Legislature(2021 - 2022)BARNES 124
03/04/2021 01:30 PM House TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Statewide Aviation & International Airports | |
| HB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 104 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
March 4, 2021
1:31 p.m.
MEMBERS PRESENT
Representative Grier Hopkins, Chair
Representative Ivy Spohnholz
Representative Harriet Drummond
Representative Sara Hannan
Representative Tom McKay
Representative Kevin McCabe
MEMBERS ABSENT
Representative Mike Cronk
COMMITTEE CALENDAR
PRESENTATION: STATEWIDE AVIATION & INTERNATIONAL AIRPORTS
- HEARD
HOUSE BILL NO. 104
"An Act relating to vehicle registration and registration fees;
relating to the motor fuel tax; and providing for an effective
date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 104
SHORT TITLE: MOTOR FUEL TAX; VEHICLE REG. FEE
SPONSOR(s): REPRESENTATIVE(s) JOSEPHSON
02/19/21 (H) READ THE FIRST TIME - REFERRALS
02/19/21 (H) TRA, FIN
03/04/21 (H) TRA AT 1:30 PM BARNES 124
WITNESS REGISTER
JOHN BINDER
Deputy Commissioner
Department of Transportation & Public Facilities
Juneau, Alaska
POSITION STATEMENT: Presented a PowerPoint and answered
questions during the meeting.
REPRESENTATIVE ANDY JOSEPHSON
Legislator
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 104 as prime sponsor.
NATHANIEL GRABMAN
Staff to Representative Andy Josephson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented a PowerPoint and answered
questions during the meeting.
ROB CARPENTER
Deputy Commissioner
Department of Transportation & Public Facilities
Juneau, Alaska
POSITION STATEMENT: Answered a question during the meeting.
ACTION NARRATIVE
1:31:31 PM
CHAIR GRIER HOPKINS called the House Transportation Standing
Committee meeting to order at 1:31 p.m. Representatives
Drummond, Hannan, McKay, McCabe, and Hopkins were present at the
call to order. Representative Spohnholz arrived as the meeting
was in progress.
^PRESENTATION: Statewide Aviation & International Airports
PRESENTATION: Statewide Aviation & International Airports
1:36:30 PM
JOHN BINDER, Deputy Commissioner, Department of Transportation &
Public Facilities (DOT&PF), went over the layout of organization
and leadership the aviation system. Underneath Deputy
Commissioner Binder, the aviation system was divided into the
Alaska International Airports System (AIAS) and Statewide
Aviation (SWA), which includes 235 rural airports. Anchorage
and Fairbanks international airports are required by statute to
be self-sustaining enterprise systems which accept no funds from
the state, and none of the revenue they generate goes to the
state, he added. There are six airports in Alaska which are not
under the oversight of DOT&PF, he stated.
1:39:39 PM
DEPUTY COMMISSIONER BINDER said international carriers, known as
signatory carriers, operated under a 10-year operating
agreement. There were currently 35 signatory carriers, he
stated. Signatories shared financial risk in exchange for
capital and operating input and discounted fees, organized and
engaged AIAS as Airline Airport Affairs Committee (AAAC), and
had co-chairs who were representatives for UPS and Alaska
Airlines, he imparted. Airports had the authority to "back-
bill" carriers so that the system always ended up even, he said.
Alaska International Airport System issued general airport
revenue bonds (GARBS) through State Bond Committee, and there
was some outstanding debt, he disclosed.
DEPUTY COMMISSIONER BINDER went over the annual revenue and
Operations, maintenance, and debt costs with the committee
(slide 7), the majority being aeronautical-related, such as
landing fees, he pointed out. The chart on the right, operating
costs, did not include airport-funded capital costs, he pointed
out. In terms of air cargo, domestic passenger traffic,
international passenger traffic, and in-state cargo. In terms
of air cargo, FY 20 was a good year, the likes of which haven't
been seen since 2007-8, as depicted on slide 8 of the
presentation. The graph on slide 8 also showed how critical air
cargo was to the other activity, he pointed out.
1:43:45 PM
DEPUTY COMMISSIONER BINDER went over the term Certified Maximum
Gross Takeoff Weight (CMGTW) on slide 9. Especially in the
light of the COVID-19 pandemic, he stated, DOT&PF felt CMGTW was
the best indicator of how aviation was doing from a budgetary
standpoint. How much steel is landing was represented, and how
much of that was air cargo. With the pandemic, things have
picked up cargo-wise, since full freighters needed to stop for
fuel, and the state of Alaska benefitted from that. As a
counter, there was a huge decline in passenger travel in FY 20.
Since 60-70% of airport revenue was related to passenger-type
activities, CARES grant funds were used to close out FY 20 "in
the black," and there was still a fair amount left for FY 21 and
beyond to keep rates down for carriers while they are struggling
during these times, he shared.
1:46:27 PM
DEPUTY COMMISSIONER BINDER, on the "Airport Improvement Program
(AIP)" slide (9), pointed out entitlements represented what was
earned and discretionary to what was left over. Overall, "the
internationals" averaged about $35 million a year in federal
capital funding for aviation programs, he stated.
CHAIR HOPKINS asked what qualified as entitlements.
DEPUTY COMMISSIONER BINDER replied airports were entitled to
federal funding based upon how much passenger and cargo activity
went through an airport. Passenger totals were calculated by
percentage for the year, he said. Typically, $3.35 billion was
made available to airports for the year, he said.
DEPUTY COMMISSIONER BINDER spoke to projects at the Ted Stevens
International Airport, including new international passenger
transfer rights, fresh, head-on seafood export to Asia.
1:50:18 PM
REPRESENTATIVE MCCABE asked about the cargo terminal expansion.
DEPUTY COMMISSIONER BINDER replied UPS and FedEx were in the
process of expanding their processes in Alaska significantly and
gave details on their aircrafts, 787-800 for UPS and Boeing 777
for FedEx. Both needed additional space for parking and sorting
facilities, he stated. In terms of more private development
opportunities, Alaska Cargo and Cold Storage was expanding, as
were IC Alaska and 6A, and all these companies also needed more
space.
REPRESENTATIVE MCCABE verified IC Alaska and 6A were both cargo
companies.
DEPUTY COMMISSIONER BINDER replied yes, all new proposals were
intended for cargo.
1:53:42 PM
DEPUTY COMMISSIONER BINDER proceeded with an explanation of the
Anchorage airport projects: unmanned aircraft systems (UAS) or
drones' testing; and air service expansion, especially to
international markets. Slide 14 showed DOT&PF owned and
operated 235 airports and seaplane bases; 173 gravel and 46
paved airports; 17 Seaplane bases, and one heliport. He
reminded the committee that rural airports provided primary
access for 82% of Alaskan communities off the contiguous road
system, and the rural system was not self-sustaining, but
primarily funded by general funds, with some revenue via leases.
There were 21 139-certificated airports (jet hubs).
1:54:59 PM
REPRESENTATIVE HANNAN asked how many of the 235 rural airports
have been tested for exposure to PFAS groundwater pollution.
DEPUTY COMMISSIONER BINDER replied the primary exposure to PFAS
in Alaska was related to firefighting foam, and that foam was
not at any of the 21 certificated airports. To identify
priority locations, DOT&PF has worked with DEC and is
approximately halfway through the testing of the 21 certificated
airports. He added that all the high-priority airports had been
tested.
REPRESENTATIVE HANNAN asked for a list of which of the 21 have
been tested and what the results were.
DEPUTY COMMISSIONER BINDER replied yes.
1:57:22 PM
DEPUTY COMMISSIONER BINDER broke down the operating costs for FY
20 in slide 15. The rural system at approximately $40 million a
year, was about 30% of the DOT&PF's highways and aviation
budget, including $14 million in federal funds. Federal dollars
were required to be spent on capital items, yet there were
maintenance and preservation items were eligible for federal
funding. As there has been a draw down in general funds over
the years, federal funds have been leveraged to accomplish
tasks. The DOT&PF received $14 million as part of the CARES
grant. Approximately $7 million was brought in from leasing
receipts, and $5 million from aviation fuel tax, which included
both jet fuel and aviation gas. As climate change continued to
have its drastic effects, in Alaska taking shape of freeze/thaw
and freezing rain events, optimizing sand and chemical usage was
important in operations. The aviation company would prefer a
fuel tax over other items, but user fees and landing fees were
other common mechanisms by which airports covered their costs.
2:00:10 PM
REPRESENTATIVE HANNAN asked when aviation fuel tax was last
increased.
DEPUTY COMMISSIONER BINDER replied it had been a long time, at
least 20 years.
2:00:46 PM
REPRESENTATIVE MCCABE asked the prices of aviation and jet fuel
taxes.
DEPUTY COMMISSIONER BINDER replied jet fuel was 3.2 cents/gallon
and aviation gasoline tax 4.7 cents/gallon.
2:01:20 PM
DEPUTY COMMISSIONER BINDER said rural airports brought in about
$130 to $140 million in Federal Aviation Administration (FAA)
funding, so about $200 million for the year. Generally, rural
airports were listed as 6.25% match in project eligible costs;
however, a few essential air service airports in designated
economically distressed communities qualified for a 5% match of
project eligible costs. Most FFY 2020 project matches were 100%
CARES Act-funded, he added.
2:03:17 PM
REPRESENTATIVE MCCABE asked if the federal government did away
with essential air service, what would happen with the 1.25%.
DEPUTY COMMISSIONER BINDER replied it would depend how language
was drafted.
DEPUTY COMMISSIONER BINDER presented an overview "snapshot" of
major rural system AIP construction projects expected to be
funded in FFY 2021-2022: pavement rehabilitation in Bethel,
Homer, and Unalaska; rural access in Angoon, Bettles, Brevig
Mission, Chevak, Ekwok, Kaltag, Kongiganak, Metlakatla, New
Stuyahok, Newtok, Noorvik, Saint Mary's, Seward, and Togiak; and
buildings in Cold Bay, Cordova, McGrath, and Napaskiak.
2:04:34 PM
REPRESENTATIVE HANNAN asked if there were different groupings
within "rural access."
DEPUTY COMMISSIONER BINDER replied it all applied to the
category of things having to be fixed infrastructure-wise.
Widening or lengthening runways and bringing things up to
standards all qualified.
REPRESENTATIVE HANNAN clarified Angoon would get a landing
strip.
DEPUTY COMMISSIONER BINDER replied yes, in a couple of years.
2:06:19 PM
CHAIR HOPKINS asked if there was a reason for building Angoon an
airport at this point, and if there were standards for when
airports must be built in general.
DEPUTY COMMISSIONER BINDER replied safety considerations,
weather considerations, and whether there is a decent place for
an airport all factored in.
CHAIR HOPKINS clarified there wasn't a new need which had
arisen.
DEPUTY COMMISSIONER BINDER there had been a need, and it was a
priority process.
2:07:46 PM
REPRESENTATIVE DRUMMOND verified Angoon had been cut off from
Alaska Marine Highway System (AMHS) service in 2020.
DEPUTY COMMISSIONER BINDER replied yes, which certainly helped
determine Angoon qualified for an airport.
DEPUTY COMMISSIONER BINDER offered more information on drones
and the Alaska Center for Unmanned Aircraft Systems Integration
(ACUASI). He reported ACUASI has gone from a three to one to a
15 to one return on investments by the activity they were
bringing to the University of Alaska-Fairbanks (UAF). Most of
the commercial interaction and partnering was done through UAF
and ACUASI; DOT&PF worked in integration with the other sister
agencies/departments and federal agencies.
2:10:00 PM
CHAIR HOPKINS asked which federal agencies worked with ACUASI.
DEPUTY COMMISSIONER BINDER replied primarily FAA, but others
were actively looking to test systems for future integration.
2:11:03 PM
REPRESENTATIVE MCCABE asked how big the drones were.
DEPUTY COMMISSIONER BINDER replied when the FAA talked about
"small unmanned systems," most were less than 55 lbs., but
ACUASI did have drones the size of C-130s being tested. There
were plans this summer to execute full-size drone operations at
Fairbanks International Airport, he said.
REPRESENTATIVE MCCABE commented Airbus had already flown in
France completely controlled by a computer.
CHAIR HOPKINS asked if there had been any outreach efforts by
ACUASI of DOT&PF to advertise Alaska's work with drones.
DEPUTY COMMISSIONER BINDER replied most testing until now had
been focused on specific industries and not intended for
commercial or public use, but that was changing.
2:14:10 PM
REPRESENTATIVE HANNAN asked if firefighting response was being
looked at.
DEPUTY COMMISSIONER BINDER replied yes, also bridge inspection,
avalanche inspection/mitigation, power inspections. Unmanned
aircraft saved so much money in addition to increasing safety
and productivity, he added.
2:16:41 PM
REPRESENTATIVE MCCABE asked if the FAA had removed requirements
for drones to be inside the operator.
DEPUTY COMMISSIONER BINDER replied requirements had only been
removed in certain test cases; they were not yet dependable
enough.
DEPUTY COMMISSIONER BINDER shared drones were being trained to
test pavement fidelity and take measurements of runways,
including material requirements, from images.
2:21:18 PM
The committee took an at-ease from 2:21 p.m. to 2:26 p.m.
HB 104-MOTOR FUEL TAX; VEHICLE REG. FEE
2:26:08 PM
REPRESENTATIVE ANDY JOSEPHSON, Legislator, Alaska State
Legislature, as prime sponsor, introduced HOUSE BILL NO. 104,
"An Act relating to vehicle registration and registration fees;
relating to the motor fuel tax; and providing for an effective
date." A doubling of fuel tax from $.08 to $.16 as HB 104
proposed did nothing to keep up with inflation, he stated. The
$.08 was set when the average wage was $9K per year; in 2021 it
was $75K per year. Extra money would go toward road conditions
and safety concerns, still leaving Alaska with one of the lowest
tax rates in the country. Spill prevention and response would
also benefit from the additional tax, he added, as in 2015 House
Bill 158 added a $.0095/gallon surcharge on motor fuel intended
for the spill prevention and response fund. For the average
driver, the cost would be about $10 per year: this is how HB
104 came to be known as the "two-latte tax."
2:31:34 PM
REPRESENTATIVE HANNAN asked why aviation taxes have not
increased since 1994?
NATHANIEL GRABMAN, Staff to Representative Andy Josephson,
Alaska State Legislature, said taxes on airports went toward
airport maintenance; if those fees had been increased, they
would not be available to DOT&PF for road maintenance. Also,
fees on aviation fuel and jet fuel put DOT&PF in a more
competitive position nationally; concern had been raised that an
increase would have a detrimental effect on planes coming into
Alaska.
2:33:15 PM
REPRESENTATIVE JOSEPHSON clarified the "two-latte tax" referred
to the urban driver; in rural areas it would be more.
2:33:57 PM
MR. GRABMAN presented HB 104, sharing Alaska's first motor fuel
tax was levied in 1945 at $.01/gallon. In 1970, motor fuel tax
increased to $.08/gallon, which is where it still is now. In
1977, marine fuel tax increased to $.05/gallon, and in 1994
aviation fuel tax increased to $.047/gallon. From September 1,
2008 until August 31, 2009 motor fuel tax was suspended on all
fuel types, and in 2015, House Bill 158 added a $.0095/gallon
surcharge on motor fuel intended for spill prevention and
response fund, as Representative Josephson had mentioned.
MR. GRABMAN went over the current rates followed by what they
would change to under HB 104: highway fuel would go from $.08 to
$.16; marine Fuel would go from $.05 to $.10; aviation fuel and
jet fuel would remain the same at $.047 and $.032 respectively;
the refined fuels surcharge would go from $.0095 to $.015; and
the off-road use refund would go from $.06 to $.12. Mr. Grabman
mentioned there was a refund for fuel intended for commercial
fishing vessels contained in HB 104.
2:36:07 PM
REPRESENTATIVE SPOHNHOLZ asked about the off-road use refund.
MR. GRABMAN replied fuel users on non-DOT&PF sponsored roads
could apply for and receive refunds for snow machines, four
wheelers, lawn mowers, and the like.
REPRESENTATIVE MCCABE offered it was known as the "Farmers'
refund."
CHAIR HOPKINS asked if one just "went up to the counter" to
receive the off-road use refund.
MR. GRABMAN replied yes.
2:37:54 PM
MR. GRABMAN went over slide 4 on HB 104's impact on the typical
driver in Alaska. According to the Alaska Department of Motor
Vehicles (DMV) there were about 645,434 registered passenger
vehicles driven an average of 9,111 miles per year. If the
average miles per year per Alaskan vehicle (9,111) is divided by
the average miles per gallon (18.1) it can be determined that
503 gallons of fuel per year multiplied by the current motor
fuel tax of $.08 could be $40.24 per year per driver. There
would also be an increase to the biennial registration fee
charged to electric vehicles (EVs) and plug-in hybrid vehicles,
he added, as noted on slide 5. This fee would increase from
$100 to $200 and $150 per year respectively, he stated. The
reason for the increase in registration is that EVs and hybrids
still create wear and tear on roads, they should be paying a
commensurate amount in fees.
MR. GRABMAN noted on slide 6 Alaska had the lowest tax rate on
both highway fuel and marine fuel of any state; in most states,
he pointed out, the marine rate was the same as the highway
rate. With passage of HB 104, Alaska would remain well below the
national average, moving from 50th to 43rd in highway fuel tax
rate in comparison to other states, and would remain last in
marine fuel taxes. Alaska currently has a more competitive
ranking among other states for jet fuel (36th) and for aviation
fuel (40th).
MR. GRABMAN reiterated Alaska's motor fuel tax of $0.08/gallon
had not changed since 1970. By way of comparison, he offered the
Consumer Price Index (CPI) had increased by a factor of 6.74
times since 1970. Also, the average cost of a gallon of gas in
the US was $0.36/gallon in 1970, and in 2021 was now $2.72 (7.56
times higher). In 1970, Alaskan per capita annual income was
$5,911. As of 2019, it was $62,806 (10.63 times higher).
2:41:50 PM
CHAIR HOPKINS asked how, after the doubling of motor fuel tax,
Alaska would go from 50th (lowest in the US) to 43rd place.
MR. GRABMAN directed attention to slide 9, which showed Alaska
having the lowest rate. When HB factored in taxes and fees, it
became 43rd, since states had different taxes. Pennsylvania did
not have a state excise tax, he pointed out by way of example,
despite having the second-highest motor fuel tax rate in the US.
2:46:16 PM
MR. GRABMAN explained slide 8 was a graph that represented the
reduction of the real value of Alaska's motor fuel tax from 1970
to 2021. If HB 104 were to pass, an additional $30 million per
year would be added annually, he pointed out. In terms of
marine fuels, approximately $5.5 million would be added, less
the commercial fishing refund. The refined fuel surcharge would
bring in an additional $3.5 million annually, and the additional
registration fees for EVs and hybrids about $87K if their use
remained constant, more if their use continued to increase.
MR. GRABMAN moved on to slide 11, in which he discussed Silver
Tip Maintenance Station's 2019 closure. Lower-than-expected
revenue from the Motor Fuel Tax was cited in the closure, he
imparted. DOT&PF has a deferred maintenance backlog of $153.8
million for highways, and $264.5 million total, he shared, and
additional revenue could be used for any of the following:
increased safety and maintenance response times; increased
maintenance operators; increased winter maintenance; increased
response time to priority 1 roadways with more resources;
availability to respond to priority 3 and 4 roads; increased
number of maintenance stations; reduction of, and more
manageable areas of, responsibility for operators; decreases in
response times during storms; decreases in road closure times
due to acts of nature; increased surface treatment chemicals and
materials; and increased ability and resources to repair
potholes and guardrails.
MR. GRABMAN showed a graph which showed that without additional
revenue the Division of Spill Prevention and Response (SPAR)
account faced insolvency in the very near future. Multiple
staff positions have been lost, despite workload staying the
same in that department.
2:48:25 PM
REPRESENTATIVE SPOHNHOLZ asked for an unpacking of the
relationship between the SPAR account and HB 104.
MR. GRABMAN replied there was a $.0095 surcharge on all fuels;
that surcharge went toward SPAR account. At the time the charge
was instated, it was not realized that certain entities such as
local governments would be exempt. An increase to $.015 in
refined fuel surcharge would ameliorate this, he stated.
2:49:58 PM
REPRESENTATIVE HANNAN asked if there have been more spills, more
things the account is being used for, or just erosion over time?
MR. GRABMAN said he would have to check.
2:51:26 PM
REPRESENTATIVE HANNAN asked what DOT&PF uses of SPAR account.
ROB CARPENTER, Deputy Commissioner, DOT&PF, replied maybe for
cleanup and maintenance, but in terms of the operating and
capital budgets he was not sure if any was used.
2:52:42 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 2:52
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| House Trans - Aviation Overview (3-4-21 FINAL).pdf |
HTRA 3/4/2021 1:30:00 PM |
DOTPF - Aviation and Airports Overview |
| HB 104 Supporting Document - State Motor Fuel Tax Rates, Federation of Tax Administrators 2.25.2021.pdf |
HTRA 3/4/2021 1:30:00 PM |
HB 104 |
| HB 104 Sponsor Statement 2.25.2021.pdf |
HTRA 3/4/2021 1:30:00 PM |
HB 104 |
| HB 104 Supporting Document - LFD Motor Fuel Tax Receipts 2018-2022 2.25.2021.pdf |
HTRA 3/4/2021 1:30:00 PM |
HB 104 |
| HB 104 Supporting Document - PWSRCAC Letter of Support 2.26.2021.pdf |
HTRA 3/4/2021 1:30:00 PM |
HB 104 |
| HB 104 FAQ 2.25.2021.pdf |
HTRA 3/4/2021 1:30:00 PM |
HB 104 |
| HB 104 Supporting Document - Fall 2020 RSB Non Petroleum Revenue 2.25.2021.pdf |
HTRA 3/4/2021 1:30:00 PM |
HB 104 |
| HB104 HTRA Hearing Request 2.25.2021.pdf |
HTRA 3/4/2021 1:30:00 PM |
HB 104 |
| 2021-03-04 - HB104 Presentation HTRA.pdf |
HTRA 3/4/2021 1:30:00 PM |
HB 104 |
| HB 104 Sectional Analysis 2.25.2021.pdf |
HTRA 3/4/2021 1:30:00 PM |
HB 104 |