02/07/2017 01:30 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Proposed Committee Bill - Exemption to the 1% Art Requirement for Two New Ak Class Ferry Vessels & the Motor Vessel Tustumena Replacement | |
| HB60 | |
| Presentation: Proposed Committee Bill - | |
| Organizational Discussion | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 60 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
February 7, 2017
1:35 p.m.
MEMBERS PRESENT
Representative Louise Stutes, Co-Chair
Representative Adam Wool, Co-Chair
Representative Matt Claman
Representative Harriet Drummond
Representative Chuck Kopp
Representative Colleen Sullivan-Leonard
Representative David Eastman (alternate)
MEMBERS ABSENT
Representative Mark Neuman
Representative Gabrielle LeDoux (alternate)
COMMITTEE CALENDAR
PRESENTATION: PROPOSED COMMITTEE BILL - EXEMPTION TO THE 1% ART
REQUIREMENT FOR TWO NEW AK CLASS FERRY VESSELS & THE MOTOR
VESSEL TUSTUMENA REPLACEMENT
- HEARD
HOUSE BILL NO. 60
"An Act relating to the motor fuel tax; relating to the
disposition of revenue from the motor fuel tax; relating to a
transportation maintenance fund; and providing for an effective
date."
- HEARD & HELD
ORGANIZATIONAL DISCUSSION: Related to AS 24.08.060(a)
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 60
SHORT TITLE: MOTOR FUEL TAX; TRANSPORTATION MAINT. FUND
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/18/17 (H) READ THE FIRST TIME - REFERRALS
01/18/17 (H) TRA, FIN
01/31/17 (H) TRA AT 1:30 PM BARNES 124
01/31/17 (H) Heard & Held
01/31/17 (H) MINUTE(TRA)
02/07/17 (H) TRA AT 1:30 PM BARNES 124
WITNESS REGISTER
MATT GRUENING, Staff
Representative Louise Stutes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented a concept for a bill relating to
the "1 percent for art" requirement for two new Alaska class
ferries (ACFs) and the M/V Tustumena replacement, on behalf of
Representative Stutes, Co-Chair of the House Transportation
Standing Committee.
MICHAEL NEUSSL, Deputy Commissioner
Department of Transportation & Public Facilities (DOT&PF)
Juneau, Alaska
POSITION STATEMENT: Answered questions during a presentation
regarding a concept for a bill relating to the "1 percent for
art" requirement for two new Alaska class ferry (ACF) vessels
and the MV/Tustumena replacement.
BRYAN IMUS, Member
Laborers' Union, Local 942
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 60 and to
recommend an amendment.
SHELLY ERICKSON, Owner
HomeRun Oil Co., Inc.
Homer, Alaska
POSITION STATEMENT: Testified in opposition to HB 60.
ANDREW BREWER
Eagle River, Alaska
POSITION STATEMENT: Testified in opposition to HB 60.
GRETA SCHUERCH, Liaison
External and Government Affairs
NANA Regional Corporation
Anchorage, Alaska
POSITION STATEMENT: During the hearing on HB 60, offered
concerns.
MIKE MILLIGAN
Kodiak, Alaska
POSITION STATEMENT: During the hearing on HB 60, shared support
for an increase in motor fuel taxes.
KAREN PERRY
Chugiak, Alaska
POSITION STATEMENT: Testified in opposition to HB 60.
JAMES SQUYRES
Rural Deltana, Alaska
POSITION STATEMENT: Testified in opposition to HB 60.
AVES THOMPSON, Executive Director
Alaska Trucking Association (ATA)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 60.
GEORGE PIERCE
Kasilof, Alaska
POSITION STATEMENT: Testified in opposition to HB 60.
PAMELA GOODE
Rural Deltana, Alaska
POSITION STATEMENT: Testified in opposition to HB 60.
SHANNON CONNELLY
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 60.
KELLY JOHNSON
Soldotna, Alaska
POSITION STATEMENT: Testified in support to HB 60.
CHRYSTAL SCHOENROCK
Nikiski, Alaska
POSITION STATEMENT: Testified in opposition to HB 60.
FRED STURMAN
Soldotna, Alaska
POSITION STATEMENT: Testified in opposition to HB 60.
STEPHEN NUSS, President
American Society of Civil Engineers (ASCE) Alaska Section
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 60.
ACTION NARRATIVE
1:35:23 PM
CO-CHAIR ADAM WOOL called the House Transportation Standing
Committee meeting to order at 1:35 p.m. Representatives Stutes,
Claman, Drummond, Kopp, Sullivan-Leonard, Eastman (alternate),
and Wool were present at the call to order.
^PRESENTATION: PROPOSED COMMITTEE BILL - EXEMPTION TO THE 1% ART
REQUIREMENT FOR TWO NEW AK CLASS FERRY VESSELS & THE MOTOR
VESSEL TUSTUMENA REPLACEMENT
PRESENTATION: PROPOSED COMMITTEE BILL - EXEMPTION TO THE 1% ART
REQUIREMENT FOR TWO NEW AK CLASS FERRY VESSELS & THE MOTOR
VESSEL TUSTUMENA REPLACEMENT
1:36:11 PM
CO-CHAIR WOOL announced that the first order of business would
be a presentation regarding a concept for a bill related to the
"1 percent for art" requirement for two new Alaska class ferries
(ACFs) and the M/V Tustumena replacement.
1:36:58 PM
MATT GRUENING, Staff, Representative Louise Stutes, Alaska State
Legislature, stated that there is no bill before the committee,
rather the purpose of the presentation is simply to introduce a
concept for a bill that Chair Stutes would like to have drafted
in the committee's name. He explained that AS 35.27.020
mandates that 1 percent of the construction cost of buildings
and new facilities that are for public use be dedicated to
artwork. He added that the 1 percent is for everything from the
purchasing, designing, administration cost, and even hanging of
art. He said that the proposal includes the two new Alaska
Class Ferries (ACFs) scheduled to be delivered in 2018 for
operation in the upper Lynn Cannel area and the replacement
vessel for the M/V Tustumena. He explained that currently the
contract for the construction of the two new ACFs is roughly
$101 million, so the 1 percent mandate for art for that project
would be a little over $1 million. He noted that for the M/V
Tustumena replacement vessel, $237,000 would be the amount for
art for that project. He explained that the bill would seek to
give a one-time exemption for the two new ACFs and the
replacement for the M/V Tustumena from that requirement for the
"1 percent for art".
MR. GRUENING, to illustrate the huge liability the "1 percent
for art" would be on the state, said that the two new ACFs are
being constructed entirely with state dollars and no federal
aid. He indicated that currently the M/V Taku is in unmanned
layup in Ketchikan. He added that all the art has been removed
from the M/V Taku and placed in a climate-controlled facility in
Ketchikan where it is available for refurbishment on the two new
ACFs. He added that the art for the new replacement vessel for
the M/V Tustumena would be taken from the old M/V Tustumena.
MR. GRUENING reiterated that the bill would create a one-time
exemption to the state to avoid paying over $1.5 million for new
art when the state already has a surplus of artwork. He said
that instead of purchasing new art, repurposing the already
existing art would be the smart thing for the state to do
considering the current fiscal environment in Alaska. He added
that there is a companion bill currently in the Senate. He
noted that the Alaska State Council on the Arts has testified
that it has no opposition to the bill concept. He said the
council understands why the state is asking for the one-time
exemption. He emphasized that the intent of the bill concept is
not to attack the "1 percent for art" program or statutorily
affect the program, but to give a one-time exemption.
1:40:56 PM
REPRESENTATIVE SULLIVAN-LEONARD asked which Senate committee was
carrying the companion bill.
MR. GRUENING responded that it is the Senate Transportation
Standing Committee.
1:41:12 PM
REPRESENTATIVE DRUMMOND shared her understanding that ordinarily
the "1 percent for art" is in addition to the construction cost.
She shared her assumption that the proposed one-time exemption,
roughly $1 million in this case, wouldn't be spent on anything
for the ferries.
MR. GRUENING replied that was only partially correct. He
clarified that he forgot to mention that in contract for the two
new ACFs it was presumed, in a cost saving measure, that part of
the safety equipment and electrical equipment for the ACFs would
be salvaged from other vessels. He said that life rafts, rigid
inflatables, some radars, and automatic identification systems
(AISs) are some examples of what would be salvaged. He
elaborated that the idea is for funds that would have been spent
on art to be used on necessary safety equipment for the project
in light of the current budget shortfalls. He deferred to Mr.
Neussl for further detail of what equipment would need to be put
on ferries that is not currently included in the budget.
1:42:43 PM
MICHAEL NEUSSL, Deputy Commissioner, Department of
Transportation & Public Facilities (DOT&PF), in response to
Representative Drummond's question, said that the one-time
exemption for the 1 percent would not be a savings. He
disclosed that the ACFs are 100 percent state general fund (GF)
funded. He explained that the construction contract for the
ACFs is $101 million, which would mean that under statute the
state would have to set aside $1.01 million for art. He noted
that as part of the negotiated contract for the ACFs, with the
shipyard and given the budget limitations that existed at the
time when the contracts took place, there was a variety of state
furnished equipment that was to be provided by the state. He
added that the necessary state funded equipment would include
life-saving slides, rigid hull inflatables, radars, AISs, and a
variety of other equipment that was supposed to be state
furnished in order to keep the construction cost within budget
for the ACFs. He added that exempting the "1 percent for art"
this one time would allow the $1 million to be freed up to go
toward necessary equipment and systems to run the vessel, rather
than to artwork.
1:43:52 PM
REPRESENTATIVE DRUMMOND provided her understanding that it would
not be a savings of a million dollars, but rather would merely
grant the department the authority to spend it elsewhere on the
ferry, rather than on artwork.
MR. NEUSSL answered yes. He elaborated that it would
essentially allow that which would be mandated to be set aside
for art to be used for other necessary equipment. He added that
currently the aforementioned equipment is unfunded.
CO-CHAIR WOOL offered his understanding that even if $1 million
was to be spent on art, $1 million would still have to be spent
on the ferry for necessary safety equipment. He added that the
additional $1 million would have to come from somewhere.
MR. NEUSSL answered that is correct.
CO-CHAIR WOOL offered his understanding that the roughly $1
million is money the ferries could not do without. He inquired
whether the turning over of some of the equipment, beside art
from the other boats, would consist of simple bookkeeping or if
it would be more complicated than that.
MR. NEUSSL answered it would be more complicated. He said that
the intention with the M/V Taku is to sell that vessel "as is,
where is," unless another state agency wants to operate it in
public service. He said that just like with a used car, the
seller wouldn't strip the good tires off, pull the radio out,
and pull the radiator out, because those parts were needed. He
opined that the seller would want to keep it as complete a
vessel as possible, to yield the maximum sale price. He
explained that the department would ideally prefer to leave the
used and old equipment onboard the M/V Taku and use some of the
funds generated from the sale to go toward new equipment for the
ACFs.
CO-CHAIR WOOL inquired whether the sale of the boat, with or
without the equipment, would be allocated for the expenses
needed for the ACFs.
MR. NEUSSL said that the proceeds of the sale of the M/V Taku
would be complicated by the fact that federal funds have been
used to maintain the vessel. He explained that the department
went through a lengthy process with the Federal Highway
Administration (FHWA) to do a vessel salvage credit computation
to determine of the sale of the proceeds, technically how much
of that money would be due back to the federal government. He
reported that about 62 percent of the sale of the M/V Taku
proceeds would go back to the federal government. He expressed
that the federal government was very generous to the department
and allowed the funds to be rolled into any other Title 23 FHWA
eligible project within the state.
1:47:21 PM
REPRESENTATIVE CLAMAN inquired whether the 37 percent that did
not come from federal money would be designated to go toward
paying for the new ACFs or if it would just go into the GF.
MR. NUESSL responded that currently there is no designation, so
it would go back into the GF.
1:47:47 PM
CO-CHAIR WOOL inquired what the asking price is for the M/V
Taku.
MR. NUESSL answered that the department does not have an asking
price yet. He explained that currently the vessel is in surplus
and ready for other state agencies and municipalities to use.
He added that the surplus process would be closing at the end of
February where at that point, assuming no interested parties,
the department will put the vessel up for sale. He noted that
the process is not yet set in stone, but he offered his best
belief that it would be a sealed bid process with minimum bids
and stipulations to ensure valid and responsible buyers. He
reiterated that the process is not yet defined nor has a
specific asking price been set.
1:48:36 PM
REPRESENTATIVE KOPP asked whether the Inter-Island Ferry
Authority (IFA) had shown any interest in the M/V Taku.
MR. NUESSL answered no. He elaborated that the IFA already has
two vessels but only operates one.
The committee took a brief at-ease at 1:49 p.m.
1:49:42 PM
CO-CHAIR STUTES moved and asked that in accordance with AS
24.08.060, the committee authorize the introduction of a
committee bill on the subject of an exemption to the 1 percent
art requirement on the two new ACFs and the replacement of the
M/V Tustumena.
REPRESENTATIVE SULLIVAN-LEONARD objected.
CO-CHAIR WOOL asked Representative Sullivan-Leonard to speak to
her objection.
REPRESENTATIVE SULLIVAN-LEONARD requested a roll call vote be
taken. She stated that she objected to the proposal coming
forward as a bill that would be sponsored by the House
Transportation Standing Committee.
1:50:40 PM
REPRESENTATIVE KOPP asked whether it would be easier for the
committee members to vote on something if they all had the bill
in hand and could then state the desire for said proposal to be
a committee bill.
CO-CHAIR WOOL shared his belief that it may be easier for some.
He opined that the overview was sufficient.
REPRESENTATIVE KOPP stated that he had no problem with the
overview.
CO-CHAIR WOOL deferred to Mr. Gruening.
1:51:22 PM
MR. GRUENING shared his understanding that it is common practice
to draft a bill based on a committee's consent. He explained
that this process is not asking committee members to vote on a
bill or whether they have an intent to [support] such a bill.
He said that it is just an approval to have a bill drafted in
the committee's name.
CO-CHAIR WOOL asked if the objection is still maintained.
REPRESENTATIVE SULLIVAN-LEONARD answered yes.
A roll call vote was taken. Representatives Kopp, Stutes, Wool,
Drummond, and Claman voted in favor of the motion for the
committee to authorize the introduction of a committee bill on
the subject of an exemption to the "1 percent for art"
requirement. Representatives Eastman and Sullivan-Leonard voted
against it. Therefore, the proposal to allow the House
Transportation Standing Committee to sponsor a bill was adopted
by the House Transportation Standing Committee by a vote of 5-2.
The committee took an at-ease from 1:52 to 1:53 p.m.
HB 60-MOTOR FUEL TAX; TRANSPORTATION MAINT. FUND
1:53:26 PM
CO-CHAIR WOOL announced that the next order of business would be
HOUSE BILL NO. 60, "An Act relating to the motor fuel tax;
relating to the disposition of revenue from the motor fuel tax;
relating to a transportation maintenance fund; and providing for
an effective date."
1:54:18 PM
The committee took a brief at-ease at 1:54 p.m.
1:54:36 PM
BRYAN IMUS, Member, Laborers' Union, Local 942, said that he
recognized that during the times of ever tightening budgets it
is becoming increasingly difficult to count on highway
construction projects that upgrade Alaska's road system and keep
[laborers] working. He shared that an example of the dilemma is
reflected in the state's capital budget, which has seen a
decrease of nearly $2 billion over the last two years. He
stated his belief that increasing the motor fuel tax would both
help to supplement the capital budget and to fund the projects
necessary to ensure Alaska's transportation infrastructure would
be able to meet the demands of the state and ensure safe travel
between cities, towns, and villages. Mr. Imus stated that
although he supports HB 60, he is concerned that the current
proposal would allow the department to syphon funds from
generated motor fuel tax revenue for use toward general
operating costs. He added that his concern is that the
department may opt to use motor fuel tax revenue to fund
administrative costs rather than applying it directly toward
snow removal and road construction projects, where it is greatly
needed. He expressed his encouragement for the committee to
amend HB 60 to address the aforementioned concern by ensuring
the funds are legislatively directed toward capital projects and
maintenance.
1:56:30 PM
SHELLY ERICKSON, Owner, HomeRun Oil Co., Inc., said that the
weight of collections on the taxes and in paying the taxes on
cash flow and credit card fees falls on her. She opined that
motor fuel taxes should be collected at the refinery or the
barge point of sale. She explained that would be the simplest
tax point of collection and would take the pressure off the end
seller. She noted that current marine fuel has an extra
deduction, which means marine fuel users are paying less. She
added that if the same taxes were left in place, then
adjustments could easily be made. Ms. Erickson shared that her
solution to simplify Alaska's motor fuel tax structure would be
to tax everyone at the starting point for the same amount and
not at the end. She shared her belief that if the motor fuel
tax increase was the only type of tax increase, then the cents
per gallon could be tolerated. She shared that she anticipates
other forms of taxation will arise and therefore opines that the
aggressive amount per gallon should be lowered by half the
proposed increase. She exclaimed that she rejects HB 60. She
revealed that she is watching more and more people struggle to
get gasoline just to be able to get to their job. She noted
that just in the last year she has noticed an increase in the
use of local nonprofits for fuel assistance. Ms. Erickson
surmised that adding a motor fuel tax is a fair way to tax
everyone, but to add this tax in addition to other forms of
taxation would result in negative financial situations for many
more people.
1:58:17 PM
ANDREW BREWER opined that rather than Alaska needing a fuel tax
increase, what is needed is a fuel tax reduction. He noted that
with the tough times Alaskan's are facing, especially with the
reduction of the permeant fund dividend (PFD), legislators need
to send the message that they understand their constituents. He
suggested that instead of increasing taxes, legislators should
take an opportunity to lower taxes and provide economic relief
to both individuals and a state economy in recession. He added
that not only would Alaskans appreciate a fuel tax reduction,
legislators would garnish support from a reduction as well.
1:59:28 PM
GRETA SCHUERCH, External and Government Affairs Liaison, NANA
Regional Corporation ("NANA"), stated that the primary mission
of the corporation is to improve the quality of life for its
over 14,000 shareholders. She added that NANA also works to
maximize economic growth, protect and enhance land, and promote
healthy communities. She said that NANA monitors policy matters
that would impact its business, communities, and shareholders.
She explained that HB 60 is of concern to NANA because it poses
significant risk to NANA shareholders and other Northwest
Alaskan residents.
MS. SCHUERCH declared that residents in the Northwest region are
already challenged with the highest cost of living anywhere in
the state. She added that Kotzebue residents pay 61 percent
more for cost of living expenses than Anchorage residents do.
She noted that the cost of living increases even more in more
remote villages, such as her hometown of Kiana, and even more so
in places like Ambler and Buckland where the price of fuel for
homes and for transportation is close to $10 per gallon.
MS. SCHUERCH stated that in Northwest Alaska many businesses,
local governments, families, and elders struggle to make ends
meet with outrageous cost of living in an already cash strapped
economy. She opined that an increase to motor fuel costs would
impact the cost of transportation for residents who rely
primarily on snow mobiles and boats for hunting and gathering
practices. She pointed out that NANA is working with other
regional entities to address the high cost of energy and is not
solely reliant on the state to solve the problem. She listed
some of the projects to include: the installation of wind
turbines; local gas exploration; gathering wind and stream flow
data to identify other sources of alternative energy; and
pursuing United States Department of Energy and United States
Department of Agriculture grants to deploy solar energy and
storage batteries for two of NANA's communities. She affirmed
that NANA and other entities are working hard to take steps to
resolve the challenges that hamper economic development in the
region. She said that while NANA supports the implementation of
a long-term fiscal plan, it does not support a motor fuel tax
increase, as it would present further financial burdens on the
Northwest Alaska region.
2:02:06 PM
MIKE MILLIGAN stated that he has always supported an increase in
motor fuel taxes. He opined that the increases proposed in HB
60 are too low and an embarrassment. He mentioned that the
state of Florida, which he pointed out does not even have to pay
for snow removal, has a 13 cent per gallon fuel tax. He shared
that he first testified in favor of motor fuel tax increases
when Andrew Halcro was in the legislature and introduced a bill
to increase fuel taxes. To further iterate the need for an
increase in motor fuel taxes, Mr. Milligan pointed out that the
last time fuel taxes were increased Elvis was still alive. He
alluded that Alaska is primarily able to build and fix roads in
the state because of federal funding. He added that the federal
funding is only there because of fuel taxes. He noted that even
as the deficit continues to climb, road and highway construction
and maintenance continue because of the aforementioned revenue
source.
MIKE MILLIGAN offered his understand that HB 60 would not
dedicate funds. He indicated that he interprets the
Constitution [of the State of Alaska] as not allowing funds to
be pre-dedicated. Notwithstanding that, Mr. Milligan encouraged
legislators to "always dedicate highway fuel taxes to highways."
He said that although there are some differences in the levy
amounts in the proposed bill, he trusts that the bill crafters
knew what they were doing. He reiterated the need for Alaska to
increase motor fuel taxes. Mr. Milligan acknowledged the
problems fuel tax increases would cause, especially in some of
the Western areas of the state. He opined that that area
already enjoys many benefits through airports and road
maintenance. He assessed that Alaska cannot continue to be
completely dependent on federal dollars. He exemplified
Alaska's dependence on federal funding by noting that the last
road he worked on was 96 percent federally funded.
2:04:36 PM
KAREN PERRY urged the committee to vote no on HB 60. She opined
that a fuel tax increase would make the lives of Alaskans more
difficult, and she reminded the committee that making their
constituent's lives more difficult is not why voters elected
them to serve in Juneau. She mentioned research done by
Americans for Tax Reform (ATR) that showed middle class Alaskans
would be hurt the most by an increase in motor fuel taxes. She
added that a motor fuel tax increase would place the burden on
hard working Alaskan individuals and businesses. She said that
an increase in fuel tax would not only lessen the amount of
money in Alaskan's pockets that is needed to feed, clothe, and
keep their families warm; an increase would also take money
needed to get to and from jobs, as well as decrease the amount
of money being pumped into local economies. She asserted that
Alaska is in a recession and a fuel tax increase is one of the
worst things that could be done. She opined that Governor
Walker seems determined to single handedly destroy Alaska's
economy. She reminded the committee that it is the
legislature's job to stop to governor. She reiterated her
advice for the committee to do what is right for all Alaskans
and vote no on HB 60.
2:06:30 PM
JAMES SQUYRES urged legislators to understand that there are two
types of rural Alaska: the Native rural village Alaska and the
rural Alaska where many individuals simply choose to live in
remote areas of the state. He stated that the latter describes
his home 40 miles from Delta Junction, deep in the unorganized
borough. He added that he lives off the grid and down a state
road that is not maintained. He explained that his road would
always be too far from any potential service point to ever be
maintained. He stressed that his testimony is not a complaint
against a remote style of living but rather is an effort to
educate the committee about how he and other Alaskans choose to
live out their version of the Alaskan lifestyle. He disclosed
that his largest expenses every month are gasoline and diesel.
He shared that he maintains two plow trucks in order to keep his
access open. He noted that after plowing his own driveway he
plows a mile of state-owned road which other Alaskans use for
access to a stocked lake used for recreational winter ice
fishing. He elaborated that it takes a lot of horsepower to
plow the steep and hilly road and that it cost him at least one
jerry can of gasoline every time he even fires up the truck. He
explained that it is 80 miles roundtrip to town just to check
the mail or refill his jerry can.
MR. SQUYRES to elaborate how dependent his remote lifestyle is
on gasoline, said his family stays warm because they burn wood
that is cut from their own land. The wood is hauled via snow
mobile, cut by a chainsaw, and finally split by a 27-ton wood
splitter - all of which use gasoline. He shared that in order
to make the call to testify today he has to use a small
efficient gasoline powered generator to charge a battery that
provides light and electricity. He said that he has to pump his
well out once a week. He noted that that operation, because of
the depth of his well, requires a large 220-volt generator that
runs on gasoline. Mr. Squyres noted the already high cost of
fuel in Fairbanks, especially in comparison to Anchorage where
not only gasoline is cheaper but most everything else is too.
He reiterated the importance of gasoline, diesel, and propane in
living a remote rural Alaskan lifestyle.
MR. SQUYRES pointed out that there will never be any
infrastructure in the area where he lives other than what a
self-reliant person can provide for him/herself. He indicated
that he would like to see the size, scope, and footprint of
government reduced much further before trying to increase
revenue off of the private economy. He described that the
people in his area have been penalized already from the
governor's veto of half of the PFD. He elaborated that $1000 is
the cost of a Honda 2000 generator, an important piece of
equipment for the remote rural Alaskan. He pointed out that
with a population of roughly 5,000 people in his area, the PFD
cap removed $5 million from the local economy and at a critical
time when final preparations were being made for winter. He
added that with a 1.4 multiplier effect that would bring the
impact to $7 million. He said that he and many others have long
been advocates of the "[Institute of Social and Economic
Research] (ISER)/Goldsmith" budget target levels by the size of
government and the use of the other half of the earnings of the
permanent fund without changing the calculations of the PFD. He
opined that it would work if the other half of those earnings
were used by government to be a revenue increase and give the
needed diversification from gas revenue. He concluded that if
the committee members woke up this morning and flushed a toilet
and turned on lights connected to a power grid, then they need
to think twice before continuing to take action that affects the
very core of individuals living much closer to the basic Alaska
[lifestyle], which is the backbone of the Last Frontier.
2:09:56 PM
AVES THOMPSON, Executive Director, Alaska Trucking Association
(ATA), explained that the ATA is a statewide organization
representing the interests of nearly 200-member companies from
Barrow [aka Utqiagvik] to Ketchikan. He declared that freight
movement is an essential part of Alaska's economy and impacts
all Alaskans, each and every day. He pointed out that one of
ATA's legislative priorities for 2017 is the development of a
balanced durable long-term fiscal plan that utilizes cuts to
state government, permanent fund earning usage, and taxes, if
required. He noted that the fuel tax increase, as proposed in
HB 60, is acceptable within the framework of a long-term fiscal
plan. He stated that ATA maintains that action is critical this
legislative session. He added that ATA has long supported a
fuel tax increase, as long as the funds would be dedicated to
transportation needs. Mr. Thompson shared that ATA realizes
funds would not be specifically dedicated through HB 60 but
feels strongly that it needs to help resolve the fiscal issues
by doing its part. He stated that ATA is pleased to see that
under HB 60, a transportation maintenance fund would be
established for use by DOT&PF, for the following purposes, [as
shown within Section *, Subsection (g), on page 4, lines 20-25,
which read as follows]:
direct capital, operating, or maintenance costs of
highways and highway infrastructure, construction of
highway projects and ferries included in the program
provided for in AS 19.10.150, including approaches,
appurtenances and related facilities and acquisition
of rights-of-way, [or] easements, or surveys [AND
OTHER HIGHWAY COSTS INCLUDING SURVEYS, ADMINSITRATION,
AND RELATED MATTERS].
MR. THOMPSON mentioned a presentation, during which the
commissioner of the Department of Revenue had stated that a
transportation maintenance fund would create confidence that
revenues from motor fuel would be used to build and maintain
transportation infrastructure. He recognized that despite being
encouraged from the comments of the commissioner, ATA urges the
legislature to write stronger intent language to clearly define
that the special highway fuel tax account be used for roads and
bridges. He indicated that the governor's fiscal year 2018 (FY
18) budget proposal has at least three requested appropriations.
Mr. Thompson told the committee there was one appropriation to
the Department of Public Safety for $1.5 million and two to
DOT&PF, one for $1 million for mental health transportation and
$1 million for a public transit match. He noted that it seems
the ink is not even dry and there is already a line up to tap
into the aforementioned fund. He remarked that ATA would
support a fuel tax increase as part of a larger package. He
pointed out that the trucking industry pays about 40-45 percent
of the state motor fuel tax.
MR. THOMPSON reviewed that under HB 60, there would be an eight-
cent increase for motor fuel tax be in 2017 and another in 2019.
He said there is an assumption that industry can immediately
pass on any tax increases to customers. He explained that many
of ATA's members use the fuel surcharge to minimize the impact
of fuel price and tax increases. He noted that those same
members generally use a regional index to determine the level of
surcharge. He elaborated that the charges are generally
negotiated between the motor carrier and their customers. He
opined that an increase in motor fuel tax would not likely
change the regional index. Mr. Thompson stated that for the
aforementioned reasons ATA is asking for a two-step increase
rather than an increase made in two consecutive years, as
currently proposed in the bill. He explained that the delay in
increase would allow for time to minimize the impact on both
customers and industry. He reiterated that ATA supports a motor
fuel tax increase as part of a balanced durable long-term fiscal
plan that includes cuts to state government spending, permanent
fund earnings, and implementation of taxes.
2:13:49 PM
REPRESENTATIVE CLAMAN pointed out that Section 8, on page 4 of
HB 60, references depositing funds from the motor fuel tax into
a special highway fuel tax account in the transportation
maintenance fund. He said that it appears to indicate that
those monies would be paid directly or used for federal matching
money for direct capital operating and maintenance cost and
highway infrastructure. He said that he just wanted to point
that section out to Mr. Thompson. He added that he also wanted
to confirm that the wording of the proposed legislation
satisfied ATA's interest in the funds being directed toward
highway projects, including maintence.
2:14:40 PM
MR. THOMPSON answered that he is familiar with that. He offered
his belief that the match money may be appropriate. He offered
his understanding that the match money would be for a public
transit vehicle and that the other DOT&PF appropriation request
is asking for $1 million for "the mental health transportation
of patients." He shared that he would like to be sure there
would be reasonably good protection built around the
transportation fuel tax fund to make sure that money wouldn't
get syphoned off into other areas.
2:15:24 PM
REPRESENTATIVE CLAMAN said that he would take a look at that
section to see how it addresses the concerns Mr. Thompson
raised. He shared that he broadly agrees with Mr. Thompson that
the legislature ought to make sure those funds would go into a
designated general fund location.
2:15:55 PM
GEORGE PIERCE, to illustrate that the legislature is trying to
tax Alaskans for revenue, said that fuel taxes would bring in a
little over $40 million the first year and $90 million the
second year. He pointed out that while there has been mention
that Alaska has the lowest fuel tax rate in the nation, it has
failed to be mentioned that Alaskans pay the highest prices for
fuel. He opined that the state should stop funding the 6,000
nonprofits and the 6,000 limited liability companies (LLCs) and
(indisc.) corporations and start making everyone step up and pay
their fair share. He added that non-contributors are not paying
their fair share. He declared that the state needs to stop the
giveaways. He mentioned that the governor took Alaskans' PFDs
and gave over $660 million to the oil industry. He surmised
that next year it would be over $1 billion dollars. He urged
the legislature to fix Senate Bill 21 [passed in the Twenty-
Eighth Alaska State Legislature] and quit giving away the
credits and incentives like it has. He restated that everyone
has to pay, and the state needs to stop the giveaways. He
advised that the legislature try representing Alaskans and not
industry.
2:17:22 PM
PAMELA GOODE stated her opposition to HB 60 and asked that it
not be reported out of committee. She opined that over the past
10 years both oil prices and government spending reached
unprecedented levels. She remarked on the growth of government,
and she opined that the government was spending on capital
punishment, and "spending like it was going to go on
indefinitely, all the while Alaskans were not celebrating." She
stated that Alaskans were praying for the prices to go down
because it was not uncommon to have prices of $5 per gallon
across the state. She elaborated that high gas prices effected
everything remote rural residents in her area did, from trips to
town, work, heating, electricity, food, farming, and all
maritime travel to hunting and fishing locations. She opined
that while the price of gas went up, the government was having a
good time. She also noted that the tourism industry took a hard
hit when gasoline prices were so high. She mentioned that she
knew of private businesses that suffered greatly, with some
never recovering and eventually folding.
MS. GOODE alluded that government has been putting billions into
the Cook Inlet Recovery Act, in refundable oil and gas tax
credits, to help bring the gas prices in the Anchorage area
down. Ms. Goode indicated that was also when the power cost
equalization program (PCEP) came into effect for the Native
villages because the villages were probably seeing $6-7 per
gallon prices. She expressed that she felt like now that
Alaskans are all breathing a little sigh of relief because
prices are down, government wants more. She noted that even
though Alaska has the lowest motor fuel tax rate it still has
the highest gas prices in the country. She restated her
opposition to HB 60 and explained that the bill would work
against the people and the overall economy in Alaska. She
shared her wish to see a roll call vote taken on HB 60 that
results in the proposed legislation failing to move from
committee.
2:19:42 PM
SHANNON CONNELLY recollected about when gas prices were
extremely high. She noted that her husband commutes and the gas
price spike really impacted her family. She added that during
that time her family didn't do anything extra. She said there
were times when they had to cancel doctor appointments because
they didn't have enough money to drive into Anchorage. She
acknowledged that there are a lot of supporters of a motor fuel
tax increase, but she opined that the supporters have not
thought through the overall impact of what an increase would do
to Alaska's economy. She surmised that businesses would not be
able to absorb the added cost and the transportation fee
increase would be passed down to the users. She stressed that
Alaskans would not only be paying more for gasoline but more for
goods and services too. She shared the she would like to see HB
60 die in committee.
2:21:04 PM
KELLY JOHNSON recommended that Alaska needs to have a more
diversified source of funds. He mentioned one caveat: If oil
prices go up, then so too should state revenue, but if oil
prices go down, then state revenue should go down. He proposed
that the state should not tax its citizens when the price of oil
is high and, thus, revenue is not needed, but should increase
taxes when the price of oil goes decreases because the state
would need the help then. He said what that would do is make
the prices at the pump the same all the time. He noted that the
price certainty would allow for people to plan their budgets
without having to worry about the price fluctuating up or down.
He offered his belief that the legislature can't take an
increase at the pump and a tax on top of that at the same time.
He opined that the legislature needs to look at motor fuel tax
as a variable tax, that way everyone would be able to live with
it. He stressed that a motor fuel tax increase might be easier
to swallow if the state would agree to give Alaskans a little
break when oil prices are high.
2:23:12 PM
CHRYSTAL SCHOENROCK offered her understanding that DOT&PF, both
the airline and the trucking industries, and the airports
support a motor fuel tax increase, but they don't absorb the
cost, Alaskans do. She elaborated that Alaskans end up paying
for the increases through added costs and fees on their bills.
She stated that she is a small business owner. She said that
her business is down 25-30 percent and that it is a direct
result of the lay-offs on the Slope. She added that she is
seeing people deal with cuts to wages and some people are not
working at all. She stated that people are having a hard time
trying to make ends meet this winter. She shared her conviction
that a fuel tax increase would be ridiculous. She opined that
there are other ways to cut the budget. She shared her belief
that the state has multitaskers that could do the work of two or
three people and would take a cut in wages just like everyone
else. She urged the committee to work a little harder on HB 60.
2:24:44 PM
FRED STURMAN shared a story of a business in Kenai that has been
in operation for over 30 years. He said that to avoid letting
one employee go, all of the employees decided to each take a 20
percent cut by taking an extra day off a week. He surmised that
the government claims that everyone needs to have skin in the
game, but he has yet to see a government employee this year who
had his/her skin in the game. He noted that government
employees still all got raises, step increases, medical care,
and still have retirement. He shared that he has a list of
nearly 800 employees that currently make more than the governor.
He opined that it is ridiculous Alaska is paying employees more
than its governor. He said that he knows some relatives who
lost 30-40 percent of their income from the oil industry. He
shared that he also knows of several people who had contracts
with the oil companies that have since been discontinued, and
those contracts brought 100 percent of their income. He opined
that the legislature needs to spend more time trying to figure
out how to reduce government spending and the number of state
employees before it starts adding more taxes. He pointed out
that some legislators in Juneau have spent upwards of $100,000
on travel and he declared that is too expensive. He urged that
the legislature reduce the state budget before it starts asking
for Alaskan's money.
2:27:14 PM
STEPHEN NUSS, President, Alaska Section, American Society of
Civil Engineers (ASCE), shared that globally the American
Society of Civil Engineers (ASCE) supports user fees, such as a
motor fuel tax. He offered ASCE's belief that adequate funding
to operate, maintain, and improve transportation infrastructure
through sustainable dedicated funds is needed. He stated that
ASCE supports a motor fuel tax. He explained that ASCE opines
that revenues should be used for mode-neutral funding. He noted
that Alaska is a large state that relies on aviation, highways,
and the Alaska Marine Highway System (AMHS) to commute, get
around, and do business. He offered ASCE's belief that any
revenues generated should be mode-neutral to be able to support
all of Alaska's transportation infrastructure systems. He added
that the funds should have budgetary firewalls to eliminate the
diversion of transportation revenues to non-transportation
purposes.
MR. NUSS pointed out that some of the comments heard previously
were supportive of the aforementioned key protection feature.
He said that personally he understands what HB 60 would do. He
stated that currently he uses about 16 gallons of gas a week, or
roughly 800-900 gallons annually. He said that at 8 cents a
gallon that equates to roughly $66 a year in motor fuel taxes.
He noted that under HB 60 that amount would raise to roughly
$200 a year. Mr. Nuss shared an example of where a motor fuel
tax can be useful. He said that last year he hit a pothole, on
C Street in Anchorage, which dented the rim and blew out the
tire. He explained that on all-wheel drive vehicles the treads
on all four tires have to match, so a driver cannot just replace
one tire, he/she would have to replace all four tires, which
would cost roughly $800. He stated that he personally saw
benefit from paying roughly $200 versus $800 a year. He shared
that it is the belief of ASCE, both nationally as well as with
the over 800 civil engineers in the state of Alaska that are
represented by ASCE, that a motor fuel tax is an important thing
to sustain Alaska's infrastructure, maintain it, improve it, and
keep Alaska running.
2:29:50 PM
REPRESENTATIVE CLAMAN asked Mr. Nuss where he commutes every
day.
MR. NUSS answered from Eagle River to midtown Anchorage. He
added that he puts about 40 miles a day on his vehicle.
2:30:11 PM
CO-CHAIR WOOL asked Mr. Nuss to clarify whether he said that he
didn't want the funds delineated between the different modes of
transportation, for example motor fuel to roads and marine fuel
to ports.
MR. NUSS responded that in looking at the investment in Alaska's
infrastructure systems, it is apparent that highways take up a
good chunk of it, but Alaska also has a significant amount of
aviation resources and a large marine highway system. He
explained that a mode-neutral [fund] would allow the greatest
flexibility in order to be able to maintain the interconnected
transportation system in Alaska. He informed the committee that
although there are individuals living off the grid that
primarily just use the airports, when they fly into Anchorage,
Fairbanks, or Juneau they end up traveling along the road
system. He reiterated that globally a mode-neutral fund is
warranted.
2:31:24 PM
CO-CHAIR WOOL, after ascertaining no one further wished to
testify, closed public testimony on HB 60. Industry testimony
would be heard next Thursday, he said.
[HB 60 was held over.]
^PRESENTATION: PROPOSED COMMITTEE BILL -
EXEMPTION TO THE 1% ART REQUIREMENT FOR TWO NEW AK CLASS FERRY
VESSELS & THE MOTOR VESSEL TUSTUMENA REPLACEMENT
PRESENTATION: PROPOSED COMMITTEE BILL -
EXEMPTION TO THE 1% ART REQUIREMENT FOR TWO NEW AK CLASS FERRY
VESSELS & THE MOTOR VESSEL TUSTUMENA REPLACEMENT
2:31:38 PM
CO-CHAIR WOOL announced that the committee would return to the
previous presentation regarding the proposed committee bill that
would allow for the exemption to the one percent art requirement
for two new Alaska Class Ferry vessels and the M/V Tustumena.
2:31:47 PM
MR. GRUENING, in regard to Representative Sullivan-Leonard's
previous question about which of the Senate committees sponsored
the companion bill, clarified that he had misspoke previously
when he stated it was the Senate Transportation Standing
Committee; the sponsorship actually rests with Senator Stedman,
who is the chair of the Senate Transportation Standing
Committee.
2:32:33 PM
REPRESENTATIVE SULLIVAN-LEONARD asked for clarification as to
the number of the bill.
MR. GRUENING apologized and said he could not recall the bill
number, but two bills were rolled into one bill regarding the
waste water cruise ship bill and the "1 percent for art" for
ferries bill.
^ORGANIZATIONAL DISCUSSION
ORGANIZATIONAL DISCUSSION
2:32:56 PM
CO-CHAIR WOOL announced that the final order of business would
be an organizational discussion.
2:32:56 PM
REPRESENTATIVE CLAMAN moved that Representatives Wool and
Stutes, co-chairs of the House Transportation Standing
Committee, be delegated the duties and responsibilities in AS
24.08.060(a) during regular and special sessions of the
Thirtieth Alaska State Legislature; this delegation remains in
effect until withdrawn by the committee.
REPRESENTATIVE SULLIVAN-LEONARD objected.
2:33:35 PM
REPRESENTATIVE CLAMAN explained that the motion basically gives
the co-chairs the authority to introduce committee bills without
taking a vote of the committee, which currently has been done in
several other committees and also in previous legislatures.
REPRESENTATIVE SULLIVAN-LEONARD opined that she is at a
disadvantage because she is not familiar with this particular
statute. She shared that she would like a legal opinion on the
matter and was not comfortable just taking the word of another
committee member. She surmised that the aforementioned process
would remove a sense of transparency in the committee process,
which is both valuable and needed.
2:34:38 PM
REPRESENTATIVE KOPP provided awareness that this same motion has
been passed in other committees. He shared that he agreed with
Representative Sullivan-Leonard about wanting to be able to
review the statute and better understand how it would work. He
said that he wanted to know how it would play out to have a
committee bill brought in and if it would take away anything
from individual legislator's authority to comment or vote. He
requested that the committee wait until next week, so all
members would have time to review all implications of the
motion.
2:35:21 PM
REPRESENTATIVE CLAMAN pointed out that he has a memorandum from
Representative LeDoux, the chair of the House Rules Standing
Committee which he is happy to share with Representative
Sullivan-Leonard.
2:35:44 PM
The committee took an at-ease from 2:35 p.m. to 2:37 p.m.
2:37:38 PM
CO-CHAIR WOOL announced that the motion would be tabled until
next week.
2:37:58 PM
REPRESENTATIVE EASTMAN inquired about his position as an
alternate acting on behalf of an excused member. He asked
whether his name would be included, as an alternate, "on that
committee referral if we were to take this action."
2:38:16 PM
CO-CHAIR WOOL expressed uncertainty. He said tabling the motion
until next week would allow time to answer any questions.
2:38:29 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 2:39
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB60 Opposing Documents - Letter Erickson 2.6.18.pdf |
HTRA 2/7/2017 1:30:00 PM |
HB 60 |
| HB60 Supporting Documents - Letter Grober 2.6.18.pdf |
HTRA 2/7/2017 1:30:00 PM |
HB 60 |
| HB60 DOTPF Response 2.6.17.pdf |
HTRA 2/7/2017 1:30:00 PM |
HB 60 |
| HB60 Supporting Documents - Motor Fuel Tax Background Information 2.6.17.pdf |
HTRA 2/7/2017 1:30:00 PM |
HB 60 |
| HB60 Supporting and Opposing Documents - Mats Su Letters 2.7.17.pdf |
HTRA 2/7/2017 1:30:00 PM |
HB 60 |
| HB60 Opposing Document-Schoenrock 02.07.17.pdf |
HTRA 2/7/2017 1:30:00 PM |
HB 60 |