Legislature(2003 - 2004)
03/18/2003 01:37 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
March 18, 2003
1:37 p.m.
MEMBERS PRESENT
Representative Jim Holm, Co-Chair
Representative Beverly Masek, Co-Chair
Representative Hugh Fate
Representative Mary Kapsner
Representative Albert Kookesh
MEMBERS ABSENT
Representative Vic Kohring
Representative Cheryll Heinze
OTHER LEGISLATORS PRESENT
Senator Donny Olson
COMMITTEE CALENDAR
HOUSE BILL NO. 156
"An Act increasing the motor fuel tax and repealing the special
tax rates on blended fuels; and providing for an effective
date."
- HEARD AND HELD
HOUSE BILL NO. 170
"An Act increasing certain motor vehicle registration fees; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 173
"An Act relating to a fee on studded tires; and providing for an
effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 156
SHORT TITLE:INCREASE MOTOR FUEL TAX
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
03/05/03 0424 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0424 (H) TRA, FIN
03/05/03 0424 (H) FN1: ZERO(DEC)
03/05/03 0424 (H) FN2: (REV)
03/05/03 0424 (H) GOVERNOR'S TRANSMITTAL LETTER
03/11/03 (H) TRA AT 2:00 PM CAPITOL 17
03/11/03 (H) Heard & Held
MINUTE(TRA)
03/18/03 (H) TRA AT 1:30 PM CAPITOL 17
BILL: HB 170
SHORT TITLE:MOTOR VEHICLE REGISTRATION FEES
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
03/05/03 0444 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0444 (H) TRA, FIN
03/05/03 0444 (H) FN1: (ADM)
03/05/03 0444 (H) GOVERNOR'S TRANSMITTAL LETTER
03/05/03 0444 (H) REFERRED TO TRANSPORTATION
03/11/03 (H) TRA AT 2:00 PM CAPITOL 17
03/11/03 (H) Scheduled But Not Heard
03/18/03 (H) TRA AT 1:30 PM CAPITOL 17
BILL: HB 173
SHORT TITLE:FEE FOR STUDDED TIRES
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
03/05/03 0447 (H) READ THE FIRST TIME -
REFERRALS
03/05/03 0447 (H) TRA, FIN
03/05/03 0448 (H) FN1: (REV)
03/05/03 0448 (H) GOVERNOR'S TRANSMITTAL LETTER
03/11/03 (H) TRA AT 2:00 PM CAPITOL 17
03/11/03 (H) Heard & Held
MINUTE(TRA)
03/18/03 (H) TRA AT 1:30 PM CAPITOL 17
WITNESS REGISTER
SARAH GILBERTSON, Policy and Program Coordinator
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: Testified on HB 156.
ROBYNN J. WILSON, Motor Fuel Tax Program Manager
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Answered questions pertaining to HB 156.
LARRY PERSILY, Deputy Commissioner
Office of the Commissioner
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions pertaining to HB 156.
BARBARA COTTING, Staff
to Representative Jim Holm
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As committee aide, spoke to HB 156,
Amendment 1; discussed the changes incorporated in Version D of
CSHB 173.
GEORGE LEVASSEUER, Maintenance and Operations Manager
Southcentral District
Northern Region
Department of Transportation & Public Facilities
Valdez, Alaska
POSITION STATEMENT: Answered questions pertaining to HB 156 and
HB 173.
RONALD JORDAN
Anchorage, Alaska
POSITION STATEMENT: During hearing on HB 170, expressed concern
with the lack of an annual fee increase for tractor-trailers and
semi-trailers that are pulled behind a tractor.
DUANE BANNOCK, Director
Division of Motor Vehicles
Department of Administration
Anchorage, Alaska
POSITION STATEMENT: During hearing on HB 170, answered
questions.
DAVE SNYDER, Operator
Diversified Tire
Wasilla, Alaska
POSITION STATEMENT: During discussion of HB 173, characterized
the $10 fee as extreme.
JUDY SNYDER
Diversified Tire
Wasilla, Alaska
POSITION STATEMENT: Testified in opposition to HB 173 as
written.
ACTION NARRATIVE
TAPE 03-11, SIDE A
Number 0001
CO-CHAIR BEVERLY MASEK called the House Transportation Standing
Committee meeting to order at 1:37 p.m. Representatives Masek,
Holm, Fate, and Kookesh were present at the call to order.
Representative Kapsner arrived as the meeting was in progress.
Representatives Kohring and Heinze were excused. Also present
was Senator Donny Olson.
HB 156-INCREASE MOTOR FUEL TAX
CO-CHAIR MASEK announced that the first order of business would
be HOUSE BILL NO. 156, "An Act increasing the motor fuel tax and
repealing the special tax rates on blended fuels; and providing
for an effective date."
Number 0146
SARAH GILBERTSON, Policy and Program Coordinator, Alaska
Municipal League (AML), provided the following testimony:
As many of you know, AML represents 140 communities
around the state of Alaska. For years, AML members
have supported an increase, both in the motor vehicle
fuel tax and the motor vehicle registration fees, so
long as these fees are: 1) used to fund state and
municipal highway road operation, maintenance, and
improvements; and 2) shared on an equitable basis
between local and state government based upon the
proportion of local-versus state-maintained roads.
Thus, if the gas tax is to increase from $.08 to $.20,
which is the national average, AML members believe
that: 1) these funds should be earmarked for road
operation, maintenance, and improvements; and 2) local
governments ought to receive a greater share of the
revenues from such a tax.
Currently, Alaska's local governments receive less
that 5 percent of revenues from state gas tax, whereas
local governments in other states such as Iowa and
Illinois receive 65 percent and 59 percent,
respectively. On an average, local governments across
the country receive approximately 31 percent of
revenues from state gas taxes. If Alaska's gas tax is
to increase to the national average of $.20, at a
minimum, 31 percent of these revenues from Alaska's
gas tax should be distributed back to Alaska's local
governments. At a maximum, Alaska's local governments
should receive 43.5 percent of state gas tax revenues
because 43.5 percent of all roads in Alaska are
municipally maintained roads.
AML members recognize that the governor wants to cut
the budget. On one of these cuts - the 25 percent
cut, which is equivalent to a $7.4 million cut in
revenue sharing and safe communities funding - will
have a significant impact on Alaska's local
governments. Having said that, writing local
governments into this bill to receive a greater
percentage of the revenue from gas tax will offset
that loss. At the same time, local government leaders
who are very skilled and have experience in selling
such increases in fees would be willing to work with
the governor to sell this increase to the public in
Alaska.
Number 0339
CO-CHAIR HOLM expressed concern that certain municipalities such
as the Fairbanks Northstar Borough do not have "road powers."
He said that the only areas near Fairbanks that have road powers
are the cities, such as City of North Pole and the City of
Fairbanks. He questioned how this would be played out if most
of the road maintenance was provided through service areas.
MS. GILBERTSON said using the revenue-sharing formula or
something similar to distribute funds to all communities in
Alaska has been suggested. She said that hopefully all of
Alaska's local governments and local communities could benefit
from the increase.
CO-CHAIR HOLM said although first-class boroughs and
municipalities do have road-service powers and therefore could
take money in and disseminate it, his concern is with the
second-class boroughs and Bush areas that don't have road-
service powers.
MS. GILBERTSON said that AML would be willing to work to see if
distribution throughout all of Alaska could occur so that no
communities were left out.
Number 0495
REPRESENTATIVE KOOKESH referred to Ms. Gilbertson's testimony
indicating AML's support as long as "two things happen" and
asked, "What happens if only one of these things happen?"
MS. GILBERTSON said the two statements are directly from the AML
policy statement, which is approved by all 140 AML members. She
said she was not sure of the answer to Representative Kookesh's
question, but the AML membership could discuss it further.
REPRESENTATIVE KOOKESH wondered if AML would have to express
opposition if only one instead of both requests were included.
He also wondered if it was constitutional to earmark the vehicle
fuel taxes for a specific purpose rather than to direct them to
the general fund.
Number 0596
REPRESENTATIVE KAPSNER said that a lot of rural communities such
as Bethel and Unalaska, are part of AML. She said her concern
with the increase in the motor fuel tax is that some communities
pay more for gasoline than other communities, and a $.20 tax on
top of a $5.00 gallon of gas is a lot to ask. She wondered if
this point had been discussed by AML's membership.
MS. GILBERTSON said the two statements had been approved by all
140 AML members and have been part of the policy statement for
many years. She stated that although this point had not come up
in debate, she would be happy to set up further discussion.
Number 0673
REPRESENTATIVE FATE noted that the tax on aviation fuel, other
than gasoline, is three and two-tenths cents a gallon. He
questioned what effect this would have on the airline industry
and how it would affect the cargo pattern at airports both in
Anchorage and Fairbanks.
Number 0714
ROBYNN J. WILSON, Motor Fuel Tax Program Manager, Tax Division,
Department of Revenue, testified that to her knowledge, the bill
did not contain an increase in the aviation tax.
Number 0800
LARRY PERSILY, Deputy Commissioner, Office of the Commissioner,
Department of Revenue, noted that the legislation has nothing to
do with aviation or marine fuel; it pertains only to highway
motor fuel.
Number 0849
CO-CHAIR MASEK, after ascertaining that there was no further
public testimony, closed HB 156 to public testimony and directed
the committee to the proposed amendments for the bill.
Number 0920
BARBARA COTTING, Staff to Representative Jim Holm, Alaska State
Legislature, speaking as the committee aide, explained
Amendment 1 as she said Dennis Poshard, of the Department of
Transportation & Public Facilities (DOT&PF) had explained it to
her. Currently, state vehicles have access to credit cards that
can be used at specific companies. A contract with MasterCard
is being worked on by DOT&PF so that persons driving state
vehicles can go to various stations. The problem is that
stations wouldn't know not to charge the tax and therefore,
MasterCard has agreed to have different companies apply for the
refund.
Number 0971
GEORGE LEVASSEUER, Maintenance and Operations Manager,
Southcentral District, Northern Region, Department of
Transportation & Public Facilities, noted that he was the Acting
State Maintenance Engineer, and testified that there would be a
refund to government agencies, from MasterCard, for the tax
assessed on any purchase of highway motor vehicle fuel.
REPRESENTATIVE KOOKESH noted that Amendment 1 [proposed
Section 5] reads: "For fuel sold to federal, state, and local
government agencies". He asked if this also refers to local
government.
MR. LEVASSEUER stated that this would be the case if a
government agency qualified for a tax exemption on fuel.
CO-CHAIR MASEK referred to the remainder of the sentence
mentioned by Representative Kookesh, in which it states "for
official use". She pointed out that "official use" would need
to be clarified before obtaining a tax credit.
Number 1094
REPRESENTATIVE KOOKESH asked what the difference was in using a
credit card rather than a purchase order.
MR. LEVASSEUER replied that in DOT&PF, a purchase order is
obtained through the supply section for purchases of a larger
amount or quantity. For smaller, field-type purchases, to avoid
overburdening the supply function, credit cards are used.
REPRESENTATIVE KOOKESH said he was concerned with agencies other
than DOT&PF and suggested that a provision for the use of
purchase orders be included, if there was going to be an
exemption.
MR. PERSILY said that he believed purchase orders were already
covered and that he doesn't think that government entities pay
the tax. He explained that Amendment 1 was brought forward by
the Department of Administration's Division of Finance in
attempts to work on a new credit card for DOT&PF so that when a
credit card purchase was made in the field, it would be "tax-
off" so that the state wouldn't be charging tax to itself. He
said this specifically deals with the problem of fuel purchases
by credit card and applies not just to the state, but also to
other governmental agencies so that credit card purchases by the
school district or municipal government would also be tax-
exempt.
REPRESENTATIVE KAPSNER asked if this specifically had to be a
government credit card or if it could be something like a school
district credit card.
MR. PERSILY replied that his understanding was that the State of
Alaska would get the credit card through a commercial bank and
it would be issued to departmental field personnel. The account
would be a governmental account, to be used for official use.
REPRESENTATIVE KOOKESH noted that the discussion pertained to
federal, state, and local agencies and he wanted it on record
that focusing on how DOT&PF does business is too narrow of a
focus.
MR. PERSILY replied that this originally began because the
state, in moving to a new credit card system for DOT&PF, brought
up the issue. He believed that Amendment 1 was drafted so that
it would have a broader application, adding that it makes things
easier on the agencies but also on the credit cards and the
service stations.
Number 1260
CO-CHAIR MASEK referred to Amendment 1, proposed Section 6,
which says in part, "on a form prescribed by the department",
noting that DOT&PF is not specified.
MR. PERSILY clarified that "the department" refers to the
Department of Revenue and its tax code.
REPRESENTATIVE FATE asked how the checks and balances of
accounting would be done, particularly by the federal
government. He asked if each department turned in information
regarding the amount of purchase to the Department of Revenue.
MR. PERSILY said he believed it was done by the taxpayer.
Number 1340
MS. WILSON provided background information, saying that federal,
state, and local agencies have always been exempt on official
use. If the agency initially pays tax by going to the gas
station and not requesting an exemption, the government agency
then applies to the department for a refund. There is a
provision in statute for a user to get a refund if the use is
exempt. She continued that a second scenario would be that a
government agency could go to a gas station and claim, "We're a
government agency and shouldn't have to pay tax"; in that case,
the gas station has already paid for the tax but is not
collecting the tax. There is a mechanism for the gas station to
get the refund directly from the department.
MS. WILSON continued that the difficulty with the credit card
situation is that the government agency does not want to pay the
tax, and the retailer, the gas station, has already paid the
tax. The credit card company is in the middle, but to date,
there has not been a mechanism for the credit card company to
get a refund. This has presented difficulties because the
government agencies or the gas stations would have to apply for
refunds and there was unnecessary paperwork.
MS. WILSON stated that this bill is an attempt to simplify that
process so that the agencies can get their fuel and not pay tax
and the gas stations will not be overburdened with having to
apply for refunds. The credit card company would assimilate the
"tax-off" purchases and send the refund claims to the
department, which would then be paid directly. The government
agency would not have to pay tax - which is the objective.
REPRESENTATIVE FATE asked if the accounting for each department
was done separately so that federal receipts were not mixed with
receipts from DOT&PF, for example.
MS. WILSON explained that any refund claimed by a government
agency is accounted for separately. The refund claim is filed
by that agency under its name, and the department then evaluates
that claim. There is a requirement in statute for an attachment
of invoices to show that the tax has been paid, and to avoid
duplication. She said if Amendment 1 passed, the department
would produce regulations specific to credit card companies in
order to address the challenges regarding original invoices.
She stated that she does not see a problem with keeping the
accounting separate and making sure that there are no duplicate
refunds.
CO-CHAIR MASEK inquired as to whether the monies would be
directed to the general fund or would be used as leverage for
TEA-21 [Transportation Equity Act for the 21st Century] funding
for highways from the federal government.
Number 1562
MR. PERSILY replied that the estimate is that in a full fiscal
year, the increase to $.20 per gallon would bring in about $41.6
million per year. He was not aware of a particular dedication
of funds and referred the question to DOT&PF.
Number 1608
REPRESENTATIVE KAPSNER asked if unincorporated communities would
qualify.
MR. PERSILY commented that if a community was unincorporated,
then perhaps it was not a government.
REPRESENTATIVE KAPSNER explained that there are communities that
do operate as if a government.
CO-CHAIR MASEK suggested that the bill for the increased motor
fuel tax would only affect areas that have gas pumps at service
stations.
REPRESENTATIVE KAPSNER said that a lot of the communities that
are unincorporated do have a gas station with a pump. Some of
the communities have roads, not highways, and a gas station is
used.
MS. WILSON said this bill would not affect whether or not that
entity would get an exemption. She said that it is a question
of whether the credit card company can get the refund.
Number 1727
REPRESENTATIVE KAPSNER asked if a friendly amendment could be
added to Amendment 1 to include "unincorporated communities".
MR. PERSILY expressed concern over not wanting to alter the way
the communities are currently being treated. He said that
without being sure if the communities are treated as off-road
and off-tax, or treated as on-road and taxable, he wasn't sure
of supporting an amendment that might cloud that issue.
Number 1770
MR. LEVASSEUER said if the communities are currently exempt,
that exemption would apply to the amendment as well, noting that
this might complicate the issue. He added that the increase in
the user fee is not to be used for ATVs [all-terrain vehicles],
snow machines, boats, and motors - it is just a highway user-fee
increase.
REPRESENTATIVE KAPSNER said there are governmental agencies that
have vehicles in communities or use the ice road and drive to
Bethel, for example, and should qualify as well as the other
local, federal, and state governments.
MR. LEVASSEUER said that the Department of Revenue had indicated
that with regard to usage that was not highway-related, an
application could be made for a refund.
Number 1867
CO-CHAIR HOLM moved to adopt Amendment 1 [text provided
previously] as written. There being no objection, it was so
ordered.
Number 1882
REPRESENTATIVE KAPSNER offered Amendment 2, labeled 23-
GH1118\A.1,Kurtz,3/10/03, which read:
Page 1, line 9:
Delete "and"
Page 1, line 11:
Delete "[; AND"
Insert "; and"
Page 1, line 12, following "(4)":
Insert "the tax rate on motor fuel used in a
motor vehicle only on roads that are not connected by
land highway or the Alaska marine highway system to
the main road system of the state, whether or not
licensed to be operated on public ways, is eight cents
a gallon ["
Page 3, line 8:
Delete "and"
Page 3, line 10:
Delete "[; AND"
Insert "; and"
Page 3, line 11, following "(4)":
Insert "the tax rate on motor fuel used in a
motor vehicle only on roads that are not connected by
land highway or the Alaska marine highway system to
the main road system of the state, whether or not
licensed to be operated on public ways, is eight cents
a gallon ["
Number 1926
MR. LEVASSEUER responded that this was the first he had seen of
Amendment 2.
REPRESENTATIVE KAPSNER said she understood there to be a verbal
understanding that the bill wouldn't affect communities off the
road system; Amendment 2 just puts that language on the books.
MR. LEVASSEUER asked if an area like Nome, where there are 130
or 140 miles of road, would be exempt and therefore remain at
$.08, pointing out that the department pays for road upgrades in
that area.
CO-CHAIR MASEK noted that this would be statewide, as the state
owns a lot of roads that are not in urban areas, and the result
would have a pretty big negative impact on the bill.
CO-CHAIR HOLM asked: If roads were built and maintained by
state money, then wouldn't it make sense to pay the additional
$.12?
MR. LEVASSEUER said these roads are either built with federal
funds and matched by state dollars, or built with state dollars.
Number 2029
REPRESENTATIVE KOOKESH explained that the off-road system in
Alaska is treated differently, and because Angoon is considered
to be an off-road system, a person can drive on the roads in
Angoon without having a valid state driver's license.
Similarly, insurance is not a requirement.
CO-CHAIR HOLM wondered whether, as a state policy, the road
systems should be treated differently. He asked if the
discussion was about money or about making policy changes.
MR. LEVASSEUER said the department's policy and opinion would be
that if any of the roads that were driven were built and
maintained by federal or state funds, then the $.12 increase
should apply.
Number 2086
REPRESENTATIVE KAPSNER said this was a different sentiment than
she had previously heard, which had indicated that the off-road
communities and the non-state-highway communities would not be
affected. She suggested that with the written language offered
in Amendment 2, the department was expressing a different
opinion.
MR. LEVASSEUER responded that he had tried to be clear in the
previous discussion that this wouldn't affect communities that
use ATVs or four-wheelers to get around, or use boats to run the
rivers. He added that if a community or an individual felt that
inclusion was unfair, application could be made to the
Department of Revenue for a refund. He emphasized that the
intent was not to put the burden on someone who was running a
four-wheeler between villages.
Number 2125
MS. WILSON said that the provision for non-highway use refers to
whether or not the motor vehicle is licensed to operate on
public ways. The department has enforced that if the vehicle is
required to be licensed to drive on the road, then the full
amount of tax would be paid. If it's the sort of road where
it's not required to be licensed, then there is a net $.02 that
is paid. She clarified "net" because up until now it has been
$.08 as the full rate, and the user could apply for a $.06
refund. She said she understood that this bill would not change
that net amount. She gave the example that the net amount would
not change for a truck in a remote area that didn't require a
license in order to be driven on that road.
Number 2202
REPRESENTATIVE KAPSNER withdrew Amendment 2, saying this
answered her question.
Number 2213
CO-CHAIR HOLM referred to the title of the bill, noting that it
says "motor fuel tax". Because the bill does not refer to all
motors, he wondered if specifying "vehicular motor fuel tax"
would be more appropriate.
CO-CHAIR MASEK said a possible clarification was in the bill,
under Section 3, where it states: "(2) the motor fuel is not
aviation fuel, or motor fuel used in or on watercraft; and (3)
the internal combustion engine is not used in or in conjunction
with a motor vehicle licensed to be operated on public ways."
CO-CHAIR HOLM said he was more inclined to think there is a need
for further specification of what the bill really does.
Number 2293
MR. LEVASSEUER replied that there had been discussion of a
"highway user fee increase" and also of this as a tax versus a
fee. He explained that this centers basically on what the
governor had said, which is more closely associating the "cost-
causers," which are people who drive the state roads, to people
who purchase the gasoline for the vehicles. The department is
spending about $60 million per year to repair and maintain the
highway system. With the $.08 tax, about $28 million per year
is recovered. Mr. Levasseuer explained that in addition to [the
state's] $60 million, an additional $50 million is spent in
federal match. Therefore, $110 million comes out of the general
fund for the highway program. The people who are driving the
roads, the users of the roads, should pay the fee to take care
of the roads. Thus this is a highway user fee increase.
Between the $28 million that is now collected and the additional
$41 million with the $.12 increase, the result would be $69
million.
Number 2361
CO-CHAIR HOLM pointed out that a letter was received from AML
referring to an increase in the "motor vehicle fuel tax." He
asked if it would be more appropriate to call this a "motor
vehicle fuel tax" rather than leaving it as "motor fuel tax."
MR. LEVASSEUER added that "highway" might be added to be more
specific.
TAPE 03-11, SIDE B
CO-CHAIR MASEK indicated that if there were a title change,
there would need to be changes throughout the bill as well. For
example, page 4, line 18, "(1) the tax on the motor fuel ...",
might need to be changed to be consistent with a title change.
Number 2362
MS. WILSON expressed concern over a title change because of the
use throughout the chapter of the term "motor fuel." She said
she was not sure if this might cause more confusion because
"motor vehicle tax" is not currently included in statute. She
said she would like to defer to people with more statutory
experience. She referred to definitions in [AS 43.40.100] in
which "motor fuel" is defined. She also pointed out that the
off-road section is an exception under [AS 43.40.030].
CO-CHAIR HOLM said his question pertained to how motor fuel fits
in with the tax scheme, with the discussion being whether motor
fuel includes aircraft fuel, marine fuel, off-highway fuel, and
road fuel. He wanted it on record that this refers to highway
taxes, pertaining to properties that are built by and maintained
by state funds.
REPRESENTATIVE FATE said the clarification suggested by Co-Chair
Holm was important and could be done either through further
definition or through a new section with intent language. He
said he would be comfortable with either choice.
CO-CHAIR MASEK said she would like the bill drafter to come up
with a committee substitute specifying that the bill pertains to
highway motor vehicle fuel.
Mr. LEVASSEUER, in response to Co-Chair Masek, confirmed that he
would be willing to work towards implementing those changes.
Number 2218
CO-CHAIR MASEK indicated HB 156 would be held in committee.
HB 170-MOTOR VEHICLE REGISTRATION FEES
CO-CHAIR MASEK announced that the next order of business would
be HOUSE BILL NO. 170, "An Act increasing certain motor vehicle
registration fees; and providing for an effective date."
Number 2192
RONALD JORDAN said that he had no real objection to the HB 170.
However, he expressed concern with Section 4, subsection (i),
and the lack of an annual fee increase for tractor-trailers and
semi-trailers that are pulled behind a tractor, which do just as
much road damage as studded tires or any other vehicle on the
road. There should be a equitable balance between the consumer
and the State of Alaska, he said. Many states do charge an
annual fee for these trailers. If there was a $100 or $200
annual fee, Mr. Jordan said he would feel more comfortable with
any fee increases for automobiles.
CO-CHAIR HOLM related his understanding of Mr. Jordan's concern
because he has driven trucks with trailers and seen asphalt peel
up behind the trailer when it's warm outside. He asked if Mr.
Jordan knew what folks have been charged for that.
MR. JORDAN directed attention to Section 3, Subsection (h)(4),
which he interpreted to refer to a delivery van. He said that
an increase in the fee for trailers and semi-trailers would
offset some of the estimated $60 million of road maintenance.
He reiterated the need for equality in this matter.
CO-CHAIR HOLM pointed out that the fee under Section 1,
Subsection (b)(6), raises the fee for a trailer not used or
maintained for the transportation of persons or property for
hire or for other commercial use from $10 to $30. He
acknowledged the disparity and related that [Mr. Jordan's
concern] will probably have to be reviewed.
Number 1967
DUANE BANNOCK, Director, Division of Motor Vehicles, Department
of Administration, turned to Mr. Jordan's concern. Mr. Bannock
explained that the division's dramatically different treatment
of commercial trailers occurred in 1999. That change was part
of a national effort to not have states do annual registration
on commercial trailers. Mr. Bannock explained that the
International Registration Plan (IRP) is a program that Alaska
is prepared to join, although it has not done so yet. In 1999
Alaska, for all practical purposes, eliminated the annual
registration fee. The legislation doing the aforementioned was
revenue-neutral and shifted approximately $1.6 million over all
commercial vehicles. Commercial vehicles already pay a much
greater cost than a noncommercial vehicle because the $1.6
million was divided amongst them. Therefore, it's fair to say
that the commercial trailers aren't paying an annual
registration fee, but it's also fair to say that the truck
towing the commercial trailer is paying what used to be the fee
for the trailer.
CO-CHAIR HOLM replied that he appreciated what Mr. Bannock said,
although he said he wasn't sure he believed it because there was
no documentation to that effect.
MR. BANNOCK offered to provide a detailed report. He pointed
out that in 1998, HB 73 officially changed the way in which
accounting is done for commercial trailers. With regard to the
reference to "biennial", Mr. Bannock noted that the legislation
is drafted in a biennial form but that commercial vehicles are
allowed to choose an annual registration fee.
CO-CHAIR HOLM requested the historical data that shows the shift
and specifies the fee the commercial vehicles pay. The problem
here is to receive the maintenance dollars that are related [to
the damage caused by] commercial transportation. Furthermore,
he didn't know whether Alaska's membership or nonmembership in
IRP was germane to the question unless [the state] is receiving
compensation from the IRP that's relative to the damage caused
to Alaska's highways.
Number 1782
REPRESENTATIVE FATE turned to Mr. Bannock's mention that the
cost has been shifted from the trailer to the tractor. He asked
if the commercial trailers are no longer licensed and thus no
longer have a license fee.
MR. BANNOCK answered that commercial trailers have a one-time
registration or permanent registration. Unlike the truck, the
tractor requires an annual or biennial registration. In further
response to Representative Fate, Mr. Bannock specified that the
one-time fee is $10 and HB 170 proposes raising that to $20.
REPRESENTATIVE FATE surmised then that his little trash trailer
that he hauls behind his 50-horsepower car that he registers
biennially at $10 costs more than a commercial trailer.
MR. BANNOCK explained that the aforementioned isn't a good
analogy because the 50-horsepower car is registered biennially,
whereas the semi-truck towing the trailer is now paying $321 per
year.
REPRESENTATIVE FATE remarked that his vehicle isn't a 50-
horsepower vehicle but rather it's a F-250 truck for which he
pays quite a bit biennially.
MR. BANNOCK said that for a pick-up truck the [registration fee]
would be $78 biennially. The $321 fee refers to what is
commonly referred to as a semi-truck, a tractor-truck, or a
fifth-wheel trailer-truck.
Number 1663
CO-CHAIR HOLM requested that HB 170 be held until more
information is available with regard to the changes made [in
1998] by HB 73 and how it relates to the Department of
Transportation & Public Facilities' maintenance.
CO-CHAIR MASEK announced that HB 170 would held and taken up at
the committee's next meeting.
MR. BANNOCK said that he has requested department staff to
provide a calendar history of all commercial vehicle revenue
rates beginning in 1998, which was the last year that an annual
registration was collected on trailers. He related his belief
that the aforementioned will illustrate that the decrease of
approximately $1.6 million in 1999 was absorbed by the remaining
commercial categories.
[HB 170 was held over.]
HB 173-FEE FOR STUDDED TIRES
CO-CHAIR MASEK announced that the final order of business would
be HOUSE BILL NO. 173, "An Act relating to a fee on studded
tires; and providing for an effective date."
Number 1586
CO-CHAIR HOLM moved to adopt the proposed committee substitute
(CS) [Version 23-GH1127\D, Kurtz, 3/12/03] as the working
document. There being no objection, Version D was before the
committee.
Number 1558
BARBARA COTTING, Staff to Representative Jim Holm, Alaska State
Legislature, speaking as the committee aide, explained that
Version D, under Section 1, creates a fine for people who
violate the law. It also eliminates the language "or other
transfer" on page 1, line 8. Furthermore, it changes the
definition of studded tire to refer to a motor vehicle tire
rather than just a tire, which might refer to bicycle tires.
Number 1498
DAVE SNYDER, Operator, Diversified Tire, related his belief that
most people aren't likely to pay the extra $40 for studded
tires. He estimated that 30-40 percent of Alaskans would be
more willing to jeopardize their safety and that of other
innocent drivers on the road than to pay the proposed fee. Mr.
Snyder said that he believes the $10 fee per studded tire is
extreme. He suggested an alternative of a $1 tax on all tires.
All tires wear out the road and studded tires keep many people
safe on the road.
CO-CHAIR HOLM inquired as to the cost of siped tires.
MR. SNYDER said his facility does a lot of siped tires. Mr.
Snyder informed the committee that siped tires and studless
winter tires don't have the same effect on glare ice conditions
as studded tires. Mr. Snyder related that he charges customers
according to the situation. When a tire is full of rocks, there
is a labor-intensive rock-picking session before the tire can be
siped, and that can cost from $15-$20 per car tire. For tires
without rocks, there is a fee to sipe the tire of $10 per tire.
CO-CHAIR HOLM asked if siped tires are an alternative in most
cases. Co-Chair Holm highlighted that Alaska is one of three
states that allow any type of studded tires.
MR. SNYDER answered that in Alaska most of the winter conditions
[justify] the need for studded tires or chains. If studded
tires are eliminated, Mr. Snyder predicted an increase in
accidents. Mr. Snyder said that his customers don't want studs,
but they need them and must have them to be safe.
Number 1320
CO-CHAIR HOLM offered his understanding that Canada doesn't
allow studded tires and thus he asked if there is any
information regarding whether this has compromised the safety of
drivers in Canada. He related that in most cases the use of
studded tires has been eliminated because of the damage they
create to the highways and that perhaps those areas are doing
more salting than in Alaska. Therefore, perhaps more salting is
an option.
Number 1285
JUDY SNYDER, Diversified Tire, announced her opposition to HB
173 as written. She related that testing has proven that the
use of studded tires significantly increases safety with regard
to braking and handling while on icy road conditions. Regarding
the use of studded tires, the National Tire Safety Organization
has mandated the use of four studded tires if any are used on a
vehicle. Therefore, HB 173 is essentially a $40 per vehicle
fee. She expressed concern that such a fee would preclude many
Alaskans from purchasing studded tires, which could have a
serious negative impact on road safety. If it's determined to
be absolutely necessary to impose a tire surcharge, Ms. Snyder
echoed the earlier suggestion to charge $1 on all tires sold in
Alaska and thus the burden would be more evenly distributed
among all drivers.
CO-CHAIR MASEK, upon determining that no one else wished to
testify, asked if there was any discussion on HB 173.
REPRESENTATIVE FATE said the testimony was that all tires exact
some wear on highways. He asked if there have been any studies
with regard to the ratio of wear from a studded tire and an all-
weather tire.
Number 1164
GEORGE LEVASSEUER, Maintenance and Operations Manager,
Southcentral District, Northern Region, Department of
Transportation & Public Facilities (DOT&PF), informed the
committee that there have been a number of studies that have
reviewed the amount of wear that studded tires do. The
department estimates that every studded tire costs $50 in wear.
Therefore, for a set of four tires, over the length of their
life, there will be $200 worth of pavement damage. There have
been a number of tests in which studded tires were run on one
track and an all-weather tire or radial tire alongside of it.
What was illustrated was that there isn't much appreciable wear
at all from the standard winter tire as compared with the
studded tire. Mr. Levasseuer highlighted that in Alaska the
grooves in the highway are about 55-58 inches apart, and that's
not related to truck wear because the width between those tires
is about 80-82 inches. Therefore, the grooves are related to a
standard passenger vehicle equipped with studded tires. The
department estimates that over $5 million a year [worth of]
damage is experienced from studded tires.
CO-CHAIR MASEK recalled an earlier meeting during which it was
noted that the most wear can be seen on the Glenn Highway and
the Seward Highway.
CO-CHAIR HOLM pointed out that the total amount of revenue
[generated by HB 173] is about $1,950,000. Therefore, [the
state] would be subsidizing in the amount of about $3 million,
even with HB 173.
Number 1052
REPRESENTATIVE KOOKESH asked if there has been a study reviewing
the safety of studded tires versus [standard all-weather] tires.
MR. LEVASSEUER informed the committee that the department has
done a number of studies which show that Alaska has clear roads
about 95 percent of the time in the winter. There has been
review of several factors that help with the newer cars such as
those with anti-lock braking systems, which provide much better
traction in the winter. There are also siped tires as well as
radial tires that provide much better traction. Furthermore,
more and more front-wheel-drive vehicles and sport-utility
vehicles (SUVs) are in use. Mr. Levasseuer explained that when
studded tires came out in the mid-1960s, studded tires were a
valid way in which to increase traction and safety. However,
now there are a number of methods being used that make studded
tires almost obsolete on Alaska's main arterials. He noted that
the department has a very aggressive maintenance program on the
main arterials throughout Southcentral Alaska and Southeast
Alaska. Furthermore, the department utilizes a very aggressive
chemical application program with magnesium chloride.
Number 0942
MR. LEVASSEUER reiterated that Alaska has clear roads about 95
percent of the time and said this negates [the need] to use
studs on the main arterials. He asserted that [the use of studs
on the main arterials] actually decreases the safety of the
traveling public because of the grooves from stud wear, which
collect water and cause the loss of traction due to hydroplaning
and decreased visibility. Therefore, Mr. Levasseuer related his
belief that there are a number of alternatives available that
provide adequate safety on Alaska's main arterials and thus
negate the need for studded tires.
REPRESENTATIVE KOOKESH said this didn't answer his question.
CO-CHAIR MASEK announced that HB 173 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at
2:55 p.m.
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