Legislature(2021 - 2022)BARNES 124
03/16/2021 01:30 PM House TRANSPORTATION
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB104 | |
| Presentation: Motor Fuel Tax | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 104 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
March 16, 2021
1:32 p.m.
MEMBERS PRESENT
Representative Grier Hopkins, Chair
Representative Sara Hannan, Vice Chair
Representative Ivy Spohnholz
Representative Harriet Drummond
Representative Tom McKay
Representative Kevin McCabe
Representative Mike Cronk
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
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."
- MOVED HB 104 OUT OF COMMITTEE
PRESENTATION: MOTOR FUEL TAX
- HEARD
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
03/04/21 (H) Heard & Held
03/04/21 (H) MINUTE(TRA)
03/16/21 (H) TRA AT 1:30 PM BARNES 124
WITNESS REGISTER
REPRESENTATIVE ANDY JOSEPHSON
Legislator
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 104 as prime sponsor.
NICOLE REYNOLDS
Deputy Director
Division of Tax
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Presented a PowerPoint and answered
questions during the hearing.
JOHN BINDER
Deputy Commissioner
Department of Transportation and Public Facilities
Juneau, Alaska
POSITION STATEMENT: Answered a question during the hearing.
DONNA SCHANTZ
Executive Director
Prince William Sound Regional Citizens Advisory Council
Homer, Alaska
POSITION STATEMENT: Testified during the hearing.
MAKO HAGGERTY
Prince William Sound Regional Citizens Advisory Council
Homer, Alaska
POSITION STATEMENT: Testified during the hearing.
ROBERT ARCHIBALD
President
Prince William Sound Regional Citizens Advisory Council
Homer, Alaska
POSITION STATEMENT: Testified during the hearing.
MIKE COONS
Palmer, Alaska
POSITION STATEMENT: Testified during the hearing.
JOE MICHEL
Executive Director
Alaska Trucking Association
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing.
BRITTANY STAMPOHAR
Government Relations Liaison
Associated General Contractors of Alaska
Fairbanks, Alaska
POSITION STATEMENT: Testified during the hearing.
EDITH MCKEE
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing.
BERT HOUGHTALING
Big Lake, Alaska
POSITION STATEMENT: Testified during the hearing.
NATHANIEL GRABMAN
Staff to Representative Andy Josephson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Josephson,
prime sponsor, offered comments during the hearing.
ACTION NARRATIVE
1:32:43 PM
CHAIR GRIER HOPKINS called the House Transportation Standing
Committee meeting to order at 1:32 p.m. Representatives Hannan,
Drummond, McKay, McCabe, Cronk, and Hopkins were present at the
call to order. Representative Spohnholz arrived as the meeting
was in progress.
HB 104-MOTOR FUEL TAX; VEHICLE REG. FEE
1:33:52 PM
CHAIR HOPKINS announced that the first order of business would
be 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."
1:34:53 PM
REPRESENTATIVE ANDY JOSEPHSON, Legislator, Alaska State
Legislature, as prime sponsor, presented HB 104. Doubling a
very small tax set in 1970 was reasonable considering affective
inflation, he put forth. Although the money was designated and
not dedicated, it was traditionally used for highway
improvements, and things that make the economy work and run. He
referenced an opinion piece which had stated mileage is higher,
and therefore more road miles covered with less tax.
Diminishing throughput has been an issue as well, he added.
Furthermore, HB 104 would increase revenue for the Spill
Prevention and Response unit (SPAR), he added.
1:37:09 PM
CHAIR HOPKINS asked under which category to find HB 104.
REPRESENTATIVE JOSEPHSON replied under designated general funds.
^PRESENTATION: Motor Fuel Tax
PRESENTATION: Motor Fuel Tax
1:38:08 PM
NICOLE REYNOLDS, Deputy Director, Division of Tax, Department of
Revenue, presented on motor fuel, beginning with its definition
in statute as any fuel used in an engine for the propulsion of a
motor vehicle or aircraft, fuel used in or on watercraft for any
purpose, or fuel used in a stationary engine, machine or
mechanical contrivance which is run by an internal combustion
motor. Regulations which interpret Motor Fuel Tax statutes were
15 AAC 40.300 and 15 AAC 40.900, she shared. Ms. Reynolds went
over a list of fuel types and uses not considered motor fuel and
which were therefore exempt, such as fuel sold to federal,
state, and local governments for official use, fuel used to heat
private or commercial buildings or facilities, fuel sold or
transferred between qualified dealers, fuel sold to electric or
telephone cooperatives, fuel sold by charitable institutions,
and fuel used to fly to and from foreign countries. Exempt from
the surcharge was exported fuel, if refined outside the US.
MS. REYNOLDS shared a brief history of motor fuel tax: in 1945
the first motor fuel tax was levied at $0.01/gallon; in 1970,
motor fuel tax was increased to $0.08/gallon; in 1977, marine
fuel tax was increased to $0.05/gallon; in 1994, aviation fuel
tax was increased to $0.047/gallon; from September 1, 2008 to
August 31, 2009 motor fuel tax was suspended across all fuel
types; in 2015 HB 158 added a $0.0095/gallon surcharge on motor
fuel; in 2019 Senate Bill 115 proposed to increase highway fuel,
gasohol, and marine fuel rates, but SB 115 did not pass both
bodies.
MS. REYNOLDS shared current motor fuel tax rates and surcharges,
as listed on slide 4: highway fuel was $0.08/gallon; marine
fuel $0.05/gallon; aviation fuel $0.047/gallon; jet fuel
$0.032/gallon; and gasohol $0.08/gallon or $0.02/gallon
depending on the season, location, and US Environmental
Protection Agency mandates. Generally, motor fuel was taxed
when sold to a qualified dealer, directly to a user, or to a re-
seller, she said. Sales between qualified dealers were not
taxed, she said, qualified dealers being wholesalers who
refined, imported, manufactured, or produced motor fuel and who
must be licensed by the Department of Revenue (DOR). Persons
who first sold untaxed motor fuel in the state were responsible
for paying the tax, she added. In the event fuel was sold and
transferred into a common storage tank serving both taxable and
exempt uses, fuel would be taxed at the highest-taxed rate of
use, and the taxpayer may claim a refund if they establish the
fuel was used for an exempt purpose or for a use that would
qualify for a lower tax rate than the rate that had been paid,
she stated.
1:45:45 PM
REPRESENTATIVE HANNAN asked for an example of the kind of
"untaxed-then-put-into-a-tank-then-comingled-with-taxable" bulk
fuel as an entity.
MS. REYNOLDS offered as an example heating or dual-purpose fuel
which was then transferred into a common storage tank, which was
then used as highway fuel as well as heating fuel and must be
taxed at the highway fuel rate. An exemption could be granted
if it were proven the fuel was also used as heating fuel.
REPRESENTATIVE HANNAN asked how many people were doing this.
MS. REYNOLDS replied not only individuals, but also corporations
and other entities.
REPRESENTATIVE HANNAN asked for an example of a type of business
who likely did this on a regular basis and filed annually with
the DOR for it.
MS. REYNOLDS replied mining companies.
1:49:47 PM
REPRESENTATIVE SPOHNHOLZ asked for a description of both taxed
and untaxed heating fuel.
MS. REYNOLDS replied heating fuel was not taxed but was subject
to the surcharge.
1:50:17 PM
REPRESENTATIVE DRUMMOND asked if the surcharge was charged on
all types of fuels including jet fuel.
MS. REYNOLDS replied no, aviation fuel was not subject to the
surcharge.
REPRESENTATIVE DRUMMOND asked which types of fuel did not get
the surcharge, aviation fuel or just jet fuel.
MS. REYNOLDS replied exemptions were fuel sold to federal or
state agencies for official use, fuel sold outside the US,
liquified petroleum gas, aviation fuel, and fuel sold or
transferred between qualified dealers.
REPRESENTATIVE DRUMMOND looked to confirm aviation fuel and jet
fuel were not subject to the surcharge.
MS. REYNOLDS replied aviation fuel was not and jet fuel may be,
but she would have to follow up with that information.
1:53:23 PM
MS. REYNOLDS moved on to slide 5 on motor fuel tax returns.
Returns were filed and tax was paid monthly, she shared.
Generally, tax was collected at the time of sale and remitted to
the DOR on the last day of the month following the sale or
transfer. Taxpayers were required to file and pay online and
must file a separate return for each type of fuel sold, she
added, and taxpayers who filed and paid on time could receive a
credit of 1% of the tax and surcharge due (limited to a maximum
credit of $100 per return), she said. The four types of returns
were gasoline, diesel, aviation, and gasohol, she added.
MS. REYNOLDS moved on to slide 6, a chart on historic taxable
gallons, pointing out that in the last four years the DOR had
seen about a 20-million-gallon decline in fuel sold. In a
summary of historic tax collections over the last four years on
slide 7, penalties, interest, and destination of money were all
included on a chart. Over the past four years there has been a
slight increase in collections as was exemplified in a bar graph
on slide 8.
1:57:48 PM
REPRESENTATIVE SPOHNHOLZ asked why there had been a decline in
aviation fuel.
1:58:23 PM
JOHN BINDER, Deputy Commissioner, Department of Transportation
and Public Facilities, replied the decline in aviation fuel had
been a trend nationwide. Not as many younger folks entering the
realm in combination with carriers and fleets upgrading to newer
aircrafts, turbine-type engines that used jet fuel as opposed to
aviation gasoline.
1:59:25 PM
CHAIR HOPKINS opened public testimony on HB 104.
1:59:54 PM
DONNA SCHANTZ, Executive Director, Prince William Sound Regional
Citizens Advisory Council, testified in support of HB 104. Ms.
Schantz relayed the revenue shortfall had diminished the ability
of the state to prevent oil spills and protect health and
safety, to maintain an adequate level of readiness, and had
taken away the ability to respond rapidly should a spill occur.
She pointed out revenue generated by the increase to the refined
fuel surcharge would go directly into the SPAR account and was
necessary to close the revenue gap. The SPAR Division had
absorbed the elimination of 17 positions since 2015, she stated,
and Governor Mike Dunleavy's proposed budget for 2022 would cut
five more positions, resulting in increased workloads for
employees and a caseload of over 2,400 contaminated sites. The
SPAR Division had moved beyond having to do "more with less" and
was now having to do "less with less" while still meeting
responsibilities. With the additional five positions being cut,
SPAR would have to prioritize contaminated sites, resulting in
delays in addressing sites or having them not be addressed at
all.
2:03:10 PM
MAKO HAGGERTY, Board Member, Prince William Sound Regional
Citizens Advisory Council, testified in support of HB 104. Mr.
Haggerty said positions being lost at the SPAR Division was very
concerning, as SPAR funding was used to clean up PFAS
contamination.
2:05:45 PM
ROBERT ARCHIBALD, President, Board of Directors, Prince William
Sound Regional Citizens Advisory Council, testified in support
of HB 104. Mr. Archibald said the state must be able to oversee
cleanup if another major oil spill occurred, and the SPAR
Division would be in the red if revenue sources were not added.
2:08:39 PM
MIKE COONS, President, Matanuska-Susitna Chapter of the
Association of Mature American Citizens, spoke in opposition of
HB 104. Mr. Coons stated figures regarding commuting and cost
increases by Representative Josephson and staff were incorrect.
Mr. Coons said Anchorage drivers paid $.26 per gallon in taxes
and seniors on fixed income were not ready to pay for an
increase. He added if charging stations were used, electricity
should also be taxed.
2:11:00 PM
JOE MICHEL, Executive Director, Alaska Trucking Association,
testified in support of HB 104. He added he would like to see
it address maintenance and construction of highways.
2:13:06 PM
BRITTANY STAMPOHAR, Government Relations Liaison, Associated
General Contractors of Alaska, spoke in support of HB 104. Ms.
Stampohar stated the motor fuel increase would take a meaningful
and reasonable approach to funding the state's backlog of
maintenance and infrastructure needs while improving general
fiscal responsibility. The increase was good for industry and
for Alaska, she stated on behalf of the organization.
2:14:53 PM
EDITH MCKEE testified in support of HB 104. Ms. McKee stated
despite having over 5K miles of roads as well as the largest
aviation system in the US, the state's maintenance and
operations budget had been cut within the last decade by 20%.
Operational needs currently exceeded proposed budget allocations
for highways and aviation, which impacted the safety of
communities across Alaska, she offered, and furthermore, thirty-
one states had already raised the motor fuel tax, she pointed
out. While many states funded up to 75% of transportation
spending, Alaska funded a mere 10%, she stated. A former DOT&PF
employee, Ms. McKee stated it was often maintenance and
operations divisions that received the first round of layoffs
because highway construction and design was funded through
federal dollars.
2:16:40 PM
BERT HOUGHTALING testified against HB 104. Aligning his belief
with that of Mr. Coons, he said commuters purchasing fuel were
already disadvantaged enough due to the COVID-19 pandemic, and
it was not the right time for the increase.
2:18:40 PM
CHAIR HOPKINS closed public testimony on HB 104.
2:19:01 PM
NATHANIEL GRABMAN, Staff to Representative Josephson, Alaska
State Legislature, offered closing remarks and replies to public
testifiers on HB 104. Mr. Grabman replied to those standing in
opposition of HB 104 that Economic Development Director Dave
Hanson had done a study and come up with the average of $100 in
extra costs per year for drivers. Homes in Anchorage cost on
average $78K more than homes in the Matanuska-Susitna Valley,
and the average earner had a higher income per capita, so there
were trade-offs, he added.
2:20:48 PM
REPRESENTATIVE MCCABE said he would love to see data from
Director Hanson, as he supposed the increase to be quite a bit
more. He added his home cost more than some homes in Anchorage.
2:21:31 PM
REPRESENTATIVE CRONK stated he was confused how the value of a
home related to HB 104.
2:21:55 PM
CHAIR HOPKINS looked to the will of the committee.
2:22:09 PM
The committee took a brief at-ease.
2:22:20 PM
REPRESENTATIVE HANNAN moved to report HB 104 out of committee
with individual recommendations and the accompanying fiscal
notes.
2:22:37 PM
REPRESENTATIVE MCCABE objected, as more time was needed for
public testimony.
2:24:22 PM
The committee took a brief at-ease.
2:24:35 PM
A roll call vote was taken. Representatives Drummond, Hannan,
Spohnholz and Hopkins voted in favor of HB 104. Representatives
McKay, McCabe, and Cronk voted against it. Therefore, HB 104
was reported out of the House Transportation Standing Committee
by a vote of 4-3.
2:25:42 PM
The committee took an at-ease from 2:25 p.m. to 2:29 p.m.
2:29:43 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 2:29
p.m.