99658
Phone: 438-2515
POSITION STATEMENT: Testified against HB 406
ROBERT HALLFORD
Northern Air Cargo
3900 W. International Airport Rd.
Anchorage, AK 99502
Phone: 243-3545
POSITION STATEMENT: Testified in favor of HB 406
REPRESENTATIVE GENE THERRIAULT
Alaska State Legislature
Alaska State Capitol, Room 421
Juneau, AK 99811
Phone: 465-4797
POSITION STATEMENT: Sponsor of HB 368
TOM WILLIAMS, Director
Permanent Fund Dividend Division
Department of Revenue
P.O. Box 110460
Juneau, AK 99811-0460
Phone: 465-2323
POSITION STATEMENT: Testified a neutral position for the
Department of Revenue
REPRESENTATIVE PETE KOTT
Alaska State Legislature
Alaska State Capitol, Room 409
Juneau, AK 99811
Phone: 465-3777
POSITION STATEMENT: Sponsor of HB 363
JUANITA HENSLEY
Division of Motor Vehicles
Department of Public Safety
P.O. Box 20020
Juneau, AK 99802
Phone: 465-2650
POSITION STATEMENT: Testified a neutral position for the
Department of Public Safety
PREVIOUS ACTION
BILL: HB 406
SHORT TITLE: NO MUNICIPAL SALES TAXES ON AIR CARRIERS
SPONSOR(S): REPRESENTATIVE(S) FOSTER
JRN-DATE JRN-PG ACTION
01/27/94 2166 (H) READ THE FIRST TIME/REFERRAL(S)
01/27/94 2166 (H) STATE AFFAIRS, FINANCE
02/15/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 368
SHORT TITLE: REAPPLICATION PERIOD FOR 1993 PF DIVIDEND
SPONSOR(S): REPRESENTATIVE(S) THERRIAULT,James,Parnell,Vezey
JRN-DATE JRN-PG ACTION
01/13/94 2052 (H) READ THE FIRST TIME/REFERRAL(S)
01/13/94 2053 (H) STATE AFFAIRS
02/15/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 363
SHORT TITLE: NO FEE FOR CAR REGISTRATION IN PERSON
SPONSOR(S): REPRESENTATIVE(S) KOTT,B.Davis
JRN-DATE JRN-PG ACTION
01/11/94 2033 (H) READ THE FIRST TIME/REFERRAL(S)
01/11/94 2033 (H) STATE AFFAIRS, FINANCE
01/13/94 2056 (H) COSPONSOR(S): B. DAVIS
01/29/94 (H) STA AT 08:00 AM CAPITOL 102
01/29/94 (H) MINUTE(STA)
01/29/94 (H) MINUTE(STA)
01/29/94 (H) MINUTE(STA)
02/08/94 (H) STA AT 08:00 AM CAPITOL 102
02/08/94 (H) MINUTE(STA)
02/15/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: SB 128
SHORT TITLE: LEGISLATIVE AUDITS
SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT
JRN-DATE JRN-PG ACTION
02/22/93 440 (S) READ THE FIRST TIME/REFERRAL(S)
02/22/93 440 (S) STATE AFFAIRS, FINANCE
03/10/93 (S) STA AT 09:00 AM BUTRVICH RM 205
03/10/93 (S) MINUTE(STA)
03/17/93 (S) STA AT 09:00 AM BUTRVICH RM 205
03/17/93 (S) MINUTE(STA)
03/18/93 845 (S) STA RPT CS 1DP 3NR SAME TITLE
03/18/93 846 (S) ZERO FISCAL NOTE TO SB & CS
(S.STA/GOV)
04/12/93 (S) FIN AT 09:00 AM SENATE FIN 518
04/12/93 (S) MINUTE(FIN)
04/14/93 1353 (S) FIN RPT 6DP 1NR (STA)CS
04/14/93 1354 (S) PREVIOUS ZERO FN (S.STA/GOV)
04/14/93 1353 (S) LTR OF INTENT WITH FIN REPORT
04/13/93 (S) MINUTE(FIN)
04/14/93 (S) FIN AT 08:30 AM SENATE FIN 518
04/14/93 (S) MINUTE(FIN)
04/14/93 (S) MINUTE(RLS)
04/17/93 (S) MINUTE(SSA)
04/23/93 1693 (S) RULES 3 CAL 1NR 4/23/93
04/23/93 1694 (S) READ THE SECOND TIME
04/23/93 1694 (S) STA CS ADOPTED UNAN CONSENT
04/23/93 1695 (S) ADVANCE TO THIRD READING FAILED
Y12 N8
04/23/93 1695 (S) THIRD READING 4/24 CALENDAR
04/24/93 1741 (S) READ THE THIRD TIME
CSSB 128(STA)
04/24/93 1741 (S) (S) ADOPTED FIN LTR OF INTENT
04/24/93 1741 (S) PASSED Y20 N-
04/24/93 1746 (S) TRANSMITTED TO (H)
04/27/93 1552 (H) READ THE FIRST TIME/REFERRAL(S)
04/27/93 1552 (H) STATE AFFAIRS, FINANCE
01/29/94 (H) STA AT 08:00 AM CAPITOL 102
01/29/94 (H) MINUTE(STA)
02/15/94 (H) STA AT 08:00 AM CAPITOL 102
ACTION NARRATIVE
TAPE 94-14, SIDE A
Number 000
CHAIR AL VEZEY called the meeting to order at 8:00 a.m.
Members present were REPRESENTATIVE PETE KOTT, HARLEY
OLBERG, JERRY SANDERS, and GARY DAVIS. Members absent were
REPRESENTATIVES BETTYE DAVIS and FRAN ULMER. HB 406 was
opened for discussion.
HB 406 - NO MUNICIPAL SALES TAXES ON AIR CARRIERS
Number 042
REPRESENTATIVE RICHARD FOSTER, SPONSOR OF HB 406, began with
an overview. HB 406 relates to municipal sales and use
taxes involving air carriers. HB 406 adds a new subsection
to current statutes which prohibits a borough, home rule, or
general law municipality from levying or collecting a sales
or use tax on an activity directly involved with the
carriage of individuals or goods for hire by an air carrier.
This is consistent with the Federal Aviation Administration
(FAA) Act of 1958, which provides the federal government
reserves for itself the power to regulate and tax air
carriers. REPRESENTATIVE FOSTER cited from the Act of 1958,
"No state or political subdivision may enact any laws that
affect the rates, routes, or services of an air carrier."
Several bush areas, of late, have composed proposals to tax
air carriers, passages of freight, or passengers and will
reserve the receipts for itself. HB 406 will ensure
taxation will be strictly reserved to the federal
government. The constant litigation between the aviation
industry and various cities will be avoided with HB 406.
Number 082
CHAIR VEZEY asked for questions from the committee and
reviewed the witnesses who would like to testify.
Number 092
REPRESENTATIVE G. DAVIS asked REPRESENTATIVE FOSTER if HB
406 coordinates with the FAA Act of 1958 in reserving the
right for only the federal government to tax. He believed
certain areas had already been taxing air carriers.
Number 101
REPRESENTATIVE FOSTER said there have only been attempts to
tax. He stated Nome and St. Mary's as examples of cities
trying to pass ordinances to tax.
Number 107
REPRESENTATIVE SANDERS stated the FAA Act of 1958 refers to
"federally certified air carriers." He then asked if this
statement refers to all air carriers.
Number 111
REPRESENTATIVE FOSTER responded the FAA Act of 1958 is all
inclusive. Private air carriers cannot charge for
passengers or freight and do not apply.
CHAIR VEZEY commented he is vaguely familiar with the FAA
Act of 1958 and the substantial amount of taxes the federal
government imposes on the aviation industry. He suggested
REPRESENTATIVE FOSTER include copies of the pertinent pages
of the FAA Act of 1958.
REPRESENTATIVE FOSTER agreed.
CHAIR VEZEY introduced REED STOOPS as the next witness.
Number 133
REED STOOPS, testified in favor of HB 406 on behalf of the
ALASKA AIR CARRIERS ASSOCIATION, To his knowledge, there
are no municipalities currently collecting a tax, therefore,
they will not incur a tax loss. There has been frequent
litigation to find loopholes in the FAA Act of 1958, all
unsuccessful. Litigation is expensive for the Alaska Air
Carriers Association and they feel the FAA Act of 1958 is
quite clear. He noted the Senate has a memorandum from
Bogle & Gates which describes the Act.
Number 156
REPRESENTATIVE G. DAVIS asked, with municipalities
attempting to gain revenue from airport operations and if HB
406 passes, would they possibly raise their landing taxes in
response. Secondly, he wondered what other revenues they
derive from carrier operations.
Number 170
MR. STOOPS explained the municipally-owned airports do
collect landing taxes and HB 406 would not affect them.
State-owned airports are not currently charging landing
taxes, but they do have a fuel tax, which is proposed to
increase in 1994. HB 406 only affects sales tax on air
cargo operations.
Number 180
CHAIR VEZEY asked MR. STOOPS if it is the Department of
Transportation's (DOT) position to cease collecting landing
taxes instead of working on an adjustment to the fuel tax.
Number 183
MR. STOOPS responded that DOT ceased collecting landing
taxes a year and half ago. The Alaska Air Carriers
Association made an agreement with Commissioner Campbell,
whereby, if there were additional taxes, a fuel tax rather
than a landing tax increase would be preferred. The landing
tax is inequitable and not very efficient to collect.
CHAIR VEZEY clarified the intent of HB 406 is to recognize
the priority of federal law and to avoid unnecessary
litigation.
MR. STOOPS agreed.
CHAIR VEZEY moved to the offnet St. Mary's teleconference
site.
DEBORAH ALSTROM, INTERIM CITY MANAGER FOR ST. MARY'S,
testified against HB 406. At one time, St. Mary's was a
fish processing hub and used to be able to collect a raw
fish sales tax. St. Mary's can no longer collect this tax,
so the city has lost out on several thousand dollars every
summer. Large fish buyers ship and charter their air fish
freight from St. Mary's to Kenai or the Peninsula to be
processed. The sales tax in very important to their
community and the loss of revenues is very large.
Number 248
CHAIR VEZEY clarified MS. ALSTROM was testifying in
opposition for HB 406.
Number 250
MS. ALSTROM answered CHAIR VEZEY was correct.
Number 252
CHAIR VEZEY asked if MS. ALSTROM would like to comment on
the apparent conflict between the municipal and federal
regulations.
Number 254
MS. ALSTROM stated she entered late and has had a hard time
hearing the testimony because of a bad telephone connection.
Number 258
CHAIR VEZEY summarized, the FAA Act of 1958 reserves for the
federal government the right to tax certified air carriers.
There have been numerous attempts to circumvent it in the
past. After litigation, they have all been dropped, but
there is considerable expense involved in litigation. He
paraphrased REPRESENTATIVE FOSTER's intent as being to
clarify that (we) are subservient to federal law and to
avoid unnecessary litigation.
Number 277
MS. ALSTROM asked if written testimony would be accepted on
HB 406 to a certain date.
Number 279
CHAIR VEZEY intended to take action on HB 406, and noted HB
406 would be referred to House Finance Committee depending
upon the will of the meeting. MS. ALSTROM may submit
testimony to either committee.
Number 289
REPRESENTATIVE SANDERS asked MS. ALSTROM if there was a
possibility St. Mary's could have a fish landing tax, taxing
the fish as it came off the boat.
Number 303
MS. ALSTROM answered there is already a tax similar to
REPRESENTATIVE SANDERS's suggestion in place.
Number 309
REPRESENTATIVE SANDERS inquired if the tax could be
increased to make up for the other lost tax revenues.
Number 312
MS. ALSTROM felt an increase would cause St. Mary's to lose
business with the competition of another lower-Yukon
village, which ships and processes fish.
Number 324
CHAIR VEZEY clarified additional landing taxes would make
St. Mary's lose their commerce to another community.
CHAIR VEZEY moved to the Anchorage teleconference site.
Number 325
ROBERT HALLFORD, NORTHERN AIR CARGO, testified in favor of
HB 406. Northern Air Cargo's and the Alaska Air Carriers
Association desire is to avoid continued litigation and
confrontation with municipalities. He cited a letter from
the City and Borough of Juneau which relates to HB 406.
"The City and Borough of Juneau has been exploring the
possibility of imposing a sales tax on the flight-seeing
business conducted within the borough. Within the borough,
it is estimated there are 19 air transport companies,...
There are four major companies and we estimate they produced
a gross flight-seeing revenue of $7 million. This
represents a tax revenue to the City and Borough of Juneau
of over $300,000." He also quoted a letter by the United
States DOT to Ms. D. Elizabeth Cuadra an attorney for the
City of Juneau in 1986, "Accordingly in response to the
specific situations you ranged in your letter of February
20th, local sales taxes would not be permissible with regard
to: a) sightseeing tours by helicopter or light plane; b)
air taxi or charter fishing trips; c) nonscheduled air taxi
operators; d) scheduled interstate commuter airline trips
regardless of the passengers ultimate destination; and e)
airline tickets sold regardless of the passengers routing.
This is because the preemption extends to all carriers
regulated by the FAA, including helicopters, etc., as well
as to all passenger transportation involving air commerce."
MR. HALLFORD pointed out the City of Juneau is attempting to
enact this tax again, and HB 406 is needed to prevent it.
The FAA Act of 1958 refers to both air transportation and
air commerce. Air transportation involves operating as a
certified air carrier. Air commerce means any time an
airplane goes into federal airspace and money changes hands.
Directly taxing air transportation is straightforward by
definition.
Number 405
CHAIR VEZEY asked if MR. HALLFORD knew of any case law
regarding these tax cases.
Number 408
MS. HALFORD cited Air Jamaica v. Florida State Department of
Revenue and Ward Air Canada v. Florida State Department of
Revenue.
CHAIR VEZEY asked MR. HALLFORD to mail a copy of the U.S.
Department of Transportation letter he cited in his
testimony.
Number 415
MR. HALLFORD replied he would.
Number 421
REPRESENTATIVE G. DAVIS moved to pass HB 406 from committee
with individual recommendations.
Number 424
CHAIR VEZEY recognized the motion by REPRESENTATIVE G.
DAVIS. The committee secretary called the roll and HB 406
passed from House State Affairs Committee with individual
recommendations. HB 406 will be referred to House Finance
Committee.
HB 368 - REAPPLICATION PERIOD FOR 1993 PF DIVIDEND
Number 433
CHAIR VEZEY opened HB 368 for discussion.
Number 441
REPRESENTATIVE GENE THERRIAULT, SPONSOR OF HB 368, referred
to his sponsor statement. "HB 368 is designed to address a
problem that has come to light regarding 1993 Permanent Fund
Dividend applications that were lost by the U.S. Postal
Service. In October of 1993 my office was contacted by
numerous constituents regarding loss of their Permanent Fund
Dividend (PFD) applications. The PFD Division did not have
record of receiving their applications, however the
individuals noted mailing their applications early in
January through the North Pole Post Office. After looking
into this situation, my staff learned that the Postal
Service had received calls in January 1993 from customers
whose payments had not reached creditors. These complaints
led to a U.S. Postal Inspection Service investigation which
determined that an apparent loss of mail took place on
January 8, 9, or 11, 1993, affecting residents in the North
Pole area. A letter documenting the loss was supplied to
customers for the notification of creditors. (on file)
"HB 368 would open a narrow window for PFD applicants by
extending the reapplication period for the 1993 dividend
year from September 1, 1993 to September 1, 1994. The
applicant would be required to provide a sworn statement
that the application was originally mailed in the postal
area during the time mail from that area was lost. A sworn
statement from another individual who witnessed the mailing
or signed the residency verification of the original
application before the 1993 deadline, and documentation from
the U.S. Postal Service acknowledging the loss of mail
entered into the mail stream during the 1993 PFD application
period.
"The PFD division currently allows an applicant who timely
filed an application that was not received by the PFD
Division to reapply before September 1 of the dividend year
(15 AAC 23.103(h)). The Division has traditionally allowed
reapplication, however 1993 was the first year the deadline
was established. Although PFD applicants receive batch
cards that verify receipt of their application, a number of
individuals did not expect to receive a batch card last year
due to the new direct deposit method of payment and
therefore did not get notice of a problem until in was too
late.
"An extension to this deadline is needed for the 1993
reapplication period due to this loss of mail in the North
Pole Post Office and the new deadline for reapplying for the
dividend. My staff and I have worked with the PFD Division
within the Department of Revenue to draft the language of HB
368 to solve this problem without throwing the reapplication
period wide open."
HB 368 has a zero fiscal note. Because of the narrow window
HB 368 provides, the PFD division has stated a neutral
opinion of the bill.
CHAIR VEZEY asked why there is a zero fiscal note when an
estimated 30 PFDs would be issued under HB 368.
Number 489
REPRESENTATIVE THERRIAULT corrected the amount of PFDs
issued would be approximately 50-60. The PFD Division sets
aside an amount of money for people going through the appeal
process. All of these people have already filed in the
appeal process, but without HB 368, they will likely be
denied.
Number 500
TOM WILLIAMS, DIRECTOR, PERMANENT FUND DIVISION, DEPARTMENT
OF REVENUE, stated because of the narrow construction of HB
368, his department has a neutral position. Because the
people have already filed in the appeal process, the
Division does not expect a significant impact on the
administration, therefore there is a zero fiscal note.
Number 510
CHAIR VEZEY questioned if the individuals had used the
certified mail service and still failed to meet the
reapplication deadline, would they still be determined
ineligible.
Number 515
MR. WILLIAMS reiterated the reapplication deadline is
September 1 and they will have until that date to provide
the required evidence of mailing. The September 1 deadline
is set so the Division can calculate the number of eligible
applicants by the statutory deadline of October 1. He
encouraged people to locate their batch receipt cards.
Number 522
CHAIR VEZEY commented HB 368 is incumbent upon all persons
applying for a PFD to verify prior to September 1 that their
application has been received.
REPRESENTATIVE KOTT inquired if there had been any past
legislative attempts to address a small group of people for
PFD reapplication.
Number 530
MR. WILLIAMS was unaware of any legislation as narrow as HB
328. Early in the PFD program, there was a broad based
reapplication period which caused a plethora of problems.
Number 536
REPRESENTATIVE THERRIAULT commented the early problems were
due to notification problems in rural Alaska. Since then,
the program has not been "opened up." The U.S. Postal
Service has only documented one loss of mail in the entire
state during the application period. Proof of loss of mail
is required for HB 368. Individuals in North Pole and one
individual visiting from Anchorage will be primarily
affected by HB 368.
Number 548
REPRESENTATIVE KOTT asked if the reapplication
REPRESENTATIVE THERRIAULT referred to was conducted through
a statute or by regulation.
Number 550
REPRESENTATIVE THERRIAULT believed it was statutory.
MR. WILLIAMS confirmed it was statutory.
Number 553
REPRESENTATIVE KOTT inquired if HB 368 was not passed, would
there be discretion for those individuals involved in the
appeal process.
Number 558
MR. WILLIAMS responded as current statute stands, the 50-60
people would not be eligible for a dividend. HB 368 would
not be codified, it would be a temporary statute.
Number 562
CHAIR VEZEY clarified HB 368, if passed, would become part
of the session laws of Alaska.
(REPRESENTATIVE OLBERG left the meeting at 8:35 a.m.)
Number 567
REPRESENTATIVE KOTT was concerned with the amount of time
taken to discuss HB 368 and wondered if the Department of
Revenue could just take care of it. He felt, however, if HB
368 was the only way these individuals could be dealt with
fairly, then he understood.
CHAIR VEZEY clarified under current statute these
individuals could not receive a dividend.
MR. WILLIAMS confirmed CHAIR VEZEY.
REPRESENTATIVE KOTT saw HB 368 as the only way to resolve
the unjust situation, therefore, he moved to pass HB 368
from committee with unanimous consent.
Number 583
CHAIR VEZEY commented HB 368 deals with a "gray area"
mitigated by a number of circumstances. The five and a half
month reapplication period is a reasonable time frame.
Hearing no further comments, CHAIR VEZEY recognized the
motion by REPRESENTATIVE KOTT. The committee secretary
called the roll and HB 368 passed House State Affairs
Committee with a unanimous "do pass" recommendation.
CSHB 363 - AN ACT RELATING TO MOTOR VEHICLE REGISTRATION
FEES
Number 602
CHAIR VEZEY recognized the Committee Substitute draft to HB
363 and asked if the committee would like to move to adopt
it.
Number 606
REPRESENTATIVE SANDERS moved to adopt the Committee
Substitute (CS) draft to HB 363.
CHAIR VEZEY recognized REPRESENTATIVE SANDERS' motion,
hearing no objections, the CS draft to HB 363 was adopted
and for discussion.
Number 614
REPRESENTATIVE KOTT noted the two changes to the original HB
363. Section 1, the amount is reduced by $5 if a person
applies through the mail. Section 2-4, $5 is added to all
the vehicle registrations throughout the state of Alaska.
Number 623
CHAIR VEZEY asked REPRESENTATIVE KOTT if a fiscal note was
available.
REPRESENTATIVE KOTT did not have a fiscal note, because the
Department of Motor Vehicles (DMV) and Public Safety need to
have the CS adopted by the committee before the fiscal note
could be provided, per Juanita Hensley. Ms. Hensley
conveyed to REPRESENTATIVE KOTT that revenue would be
generated for the DMV at a minimum of $55,000. He felt this
was underestimated, and that it should be closer to
$400,000, based on the DMV's numbers and "no speculation".
Number 638
JUANITA HENSLEY, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF
PUBLIC SAFETY (DPS), testified her department remained
neutral on the CS draft of HB 363. She noted the Governor's
Office would supply a fiscal note for the members' packets
now that the CS has been adopted. She stated, DMV estimates
$55,000 net revenue for the state. "To give you a little
background as to why we estimate that, is that this raises
all annual registration fees by $5 and it provides a $5
reduction if the registration renewal is conducted by mail.
The current $10 fee for registration renewals not conducted
by mail is eliminated. In 1993, the Division processed
114,000 new registrations and 417,000 renewal registrations.
Prior to FY 94, 30 percent of all vehicle owners used the
mail to renew their registrations. And the remainder
renewed in-person at the DMV offices. With implementation
of the $10 fee for in-person renewals, the use of the mail
increased to the point that by the end of the first year,
July 1994, the Division estimates 60 percent of the renewals
will be conducted by mail. Those 166,000 owners who did
not use the mail generate $1.6 million in revenue, which
will be eliminated with this bill. This revenue will be
replaced by raising all registration fees by $5. The total
annual number of registrations (531,000) would generate
$2.655 million in additional revenue. This amount would be
reduced by $5 for each renewal conducted by mail. It is
assumed that those 30 percent of the owners who use the
mail, before the fee, will continue to do so. The original
$10 fee was picked because the Division felt that it was
enough of an incentive without being overly burdensome. The
$5 reduction will not be as much of an incentive as the $10
fee, and some owners who used the mail will revert to the
in-person office visits. The Division estimates that with
the $5 fee, only 45 percent of the vehicle owners will use
the mail. The 45 percent, or 188,000 vehicle owners who use
the mail, will result in the reduction of $940,000. The
summary of all these actions is as follows: Revenue loss at
the $10 fee, 166,00 registrations x 10 is $1.6 million;
revenue gained from the $5 increase, 531,000 x $5 is $2.655
million; revenue loss from the $5 reduction, 188,00 x $5 is
$940,000; leaving a net revenue gain of $55,000.
While this bill does not show a net revenue gain, while it
does show a revenue gain, it also has the effect of adding
15 percent of vehicle owners, or almost 80,000 customers, to
the already long lines at DMV offices. This erases the
efficiency initiative originally intended by having the $10
fee. The Department basically with this $5 would be
neutral; however, we do expect more people in the lines."
Number 681
REPRESENTATIVE KOTT thought the DPS was making assumptions
in their fiscal analysis. He believed $5 decrease in fees
would be enough incentive to use the mail system and people
would fear, even more, the possibility of long lines.
REPRESENTATIVE KOTT cited a letter from the DMV January 13,
1994, which states it doesn't cost anymore to process
applications behind the scene as in front of the counter.
He commented in essence, there should be a greater positive
revenue from the counter activity, because it's not costing
anymore. .
MS. HENSLEY responded processing an application is the same
amount of work wherever it is done, however, when a person
is in front of the counter there is "chit chat", and checks
take time to write. DMV estimates it takes two more minutes
to process an application at the counter than it does by
mail.
TAPE 94-14, SIDE B
Number 000
REPRESENTATIVE KOTT reiterated the information he received
January 13, 1994, from Jay Dulany, DMV, which stated the
"time saved by not exchanging pleasantries in a face to face
setting is offset by the additional time in handling the
mail." (On file.)
Number 010
REPRESENTATIVE G. DAVIS indicated almost all fiscal notes
have assumptions in them.
Number 019
CHAIR VEZEY commented anyone is welcome to submit written or
oral testimony refuting the DMV fiscal note. He speculated
the mail use rate after the $5 decrease, MS. HENSLEY
assumed, was too generous, feeling the public would
instinctively respond to higher fees.
Number 056
MS. HENSLEY responded the DMV has no way of estimating how
many people will continue to use the mail system. Human
nature is to procrastinate.
Number 066
CHAIR VEZEY repeated he thought the DMV's assumption was
generous, while REPRESENTATIVE KOTT's was a little harsh.
Number 071
REPRESENTATIVE KOTT felt the DMV has a great deal of
latitude and discretion in determining whether or not they
should apply the $10 fee to those individuals that perhaps
come to the state for the first time. He felt the
department could probably make some allowances for the face
to face fee in those situations. There are a number of
military members and other individuals in the Anchorage
"bowl area" that are involved in that circumstance. He felt
these individuals should be a consideration in the fiscal
note. REPRESENTATIVE KOTT noted an instance where he was
standing in the DMV line and the front counter clerk took
five to ten minutes to talk with the supervisor to decide if
the $10 fee should be waived or not.
Number 100
CHAIR VEZEY understood the fiscal note would be transmitted
from MS. HENSLEY soon after the meeting. CSHB 363 could not
be transferred to the Clerk's Office without a fiscal note.
However, if the committee wanted to take action on it, CHAIR
VEZEY would allow it. He also mentioned to the committee
that CSHB 363 could be held over.
Number 115
MS. HENSLEY interjected the fiscal note would be to the
committee within an hour.
Number 117
REPRESENTATIVE G. DAVIS clarified the fiscal note would read
$55,000.
REPRESENTATIVE KOTT moved to pass CSHB 363 with fiscal note
attached, per MS. HENSLEY'S testimony, under the next
committee referral.
Number 126
CHAIR VEZEY asked the committee secretary to call role.
Having done so, CSHB 363 passed from the House State Affairs
Committee with individual recommendations.
SB 128 - LEGISLATIVE AUDITS
Number 140
CHAIR VEZEY opened SB 128 for discussion and asked if anyone
was present to testify. There were no teleconference site
witnesses. He asked if the committee wished to take action
on SB 128, noting it had been held over to allow the
Director of the Office of Management and Budget (OMB) to
provide testimony.
Number 156
REPRESENTATIVE KOTT was reluctant to pass SB 128 on without
having heard from the sponsor; however, if there was proper
notification made, and there has been no communication from
the Department, perhaps that is an indication they are in
concurrence with SB 128 and the fiscal note.
Number 167
CHAIR VEZEY understood the administration does not support
SB 128 and they asked for it to be held over for Mr. Stastny
to testify. The Senate State Affairs Committee has prepared
a zero fiscal for SB 128. The House State Affairs Committee
has prepared a zero fiscal note for SB 128. The Office of
the Governor has prepared a fiscal note which reads $206,000
the first year and increases at about three-four percent
each year thereafter.
(REPRESENTATIVE OLBERG reentered the meeting at 8:55 a.m.)
Number 190
REPRESENTATIVE KOTT felt another hearing would be in order
for SB 128. He would like the OMB to challenge the fiscal
notes.
Number 199
Hearing no further comments, CHAIR VEZEY held SB 128 in
committee for an additional hearing.
REPRESENTATIVE KOTT urged for SB 128 to be rescheduled at
the earliest convenience.
Number 210
CHAIR VEZEY announced the Subcommittee on the Alaska
Railroad will meet February 16, 1994, at 8:00 a.m.,
teleconferencing to Anchorage to hear from Bill Reeves.
Having no more business before the committee, CHAIR VEZEY
adjourned the House State Affairs Committee at 8:58 a.m.
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