Legislature(1995 - 1996)
03/12/1996 08:10 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
March 12, 1996
8:10 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Scott Ogan, Vice Chair
Representative Joe Green
Representative Ivan Ivan
Representative Brian Porter
Representative Caren Robinson
Representative Ed Willis
MEMBERS ABSENT
All members present.
COMMITTEE CALENDAR
SENATE BILL NO. 266
"An Act relating to the Creamer's Field Goose Classic."
- PASSED OUT OF COMMITTEE
*HOUSE BILL NO. 438
"An Act relating to the indexing of documents recorded in the state
recorder's offices; and providing for an effective date."
- PASSED OUT OF COMMITTEE
HOUSE BILL NO. 443
"An Act relating to the tax on transfers or consumption of motor
fuel, and repealing the exemption from that tax for motor fuel
which is at least 10 percent alcohol by volume; and providing for
an effective date."
- HEARD AND HELD
HOUSE BILL NO. 110
"An Act relating to the confidentiality of certain information in
motor vehicle records; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
(* First Public Hearing)
PREVIOUS ACTION
BILL: SB 266
SHORT TITLE: CREAMER'S FIELD GOOSE CLASSIC
SPONSOR(S): SENATOR(S) FRANK,Sharp
JRN-DATE JRN-PG ACTION
02/07/96 2325 (S) READ THE FIRST TIME - REFERRAL(S)
02/07/96 2325 (S) STATE AFFAIRS
02/13/96 (S) STA AT 3:30 PM BELTZ ROOM 211
02/13/96 (S) MINUTE(STA)
02/22/96 (S) STA AT 3:30 PM BELTZ ROOM 211
02/22/96 (S) MINUTE(STA)
02/23/96 2513 (S) STA RPT 1DP 2NR
02/23/96 2513 (S) ZERO FISCAL NOTE (REV)
02/26/96 (S) RLS AT 12:45 PM FAHRENKAMP RM 203
02/26/96 (S) MINUTE(RLS)
02/28/96 2568 (S) RULES TO CALENDAR 2/28/96
02/28/96 2572 (S) READ THE SECOND TIME
02/28/96 2573 (S) ADVANCED TO THIRD READING UNAN CONSENT
02/28/96 2573 (S) READ THE THIRD TIME SB 266
02/28/96 2573 (S) PASSED Y16 N2 E2
02/28/96 2573 (S) DUNCAN NOTICE OF RECONSIDERATION
02/29/96 2594 (S) RECON TAKEN UP - IN THIRD READING
02/29/96 2595 (S) RECONSIDERATION FAILED Y10 N5 E5
02/29/96 2595 (S) MOTION TO RESCIND PREVIOUS ACTION
02/29/96 2595 (S) MOTION HELD TO 3/6 CALENDAR
03/06/96 2628 (S) RESCINDED PREVIOUS ACTION Y18 N- E2
03/06/96 2629 (S) PASSED ON RECONSIDERATION Y12 N6 E2
03/06/96 2636 (S) TRANSMITTED TO (H)
03/08/96 3018 (H) READ THE FIRST TIME - REFERRAL(S)
03/08/96 3018 (H) STATE AFFAIRS
03/12/96 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 438
SHORT TITLE: RECORDING: INDEX DOCUMENTS BY LOCATION
SPONSOR(S): REPRESENTATIVE(S) BRICE,Kelly,James
JRN-DATE JRN-PG ACTION
01/22/96 2507 (H) READ THE FIRST TIME - REFERRAL(S)
01/22/96 2507 (H) STATE AFFAIRS, RESOURCES
01/31/96 2587 (H) COSPONSOR(S): KELLY
03/12/96 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 443
SHORT TITLE: INCREASE MOTOR FUEL TAX
SPONSOR(S): RULES BY REQUEST OF LONG RANGE FINANCIAL PLAN CMSN
JRN-DATE JRN-PG ACTION
01/22/96 2508 (H) READ THE FIRST TIME - REFERRAL(S)
01/22/96 2508 (H) STATE AFFAIRS, JUDICIARY, FINANCE
03/12/96 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
ALLISON GORDON, Legislative Aide
Senator Steve Frank
State Capitol, Room 578
Juneau, Alaska 99801-1182
Telephone: (907)465-3709
POSITION STATEMENT: Representing Senator Steve Frank, regarding SB
110.
MR. DAVID LAMBERT
P.O. Box 71243
Fairbanks, Alaska 99708
Telephone: (907) 454-7304
POSITION STATEMENT: Representing Fairbanks Montessori Association
and Friends of Creamer's Field, regarding SB 110.
SHARON YOUNG, State Recorder
Department of Natural Resources
State of Alaska
3601 C Street, Suite 1180
Anchorage, Alaska 99503-5947
Telephone: (907)269-8882
POSITION STATEMENT: Representing Recorder's Office, Department of
Natural Resources, regarding HB 438.
RICHARD MCMAHON, Chief
Land Records Information
Department of Natural Resources
State of Alaska
3601 C Street, Suite 916
Anchorage, Alaska 99503-5947
Telephone: (907)269-8836
POSITION STATEMENT: Representing Land Records Information Section,
Department of Natural Resources, regarding HB 438.
SAM S. KITO, III, Legislative Liaison
Department of Transportation and Public Facilities
State of Alaska
3132 Channel Drive
Juneau, Alaska 99801-7898
Telephone: (907)465-3904
POSITION STATEMENT: Representing Department of Transportation and
Public Facilities, regarding HB 443.
BRAD PIERCE, Senior Policy Analyst
Office of Management and Budget
State of Alaska
P.O. Box 110001-0001
Juneau, Alaska 99811-0001
Telephone: (907)465-4677
POSITION STATEMENT: Representing Office of Management and Budget,
regarding HB 443.
BOB BARTHOLOMEW, Deputy Director
Income & Excise Audit Division
Department of Revenue
P.O. Box 110420
Juneau, Alaska 99811-0420
Telephone: (907)465-2320
POSITION STATEMENT: Representing Department of Revenue, regarding
HB 443.
BERNIE SMITH
P.O. Box 3369
Kenai, Alaska 99611
Telephone: (907)446-8191
POSITION STATEMENT: Representing Tesoro Alaska Petroleum,
regarding HB 443.
ALBERT W. DICK, Mayor
City of Hoonah
P.O. Box 360
Hoonah, Alaska 99829
Telephone (907) 945-3664
POSITION STATEMENT: Representing City of Hoonah, regarding HB 443.
ALBERT M. SNELLING
Samson Tug & Barge
P.O. Box 559
Sitka, Alaska 99835
Telephone: (907) 747-8559
POSITION STATEMENT: Testifying on behalf of Samson Tug & Barge,
regarding HB 443.
FRANK DILLON, Executive Director
Alaska Trucking Association
3443 Minnesota Drive
Anchorage, Alaska 99503
Telephone: (907)276-1149
POSITION STATEMENT: Testifying on behalf of the Alaska Trucking
Association, regarding HB 443.
ACTION NARRATIVE
TAPE 96-34, SIDE A
Number 0015
The House State Affairs Committee was called to order by Chair
Jeannette James at 8:05 a.m. Members present at the call to order
were Representatives James, Green, Porter, Robinson, and Willis.
Members absent were Representatives Ogan and Ivan.
SB 266 - CREAMER'S FIELD GOOSE CLASSIC
The first order of business to come before the committee was SENATE
BILL NO. 266, "An Act relating to the Creamer's Field Goose
Classic." Chair James called on Allison Gordon, aide to Senator
Steve Frank.
Number 0075
ALLISON GORDON, Legislative Aide to Senator Steve Frank, sponsor of
SB266, stated SB 266 would amend current law to include the Friends
of Creamer's Field among those who are authorized to operate and
administer a goose classic. She explained that a goose classic is
a game of chance where the participants have the opportunity to win
a cash prize for guessing the closest time of arrival of the first
goose to Creamer's Field. Currently, within the Fairbanks area,
the Fairbanks Montessori Association is the only group that may
operate and administer a goose classic. This association has found
that with its small volunteer group, they are unable to operate the
goose classic. Fairbanks Montessori Association and Friends of
Creamer's Field have worked to form a contract in which the two
organizations put on the classic together. The proposed
legislation would also allow either group to operate the classic
separately. She stated the Department of Revenue supports SB 266.
Number 0195
CHAIR JAMES called on the next witness, David Lambert, via
teleconference from Fairbanks.
DAVID LAMBERT stated he was representing Fairbanks Montessori
Association and Friends of Creamer's Field. He invited questions
from the committee.
Number 0228
REPRESENTATIVE BRIAN PORTER moved that SB 266 move from committee
with individual recommendations and attached zero fiscal note.
Number 0251
REPRESENTATIVE CAREN ROBINSON asked why it was necessary to pass
new legislation for each type of classic, rather than simply
amending current law to allow the Department of Revenue to approve
each classic as appropriate.
CHAIR JAMES responded that Representative Robinson should talk to
Gary Davis about the issue.
Number 0276
CHAIR JAMES announced that SB 266 was passed out of the House State
Affairs Committee, with individual recommendations and attached
fiscal note.
Number 0344
HB 438 - RECORDING: INDEX DOCUMENTS BY LOCATION
CHAIR JAMES announced that the next order of business to come
before the House State Affairs Committee was HOUSE BILL NO. 438 "An
Act relating to the indexing of documents recorded in the state
recorder's offices; and providing for an effective date." Chair
James called on the bill's sponsor, Representative Tom Brice.
REPRESENTATIVE TOM BRICE explained that the mining industry has
historically used a cardex system to record information relating to
location of land claims. The state has stopped funding this
system, which has created an information void. HB 438 would add
the word "location" into information required to be maintained by
the Recorder's Office in its index system. He invited questions
from the committee.
Number 0463
SHARON YOUNG, State Recorder, Department of Natural Resources,
testified on behalf of the Department of Natural Resources. She
stated that the recorder's office has historically maintained only
a grantor/grantee index, as mandated by statute. As a courtesy,
the office has attempted to maintain a location index, which is not
mandated. As a result, location information within the system is
incomplete. Within the past year, the recorder's office has
attempted to index all locations. Because the volume levels are
low, they have been able to do this without additional funding.
She explained that mandating the location index would provide a
more comprehensive and complete public record, not only for the
mining community, but for other individuals who use the system.
She invited questions from the committee.
Number 0580
CHAIR JAMES asked if Ms. Young wished to testify regarding the
fiscal note.
MS. YOUNG responded that the fiscal note anticipates a 5 percent
annual volume increase, after FY 97. The proposed funding would be
necessary to support that volume level.
Number 0656
CHAIR JAMES replied that there were two fiscal notes. The first,
regarding the information resource management component, shows a
personal services item of $70 thousand in FY 97. The recorder's
office Uniform Commercial Code component shows no personal services
in FY 97, but begins in FY 98, and continues. She noted the
increases appeared to cover only regular merit and step increases,
and did not add additional positions.
Number 0699
MS. YOUNG concurred. She stated the increases were based on
current years' salaries, and assume a 5 percent growth in volume.
She noted that a representative of the Information Services section
was also present to testify.
CHAIR JAMES reiterated her understanding that the information has
always been provided as a courtesy by the recorder's office, and
not by the Information Services section.
Number 0740
MS. YOUNG agreed. She explained that the testimony of the Land
Records Information Section would clarify their fiscal note, which
addresses a broader scope of integrating the information with other
database information within the department.
Number 0762
CHAIR JAMES asked if the information would still be kept on a
cardex system.
MS. YOUNG replied that the recorder's office would continue to
index the information as it has in the past. She explained that
the information services section would provide an interface with
other information.
Number 0802
REPRESENTATIVE JOE GREEN asked how the cost increases were
calculated.
MS. YOUNG replied that the increase was based on average recording
volumes. A document increase of about 4,500 substantiates an
additional full-time position. She further explained that
statewide volume has averaged about 200,000 documents per year, and
a 5 percent increase is anticipated.
REPRESENTATIVE GREEN then asked why twice as many full-time
employees would be required.
Number 0891
MS. YOUNG replied she was not sure she understood the question.
REPRESENTATIVE GREEN responded that he was looking at positions, on
the fiscal note.
MS. YOUNG explained that the $70 thousand need in personal services
would cover a five percent volume growth, which would represent one
full-time and one part-time position. In the next year, a
subsequent 5 percent growth would result in a dollar need of $81
thousand. The positions would increase to two full-time.
Number 0941
REPRESENTATIVE GREEN then asked about the figures for FY 98 and FY
01.
MS. YOUNG explained that the figures are not finite.
CHAIR JAMES expressed her opinion that the figures did not
calculate correctly. She stated that the fiscal note would be
handled by the Finance Committee, but that it was a very important
component of the bill.
Number 1028
REPRESENTATIVE SCOTT OGAN mentioned that he had noticed no finance
committee referral on the bill.
CHAIR JAMES replied that there would have to be a finance referral,
since there was a fiscal note.
Number 1054
REPRESENTATIVE PORTER suggested the Clerk's office should be
notified the bill needs a referral to House Finance, and that the
House State Affairs Committee has a concern over the validity of
the fiscal note.
Number 1071
REPRESENTATIVE GREEN noted the bill's passage hinges on the fiscal
note.
CHAIR JAMES stated she did not want a fiscal note to kill the bill.
Number 1110
CHAIR JAMES invited Richard McMahon to testify.
RICHARD MCMAHON, Chief, Land Records Information Section,
Department of Natural Resources (DNR), stated he had participated
in the cardex meetings mentioned earlier. He explained the DNR's
proposal would not replace the cardex system. Rather, the
objective is to expand the indexing, so that recorded documents can
be located by location. The DNR's system contains all mining
records, as well as many others. The department also has access to
federal records, through the Bureau of Land Management (BLM)
system. He stated that the DNR would like to institute an index
system using a common key approach. The fiscal note would provide
one computer programming position for twelve months, as well as
funding to pay for Department of Administration mainframe services.
Number 1223
CHAIR JAMES responded she assumed some computer programming would
be needed, which was why she had asked the questions of the
previous witness.
CHAIR JAMES called on the next witness, via teleconference, in
Fairbanks.
Number 1248
MARY NORDALE stated she would testify in support of HB 438. She
explained she was a member of the cardex committee, chaired by Earl
Beistline, who had authorized her to speak on his behalf. She
emphasized that HB 438 is an extremely important bill for the
mining industry, as well as other resource based industries. The
cardex system which has always been used is a good one, and works
well, but is available only in Fairbanks. People wanting to do
research in the system have had to come to Fairbanks. This has
been a subject of concern to the mining industry statewide. Ms.
Nordale pointed out that, as far as the fiscal note is concerned,
the recorder's office does collect fees for documents recorded, and
in this way actually generates revenue.
Number 1471
REPRESENTATIVE OGAN mentioned the receipts generated by the
recorder's office. He asked if there was a way to find out if the
receipts would bring in enough revenue to offset the fiscal note.
CHAIR JAMES responded that, as the witness explained, the fee for
services in the recording office provides more money than the
office spends. She explained that the money goes into the general
fund, so the money received would not actually offset the fiscal
note.
Number 1545
REPRESENTATIVE OGAN asked if going to a digital system would result
in enough increased revenue to offset the cost of the new system.
CHAIR JAMES replied she didn't think there would be fees charged
for using the system. The fees are only charged for recording
documents.
REPRESENTATIVE PORTER commented that the fiscal note from the
recorder's office does contain an offset of revenue. However, the
fiscal note from information resources management has $90 thousand
that is not offset. Therefore, the fiscal impact to the budget
would be $90 thousand in FY 97, and an additional ten thousand in
other years.
CHAIR JAMES asked Ms. Young to respond to the question regarding
fees charged for using the information.
Number 1635
MS. YOUNG responded that, yes, the fees are generated only by
recording of documents. Access to the documents is free.
CHAIR JAMES asked if it would be possible for the information to be
tallied and available statewide via computer.
Number 1692
MR. MCMAHON stated that the index system would be able to identify
recorded documents, and provide the book and page records, so that
the documents could be accessed in the recorder's office. The
proposed system would not provide electronic images of the
documents themselves. He explained that in the cardex meetings,
one consultant stated that research which would take one to two
hours using the cardex system, could take three to five days
looking by book and page in the recorder's office.
Number 1750
CHAIR JAMES responded that she didn't visualize the system
providing electronic images of the documents. She stated that
being able to identify an area of the state, and discover the
ownership and status of the land, is extremely important to
resource development.
REPRESENTATIVE OGAN asked if the recorder's office had the
authority to charge the public for accessing the information.
Number 1810
MR. MCMAHON replied that the authority to institute fee schedules
was in place.
REPRESENTATIVE GREEN asked if it was correct that receipts
currently exceed the cost of running the recorder's office.
MS. YOUNG replied, yes, that was true.
Number 1866
MS. NORDALE stated the mining community in Fairbanks has always
supported fees for recording of required documents.
CHAIR JAMES reiterated her belief that the House State Affairs
Committee should not be arguing over fiscal notes. She emphasized
that she doesn't want to see the bill killed because of the fiscal
note.
Number 1993
REPRESENTATIVE IVAN IVAN stated he approved of the intent of the
bill, but questioned if a statute was actually required. Couldn't
the intent be accomplished through administrative measures?
CHAIR JAMES responded that funds for this process had been taken
out of the budget, because it was not a statutory requirement. She
again emphasized the information is a valuable tool for the mining
community, and should be available statewide. Therefore, the bill
is needed to make collecting of this information a statutory
requirement. She stated she wanted to be sure she had enough
information to support the issue in the budget process, and she
appreciated the information provided.
Number 2067
REPRESENTATIVE ED WILLIS made a motion to pass HB 438 with
accompanying fiscal note and individual recommendations out of the
House State Affairs Committee, with a note regarding the validity
of the fiscal note. There being no objection, HB 438 was passed
out of the House State Affairs Committee.
Number 2075
HB 110 - CONFIDENTIALITY OF MOTOR VEHICLE RECORDS
CHAIR JAMES that announced HB 110 would be heard at the next
meeting.
Number 2121
REPRESENTATIVE OGAN introduced Gate Weaver, a senior at Colony High
in the Palmer-Wasilla area, and winner of the Student to Juneau
Contest. He explained Mr. Weaver would be his shadow for the next
few days.
Number 2121
HB 443 - INCREASE MOTOR FUEL TAX
CHAIR JAMES announced the next order of business before the House
State Affairs Committee was HOUSE BILL NO. 443, "An Act relating to
the tax on transfers or consumption of motor fuel, and repealing
the exemption from that tax for motor fuel which is at least 10
percent alcohol by volume; and providing for an effective date."
Chair James introduced Sam Kito, III, to present the bill.
Number 2173
SAM S. KITO, III, Legislative Liaison, Department of Transportation
and Public Facilities (DOT), State of Alaska, announced he would
read a prepared statement in support of HB 443. Mr. Kito read as
follows: "The Department of Transportation and Public Facilities
supports HB 443. More specifically, the department supports
increase in highway and marine motor fuel taxes, if the taxes will
be dedicated to the mode from which the taxes were collected.
"House Bill 443 was introduced at the request of the Long Range
Financial Planning Commission, as a component of an overall long-
range fiscal plan. The bill proposes an increase in the highway
motor fuel tax, from the current eight cents per gallon to twenty-
two cents per gallon, and an increase in the marine motor fuel tax
from the current five cents per gallon to eight cents per gallon.
The bill also repeals the exemption currently in place for the use
of gasohol. The DOT estimates that even without an increase in
motor fuel tax, the lost revenue from the use of gasohol will be in
excess of six million dollars for FY 97.
"The highway fuel tax increase will provide the department with
revenue, which will enable the department to increase maintenance
on state-owned roads and highways. An increase in maintenance will
extend the life of our roads and highways. This will make federal
construction funds available for other important highway projects
in the state.
"There are other factors which make increasing the motor fuel tax
an important issue for this legislature to address. In January,
the United States General Accounting Office (GAO) released a report
entitled `HIGHWAY FUNDING, Alternatives for Distributing Federal
Funds.' The report did not make specific recommendations.
However, the GAO did lay out seven alternatives for distribution of
the nation's federal highway trust funds. In four of the
alternatives, Alaska's overall share goes from $231 million, which
we received in FY 95, to approximately $40 million. In only one
alternative, Alaska's best case in this report, the state's share
goes from $231 million to $89 million.
"If Congress decided to adopt even the best GAO alternative, Alaska
could stand to lose $191 million federal dollars for construction
on our highways in the state. For this reason, the department
believes it is prudent to indicate to other states and to congress
that we are doing all we can to maintain the transportation system
we have, and to show a commitment to maintain our transportation
system in the future. Fortunately, at this time, the state has a
strong advocate in Senator Stevens, who sits on the Senate
Appropriations Committee. But, the potential for losing valuable
federal highway funds is still there. Even if we do manage to
maintain the current level of funding through the next federal
highway spending authorization, we can eventually expect a decline
in federal highway funds for Alaska.
"The marine fuel tax increase, coupled with a dedicated fund, will
provide the department with funding for a harbor transfer program.
The program would involve funding capital projects for state owned
harbors, to upgrade the facilities to the condition where the
department could turn over the facilities to a local municipality.
The department estimates that all but about 22 of the facilities
currently owned by the state could reasonably be transferred in
five years. The proposed program would basically get the state out
of the harbor business."
Mr. Kito then invited questions.
Number 2307
CHAIR JAMES noted for the record that the bill before the committee
is the House State Affairs Committee substitute. The original bill
did not require a dedicated fund in order for the legislation to
take effect. She explained that a constitutional amendment to
create a dedicated fund is currently in the finance committee.
House Bill 443 would be contingent upon the passage of that
constitutional amendment.
Number 2344
REPRESENTATIVE PORTER moved that the committee adopt working draft
CSHB443 (STA), M-3796. There being no objection, the CS was
adopted as the working draft.
Number 2358
REPRESENTATIVE WILLIS asked Mr. Kito if the administration had a
position on the proposed constitutional amendment.
MR. KITO replied that the governor does support a constitutional
amendment for transportation purposes. The resolution currently in
house finance is generally supported by the governor, with several
suggested amendments.
Number 2381
REPRESENTATIVE IVAN asked for clarification regarding the meaning
of marine motor fuels taxes. He wondered if the tax would apply
only to fuels used on navigable waters, or if small river boats
would also be affected.
MR. KITO responded that the tax would be collected at the
distribution points throughout the state, not at point of sale. He
explained that if the distributor believed that a percentage of the
fuel would be used in marine craft, he would file with the
department to pay the fuel tax. He added that a representative
from the Department of Revenue was present to answer questions.
Number 2439
BOB BARTHOLOMEW, Assistant Director, Income & Excise Tax Division,
Department of Revenue, State of Alaska, announced he would testify
on behalf of the department. He explained he would clarify the
content of the fiscal note. The fiscal note was prepared prior to
the CS, and shows revenue in FY 97. If the bill was amended
according to the CS, to tie the tax increase to a dedicated fund,
there would be no new revenues collected in FY 97. The dedicated
fund would go into place in FY 98. In the first year, increased
revenue from raising the highway motor fuel and marine motor fuels
taxes, and removing the gasohol exemption, would amount to $59.5
million.
TAPE 96-34, SIDE B
Number 0000
MR. BARTHOLOMEW further explained the gasohol exemption was passed
in the early 1980's, to help expedite potential sale of Delta
barley. The exemption is still on the books, and results in a loss
of revenue. In FY 95 the state lost $2.4 million in revenue due to
the use of gasohol, and the projection for FY 96 is six million.
He stated the fiscal note also contains increased operating costs
of $80 thousand, which covers one Revenue Auditor III, to be based
in Anchorage. Mr. Bartholomew then invited questions.
Number 0087
CHAIR JAMES reiterated Representative Ivan's question, regarding
how the types of fuel would be identified.
MR. BARTHOLOMEW explained that motor fuel tax is currently paid by
a qualified motor fuel dealer, who is normally a wholesaler. When
fuel is sold, the distributor must make a determination concerning
the ultimate use of the fuel. The distributor then files a tax
return with the department of revenue. In some cases, it is
possible that fuel sold to a retail dealer, such as a gas station,
may wind up in either car or boat engines, yet would be taxed at
the highway rate. He stated that, as the tax is raised, additional
guidelines may have to be provided for such multiple use
situations.
Number 0189
REPRESENTATIVE OGAN asked if Mr. Bartholomew could explain section
five of the bill.
MR. BARTHOLOMEW responded that both the original bill and the CS
contain a clause directing the department of revenue to tie the tax
to the Consumer Price Index (CPI), and to adjust it every two
years.
REPRESENTATIVE GREEN then asked if the figures would be rounded off
each year.
MR. BARTHOLOMEW responded that January, 1997, would be used as the
base.
Number 0235
CHAIR JAMES announced that the Mayor of Hoonah would be testifying
via teleconference.
MAYOR ALBERT W. DICK, City of Hoonah, stated the previous testimony
had clarified his concerns.
Number 0245
CHAIR JAMES announced that Bernie Smith would be testifying via
teleconference, from Kenai.
BERNIE SMITH announced he would testify on behalf of Tesoro Alaska
Petroleum. He stated that the increase contained in the CS
amounted to a fourteen cent increase in one year. When tied in
with eliminating the gasohol exemption, the total increase amounts
to twenty-two cents per year. He commented this would put a burden
on the public, especially in Anchorage and Fairbanks. He stated
that Tesoro feels the increase is too steep, but would support the
constitutional amendment, which would give the voters a chance to
decide on the issue. On the marine motor fuel tax, he stated the
current tax already affects in-state refineries. Processors coming
into Alaskan waters will bring their own fuel aboard their vessels,
and park outside the state three-mile water limit, rather than pay
the cost difference. He emphasized that adding an additional tax
would make it extremely difficult for in-state refineries to
compete with Seattle based vessels. He stated Tesoro would support
the proposed dedicated fund for the current marine motor fuel tax.
Mr. Smith then invited questions from the committee.
Number 0384
CHAIR JAMES asked if Tesoro would support phasing in the additional
tax.
MR. SMITH replied he could not answer the question without
consulting with company officials. He speculated that the company
would probably not object to an increase of five cents per gallon
in the first year, provided the revenue went to a dedicated fund.
NUMBER 0417
CHAIR JAMES then asked if the difference between the amount paid
for fuel in Seattle and Alaska was so great that increasing the tax
would actually cause large users to bring in their own fuel.
MR. SMITH replied that this was already occurring. He reiterated
this made it extremely difficult for in-state refineries to
compete.
CHAIR JAMES responded that the oil industry needs to do a better
job of explaining to the public why the price of fuel is so high in
the state of Alaska. She then announced the committee would hear
testimony from Sitka, via teleconference.
Number 0487
ALBERT M. SNELLING, an employee of Samson Tug & Barge, explained
the company is a line haul freight company operating out of Sitka,
with a terminal in Seattle. They haul cargo to Valdez, Kodiak,
Sand Point, King Cove, Dutch Harbor, and Adak. He stated that,
with the proposed tax increases, the company's total fuel costs for
1996 would exceed one million dollars. He added that the increased
fuel costs would result in higher prices to the consumer for items
brought into the state, such as groceries. He stated he favored
cutting government spending and privatization of some government
functions, rather than increasing taxes on industry.
CHAIR JAMES announced the committee would hear testimony from
Anchorage, via teleconference.
FRANK DILLON, Executive Director, Alaska Trucking Association,
announced he would testify on behalf of the trucking association.
He explained that diesel fuel is the life blood of the trucking
industry, and that fuel is 12 to 15 percent of the total cost of a
trucking operation. He stated he was pleased to see the committee
substitute for HB 443, because of the dedicated fund provision. He
further stated he would confine his remarks only to the highway
fuel tax. He stated the association has two problems with the
current committee substitute. One is the rate of taxation; the
association does not believe the rate is justified. Second, the
association objects to indexing the price increase to the CPI. He
explained the association does advocate a dedicated fund for
highway fuel tax revenues. Mr. Dillon then invited questions from
the committee. He added that he concurred with Mr. Snelling's
testimony, and that the fuel increase would definitely be passed
along to consumers.
Number 0775
CHAIR JAMES announced the committee would hear testimony from Brad
Pierce, Office of Management and Budget.
BRAD PIERCE, Senior Policy Analyst, Office of Management and Budget
Office of the Governor (State of Alaska,) stated he was on the
staff of the Long Range Financial Planning Commission, which had
proposed the current bill. He explained that revenues from the
bill figured prominently in the commission's long range plan for
the state. The commission definitely felt the increase from the
increased fuel tax should be tied to a dedicated fund. He further
explained the commission's reason for indexing the rate increase to
the Consumer Price Index (CPI). The current motor fuel tax rate
has not been increased since 1961, which made it the lowest rate in
the nation. Tying the rate increase to the CPI would keep the tax
in line with the national average.
Number 0862
REPRESENTATIVE CAREN ROBINSON asked if twenty-four cents per gallon
was the national average.
MR. PIERCE replied that the national average is twenty-two cents
per gallon.
Number 00873
CHAIR JAMES commented that Alaska's base price for fuel is much
higher than other places, which makes the tax more problematic.
She commended the work of the Long Range Financial Planning
Commission, but stated the state needs to determine what level of
spending can be sustained over the long term. Not only do we have
the lowest rate of tax on gasoline, we also have no income or sales
taxes. We continue to receive permanent fund dividends. She
emphasized that people need to decide how much state spending they
are willing to support. While cutting the budget may have a
devastating effect on the economy, imposing new taxes on businesses
may have an even more devastating effect. She stated the state
needs to be cautious in imposing new taxes, but it must be done in
smaller steps. She further stated she did not agree with tying
increases to the CPI.
Number 1007
CHAIR JAMES announced the committee would not be taking action on
HB 443 today. She asked if there were further questions or
comments.
Number 1015
REPRESENTATIVE PORTER asked what was the effect of section six.
CHAIR JAMES replied that it repealed the exemption on gasohol.
Number 1032
REPRESENTATIVE OGAN stated that he agreed with Chair James
regarding tying the tax increase to the CPI. He asked if it was
the appropriate time to move an amendment.
Number 1061
CHAIR JAMES responded that an amendment would be considered at the
next meeting.
REPRESENTATIVE OGAN applauded the concept of allowing the people to
vote on the issue, through a constitutional amendment.
ADJOURNMENT
Number 1118
CHAIR JAMES adjourned the House State Affairs Committee meeting at
9:18 a.m.
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