Legislature(2003 - 2004)

04/23/2003 08:38 AM W&M

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
           HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS                                                                          
                         April 23, 2003                                                                                         
                           8:38 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Mike Hawker, Co-Chair                                                                                            
Representative Jim Whitaker, Co-Chair                                                                                           
Representative Vic Kohring                                                                                                      
Representative Norman Rokeberg                                                                                                  
Representative Bruce Weyhrauch                                                                                                  
Representative Peggy Wilson                                                                                                     
Representative Carl Moses                                                                                                       
MEMBERS ABSENT                                                                                                                
Representative Cheryll Heinze                                                                                                   
Representative Max Gruenberg                                                                                                    
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 271                                                                                                              
"An Act levying and providing for the collection and                                                                            
administration of an excise tax on passenger vehicle rentals;                                                                   
and providing for an effective date."                                                                                           
     - HEARD AND HELD                                                                                                           
PREVIOUS ACTION                                                                                                               
BILL: HB 271                                                                                                                  
SHORT TITLE:PASSENGER VEHICLE RENTAL TAX                                                                                        
SPONSOR(S): REPRESENTATIVE(S)KOTT                                                                                               
Jrn-Date   Jrn-Page                     Action                                                                                  
04/15/03     0986       (H)        READ THE FIRST TIME -                                                                        
04/15/03     0986       (H)        W&M, FIN                                                                                     
04/15/03     0986       (H)        REFERRED TO WAYS & MEANS                                                                     
04/22/03                (H)        W&M AT 7:00 AM HOUSE FINANCE                                                                 
04/22/03                (H)        Heard & Held                                                                                 
04/23/03                (H)        W&M AT 7:00 AM HOUSE FINANCE                                                                 
WITNESS REGISTER                                                                                                              
DAN COFFEE, Part-Owner                                                                                                          
Dollar Rent A Car - Anchorage                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Expressed concerns with HB 271.                                                                            
ANDREW HALCRO, President/CEO                                                                                                    
Avis Rent-A-Car - Alaska                                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 271.                                                                         
ACTION NARRATIVE                                                                                                              
TAPE 03-12, SIDE A                                                                                                            
Number 0001                                                                                                                     
CO-CHAIR HAWKER  called the House  Special Committee on  Ways and                                                             
Means  meeting to  order at  8:38 a.m.   Representatives  Hawker,                                                               
Whitaker, Kohring,  Rokeberg, Weyhrauch,  Wilson, and  Moses were                                                               
present at the call to order.                                                                                                   
HB 271-PASSENGER VEHICLE RENTAL TAX                                                                                           
CO-CHAIR HAWKER announced  that the only order  of business would                                                               
be HOUSE  BILL NO.  271, "An  Act levying  and providing  for the                                                               
collection  and  administration of  an  excise  tax on  passenger                                                               
vehicle rentals; and providing for an effective date."                                                                          
Number 0058                                                                                                                     
DAN COFFEE, Part Owner, Dollar Rent  A Car - Anchorage, said that                                                               
as a small  business in Anchorage he is and  will always continue                                                               
to be willing to  do its share to solve the  fiscal problem.  Mr.                                                               
Coffee  turned  to  what  one  would  consider  [the  car  rental                                                               
industry's]  fair share.   In  Anchorage, there  is a  10 percent                                                               
airport fee, a sales tax of 8  percent for a total of 18 percent.                                                               
Therefore, an  additional 15  percent tax  will effectively  be a                                                               
tax  rate of  33 percent,  which  doesn't take  into account  the                                                               
proposed increase in  license fees for vehicles nor  does it take                                                               
into consideration the  proposed tax increases on  gasoline.  Mr.                                                               
Coffee informed  the committee  that the  car rental  industry in                                                               
Anchorage pays a little over $8  million into the state and local                                                               
coffers.  Therefore, the [Anchorage  rental car] industry already                                                               
makes a substantial contribution.                                                                                               
MR. COFFEE said he hoped  that the committee would understand the                                                               
consequences of this  legislation to the industry.   He turned to                                                               
the  fiscal  note and  related  his  belief  that the  costs  are                                                               
understated and  the revenue is  overstated.   Furthermore, there                                                               
is no analysis  with regard to what this legislation  would do to                                                               
business.   While  there is  a certain  elasticity, at  some time                                                               
[these  taxes]  create marginal  effects  on  business such  that                                                               
there is a decrease in the  total volume of business if the price                                                               
continues  to  increase.    There   are  other  alternatives,  he                                                               
suggested.     He   commented  that   he   doesn't  believe   the                                                               
consequences of  HB 271 are  fully appreciated.  However,  if the                                                               
legislature  is going  to  move forward  with  this proposal,  he                                                               
expressed the need  to not exclude any particular  segment of the                                                               
industry.   He noted that  he didn't understand  why recreational                                                               
vehicles  (RVs) had  been  excluded from  this  legislation.   He                                                               
highlighted that the cruise ship  industry almost faced a similar                                                               
tax, however it was ultimately  deemed inappropriate.  Therefore,                                                               
he surmised that  [the car rental industry] is  the only industry                                                               
left  in the  barrel.    Mr. Coffee  said  that  [the rental  car                                                               
industry]  would like  to  participate in  a  way that  addresses                                                               
these  concerns  and  how  a  tax would  impact  the  car  rental                                                               
industry.    He mentioned  that  he  didn't understand  why  this                                                               
legislation is on a  fast track.  He pointed out  that HB 271 was                                                               
introduced Tuesday and this is  its second hearing, and then it's                                                               
scheduled in the  House Finance Committee on Friday.   Mr. Coffee                                                               
expressed  the desire  [for the  car rental  industry] to  have a                                                               
better opportunity to present its side of the matter.                                                                           
Number 0525                                                                                                                     
CO-CHAIR  HAWKER requested  that Mr.  Coffee explain  the airport                                                               
surcharge and who benefits from it.                                                                                             
MR. COFFEE explained  that the airport surcharge is  a 10 percent                                                               
surcharge on time and mileage.   This surcharge is in addition to                                                               
rent  and  is  basically  used for  various  airport  facilities.                                                               
Every concessionaire, whether a car  rental company or gift shop,                                                               
signs an agreement  with the airport, the airport goes  out for a                                                               
request for  proposals (RFP), and solicits  car rental companies.                                                               
The solicitation specifies that the  company would have to pay 10                                                               
percent  of its  gross  revenue to  the airport  in  order to  do                                                               
business there.   Mr. Coffee  noted, for reasons unknown  to him,                                                               
that the off-airport  operators also pay 10 percent.   In further                                                               
response  to Co-Chair  Hawker, Mr.  Coffee said  that anyone  who                                                               
comes through the airport pays the  10 percent tax.  He explained                                                               
that  the  reporting  responsibility  lies with  the  car  rental                                                               
company.  Those companies with  shuttle buses to take individuals                                                               
to an  off-airport location are  required to report  that portion                                                               
of income that is generated  from those individuals who come into                                                               
the Ted Stevens Anchorage International  Airport (TSAIA) and rent                                                               
a car at an off-airport location.                                                                                               
CO-CHAIR HAWKER related  his understanding that if  he arrives at                                                               
TSAIA  and  takes  a  shuttle to  an  off-airport  facility,  the                                                               
airport would assess a 10 percent  tax.  He questioned what would                                                               
happen if he took  a taxi and didn't specify that  he had come in                                                               
from the airport.                                                                                                               
MR. COFFEE  responded that  Co-Chair Hawker  wouldn't pay  the 10                                                               
percent tax in  that situation.  In further  response to Co-Chair                                                               
Hawker,  Mr. Coffee  clarified that  the shuttle  buses are  from                                                               
companies  that aren't  concessionaires.   Generally,  on-airport                                                               
operators don't shuttle customers.                                                                                              
CO-CHAIR  HAWKER  asked  if  such  an  airport  surcharge  exists                                                               
elsewhere in the nation.                                                                                                        
MR.  COFFEE  specified that  the  rates  vary,  but the  fact  of                                                               
charging  a  percentage  of  time  and  mileage  is  a  universal                                                               
practice in all the areas with which he is familiar.                                                                            
CO-CHAIR  HAWKER  asked  if  the  off-airport  rental  charge  is                                                               
MR.  COFFEE answered  that it  wasn't [charged]  in Alaska  seven                                                               
years ago.   When it was  reviewed at that time,  the off-airport                                                               
rental charge was [sporadic].   Typically, other locations charge                                                               
a per  passenger or  per trip  shuttle bus  fee and  that usually                                                               
isn't  charged as  a  percentage  of time  and  mileage for  off-                                                               
airport operators.                                                                                                              
CO-CHAIR  HAWKER  related that  his  research  indicates that  at                                                               
least 16 airports  in the U.S. now charge  the off-airport rental                                                               
fees at rates varying form 4-10 percent.                                                                                        
MR. COFFEE agreed that it isn't uncommon.                                                                                       
Number 1044                                                                                                                     
REPRESENTATIVE KOHRING  expressed concern about this  tax for the                                                               
same reasons  Mr. Coffee has  mentioned.  Furthermore,  he wasn't                                                               
sure why  this tax is  being promoted because there  doesn't seem                                                               
to be  a compelling reason  for the tax  other than the  need for                                                               
revenue.   He  expressed concern  that  this tax  could create  a                                                               
disincentive for tourists.                                                                                                      
MR.  COFFEE  specified that  his  concern  is  in regard  to  the                                                               
independent  traveler, who  is  his customer.    The cruise  ship                                                               
travelers aren't  really customers [of the  car rental industry].                                                               
He  informed the  committee that  the growth  of the  independent                                                               
traveler has  been either  flat or negative.   For  example, [Ted                                                               
Stevens  Anchorage  International  Airport's]  revenue  from  car                                                               
rentals in  the first three  months of  this year is  down almost                                                               
$600,000,  although that  decline  can be  attributed to  various                                                               
things.  Imposing this type of  tax would mean those in Anchorage                                                               
would pay  33 percent in  taxes and fees.   He noted that  if the                                                               
airport  fee was  taken out,  the fee  in Anchorage  would be  23                                                               
percent, which is the same as  what is paid in Massachusetts, the                                                               
fourth highest  in the country.   Therefore, Alaska would  be the                                                               
highest  or  fourth highest  depending  upon  how the  taxes  are                                                               
defined.     Therefore,   Mr.  Coffee   was  worried   about  the                                                               
consequences for the business because,  as mentioned earlier, the                                                               
[rental  car industry]  has suffered  a substantial  reduction in                                                               
the type of  travelers who rent cars.  Therefore,  he was fearful                                                               
this tax will result in a  marginal decline and ultimately have a                                                               
very negative impact at some  point.  Furthermore, Mr. Coffee was                                                               
concerned  that  this  will   burden  Alaska  business  travelers                                                               
substantially,  which will  have  a negative  impact on  business                                                               
travel.   Mr.  Coffee opined  that  no one  has a  handle on  the                                                               
potential  impact of  this tax,  and therefore  he expressed  the                                                               
need to have a handle on it before implementing the tax.                                                                        
Number 1349                                                                                                                     
ANDREW HALCRO, President/CEO, Avis  Rent-A-Car - Alaska, informed                                                               
the  committee  that  Avis  rents cars  in  nine  communities  in                                                               
Alaska.   He  announced that  he  opposes HB  271.   As a  former                                                               
legislator,  Mr. Halcro  expressed great  concern with  regard to                                                               
the  handling of  this legislation.   Mr.  Halcro explained  that                                                               
every rental car company in  Alaska, with the exception of Hertz,                                                               
is a small locally owned operation.                                                                                             
MR.  HALCRO turned  to what  rental  customers pay  the State  of                                                               
Alaska.   As Mr.  Coffee mentioned, those  renting cars  at TSAIA                                                               
pay a  10 percent airport concession  fee, which is based  on the                                                               
amount of business the company does  and that fee is passed on to                                                               
customers.   Three years ago  the citizens of Anchorage  voted to                                                               
implement an  additional 8  percent car  rental tax.   Therefore,                                                               
Anchorage is the only city in the  U.S. with a car rental tax and                                                               
no retail  sales tax.   Mr. Halcro  said, "Meaning that  it's the                                                               
only city to single-handedly single  out an industry for taxation                                                               
when  the  rest  of  the   citizens  are  not  paying  anything."                                                               
Currently,  rental  car  customers  in Anchorage  are  paying  18                                                               
percent.    Additionally,  the  car  rental  industry  paid  over                                                               
$200,000 last year  in parking spaces alone at TSAIA.   The total                                                               
car   rental  industry   contribution   to   the  Department   of                                                               
Transportation & Public Facilities amounted  to $3.7 million.  He                                                               
reviewed the total  fees in various cities  throughout Alaska and                                                               
those fees  ranged from  9.5 percent to  15 percent.   Therefore,                                                               
with  the  proposal   in  HB  271  customers   in  the  following                                                               
communities  will  pay  the  following  fees:    Anchorage  -  33                                                               
percent; Fairbanks - 24 percent; Kenai  - 30 percent; Juneau - 30                                                               
percent; Sitka -  24 percent; Skagway - 19  percent; Petersburg -                                                               
21 percent.                                                                                                                     
MR.  HALCRO  turned  to  a   document  in  the  committee  packet                                                               
entitled,  "Rental  Car  Tax,  State-by-State  Comparison."    If                                                               
Alaska  passed a  15  percent  car rental  tax,  Alaska would  be                                                               
highest in the nation.  Currently,  the highest rental car tax is                                                               
11.5 percent in Maryland.   Mr. Halcro interpreted the sponsor of                                                               
HB 271 as proposing that Alaska's rental  car tax go from 0 to 15                                                               
percent.   Additionally,  Mr. Halcro  said  that the  information                                                               
provided isn't  correct because the  local sales tax  column only                                                               
goes  up  to 6  percent;  customers  in  Anchorage are  paying  8                                                               
percent.   Mr. Halcro  returned to what  the rental  car industry                                                               
contributes to Alaska  and informed the committee  that last year                                                               
Avis  Rent-A-Car -  Alaska spent  $140,000 registering  vehicles.                                                               
In Anchorage alone, Avis Rent-A-Car  purchased 125,000 gallons of                                                               
gas,  which  doesn't included  gas  that  customers purchased  at                                                               
stations throughout the state.                                                                                                  
MR. HALCRO said  that he would now address  the industry outlook.                                                               
As  Mr.  Coffee  mentioned,  the rental  car  industry  is  going                                                               
through some  difficult times.   For instance,  there was  a slow                                                               
down  after  [the  terrorist  attacks  of  September  11,  2001],                                                               
although he characterized it as  okay.  However, this summer [the                                                               
down turn] is  about the economy and the fact  that people aren't                                                               
traveling  because  they  are  worried about  the  economy.    He                                                               
informed  the committee  that  business was  down  11 percent  in                                                               
February at  TSAIA.  Furthermore,  Mr. Halcro related  that fewer                                                               
people  are  getting  off  airplanes   and  renting  cars.    The                                                               
aforementioned seems to be supported  by the information included                                                               
in  the  committee  packet.   The  committee  packet  includes  a                                                               
summary  report  of the  2002  travel  industry season  from  the                                                               
Alaska Travel Industry Association.   Page 10 of the report shows                                                               
the progression of  passenger travel and the trend  over the past                                                               
10 years.  From  that, one can see that by the  end of 2002, more                                                               
cruise  ship passengers  were projected  than  those getting  off                                                               
domestic air flights.  People  who depart from cruise ships don't                                                               
rent cars.   However, those that  rent cars also stay  at bed and                                                               
breakfasts, visit gift shops, and spend  money.  Over the last 10                                                               
years  the  lack  of  the  state's inability  to  make  a  strong                                                               
commitment to marketing tourism,  independent travelers are being                                                               
replaced by cruise ship passengers.                                                                                             
Number 2155                                                                                                                     
MR.  HALCRO  noted  that  he  has been  traveling  to  his  shops                                                               
throughout the  state and  the outlook in  each community  is not                                                               
good for the summer tourism  season.  For instance, in Petersburg                                                               
the  tourism industry  is  under much  stress.   At  one of  most                                                               
critical  times   in  the  tourism  industry,   this  legislation                                                               
proposes implementing  a tax  on the industry;  a tax  that would                                                               
make  Alaska  the highest  taxed  [rental  car industry]  in  the                                                               
country.   Mr.  Halcro  expressed frustration  because taking  15                                                               
percent out of  the car rental industry hurts  the industry while                                                               
nothing  is  being  done  to   stimulate  business  or  get  more                                                               
customers  in  the airports  and  off  planes.   Therefore,  $7.5                                                               
million is  being taken out of  an industry and it  still doesn't                                                               
solve  the fiscal  gap.   Mr. Halcro  said he  assumes that  this                                                               
exercise  is to  generate revenue  to fill  the fiscal  gap.   He                                                               
recalled  that  the  discussion   regarding  not  "nickeling  and                                                               
diming" individual Alaskan  industries was had a year  ago.  Now,                                                               
HB 271  was introduced last week  and no one in  the industry was                                                               
contacted  or  counseled.    In  response  to  Co-Chair  Hawker's                                                               
directive to  speak only  to the merits  of the  legislation, Mr.                                                               
Halcro emphasized that the merits  of the legislation go hand-in-                                                               
hand with  the process.   This legislation wasn't  given adequate                                                               
committee referrals, he said.                                                                                                   
Number 2451                                                                                                                     
MR. HALCRO turned to  the intent of HB 271.  If  the intent of HB
271  is  to  obtain  a  contribution from  those  who  use  state                                                               
service,  why was  the recreational  vehicle exempted  yesterday.                                                               
This is a  matter of fairness.  Mr. Halcro  pointed out that this                                                               
hearing  was  scheduled  at  7:00 a.m.  and  the  legislation  is                                                               
already scheduled in  the House Finance Committee on  Friday.  He                                                               
expressed the  hope that he would  be given the ability  to raise                                                               
questions during  the public process, although  he also mentioned                                                               
that this  bill is  on the  fast track.   In closing,  Mr. Halcro                                                               
suggested that  HB 271 be  placed in  a subcommittee and  the car                                                               
rental industry allowed  to participate.  He opined  that HB 271,                                                               
poorly  thought   out  legislation,   is  being  rushed.     This                                                               
legislation  has  the  possibility  to hurt  an  industry  that's                                                               
struggling.  He concluded by  noting that he heard Representative                                                               
Heinze explain that  the cruise ship head tax  was killed because                                                               
of  her  concerns  regarding  the  impacts  to  the  cruise  ship                                                               
Number 2736                                                                                                                     
CO-CHAIR HAWKER  announced that  legislation in  other committees                                                               
will not  be discussed in  this committee  when HB 271  is before                                                               
this committee.   Co-Chair Hawker related  his understanding that                                                               
part  of the  intent  of HB  271  is to  use  money to  stimulate                                                               
tourism  through marketing.   As  mentioned earlier,  one of  the                                                               
largest  problems of  the car  rental industry  is the  potential                                                               
decline in  tourism traffic this summer.   He asked, "Is  there a                                                               
reasonable  connection ...  between looking  at those  that would                                                               
benefit from additional  tourism in some way  contributing to the                                                               
cost of the state soliciting those tourists."                                                                                   
MR.  HALCRO replied,  "You're absolutely  correct."   The problem                                                               
with the tourism industry in Alaska is  that it has no way to pay                                                               
for  itself.   Other  states have  a state  sales  tax and  those                                                               
proceeds return  to the state  to generate revenue to  market the                                                               
state, which is what Alaska  should be doing.  The aforementioned                                                               
isn't  accomplished by  choosing  one industry  and burdening  it                                                               
with a 15 percent tax.   This legislation should be amended to be                                                               
a 2-3  percent statewide sales  tax so that  everyone contributes                                                               
and there would  be revenue to advertise and market  Alaska.  One                                                               
can clearly see  the trend that more people are  coming to Alaska                                                               
on cruise  ships rather than planes.   Such a trend  does nothing                                                               
for the car  rental industry or a whole host  of other industries                                                               
in the state.   Mr. Halcro said, "If you're  looking to solve the                                                               
problem, if you're  truly looking to generate revenue  to pay for                                                               
the  necessary  investment in  tourism  marketing,  then I  would                                                               
suggest to you that taking 15  percent out of one industry is not                                                               
the appropriate way  to do it.  Rather, spread  the burden around                                                               
everybody that benefits."                                                                                                       
Number 2930                                                                                                                     
REPRESENTATIVE  ROKEBERG   asked  if  Mr.  Halcro   has  had  the                                                               
opportunity to  review the  number of  bills relating  to revenue                                                               
enhancement   that  will   impact   the   car  rental   industry.                                                               
Specifically, he asked  if Mr. Halcro has  analyzed the potential                                                               
sales tax cost  in combination with the motor  fuel tax increases                                                               
and vehicle registration fee increases  in order to determine the                                                               
bottom line impact as well  as the industry's contribution to the                                                               
state coffers.                                                                                                                  
MR. HALCRO  replied, yes.  He  said that part of  his frustration                                                               
is that  the car rental industry  is under siege.   For instance,                                                               
yesterday  the House  Finance Committee  passed legislation  that                                                               
increased the Division  of Motor Vehicle (DMV) fees.   Mr. Halcro                                                               
said that  Governor Murkowski  is his governor  and what  does he                                                               
have to show for it:  a  proposed increase in DMV fees; a propose                                                               
increase in  the gas tax; a  proposed fee increase on  tires; and                                                               
now a  proposed 15 percent rental  car tax.  In  further response                                                               
to Representative  Rokeberg, Mr.  Halcro related that  the impact                                                               
on his company  from the fees alone amounts to  an increased cost                                                               
of  doing  business  of  about  $65,000-70,000.    However,  that                                                               
doesn't include any negative impacts  related to a 15 percent car                                                               
rental tax and the decrease  in business he believes would ensue.                                                               
Therefore, he said  he believes HB 271 needs some  work and there                                                               
needs  to  be   a  mechanism  for  the  industry   to  meet  with                                                               
legislators so  that the industry  can show how much  pressure it                                                               
is under.                                                                                                                       
Number 3259                                                                                                                     
REPRESENTATIVE  ROKEBERG suggested  that it  would be  helpful if                                                               
Mr. Halcro  could provide  some numbers  regarding the  impact of                                                               
each  bill on  the  car  rental industry  and  equate  that to  a                                                               
percentage.  He noted his concern  that if HB 271 is passed along                                                               
with   the  other   industry-related  legislation,   there  could                                                               
possibly  be increases  of  25  percent on  a  gross  basis.   He                                                               
related his opinion  that "this" is somewhat  hostile when viewed                                                               
in concert with  the other legislation that would  impact the car                                                               
rental industry.                                                                                                                
MR. HALCRO said  he would be happy to provide  those numbers, but                                                               
pointed out that  the industry is trying to  slow the legislation                                                               
long enough to "get a word  in."  The sponsor of this legislation                                                               
is  proposing a  change in  public  policy, yet  the industry  is                                                               
being required  to do the  homework to show the  legislators that                                                               
this  isn't necessary.    However,  it should  be  the other  way                                                               
around in  that the committee  should be reviewing full  and fair                                                               
Number 3529                                                                                                                     
REPRESENTATIVE  ROKEBERG   turned  to   the  issue   of  economic                                                               
substitution and  inquired as to  what the  economic substitution                                                               
alternatives  are and  the impact  those would  have [on  the car                                                               
rental industry].                                                                                                               
MR. HALCRO agreed that raising  the cost of goods sometimes makes                                                               
the consumer  look elsewhere,  such as  shuttle buses  and taxis.                                                               
He said that it's probably a  $15 cab ride to downtown Anchorage.                                                               
However, he  suggested that the  impact of taxes on  the industry                                                               
is more  important to review.   If an industry is  growing, it is                                                               
far easier to absorb an increase  in taxation.  However, when the                                                               
industry is in decline, it is  much harder to absorb a 15 percent                                                               
increase.  Mr.  Halcro noted that Avis operates  in some marginal                                                               
communities.  He  informed the committee that over  the past five                                                               
years,  the  company  hasn't  grown   and  there  are  no  growth                                                               
opportunities.   He related communities  in which he  has closed.                                                               
Mr. Halcro said that every day  he is faced with the challenge to                                                               
keep doors  open in some  of the  smaller communities.   Now, the                                                               
aforementioned  challenge  is in  addition  to  this proposed  15                                                               
percent increase.                                                                                                               
Number 3757                                                                                                                     
REPRESENTATIVE  ROKEBERG  pointed  out  that  when  Alaskans  are                                                               
polled regarding  revenue enhancement,  one suggestion is  to get                                                               
the visiting public to pay.   Therefore, this legislation appears                                                               
to be  a vehicle that  allows for that.   He asked if  Mr. Halcro                                                               
believes there  is some  equity in applying  a tax  that modestly                                                               
impacts  the car  rental industry,  such as  that proposed  in HB
MR.  HALCRO commented  that moderation  in eye  of beholder.   He                                                               
said he  didn't consider a  15 percent  tax moderate.   He agreed                                                               
that  Alaskans have  the  right  to feel  that  tourists need  to                                                               
contribute more,  but the car  rental industry already  pays [its                                                               
share].  He reiterated that Anchorage  is the only U.S. city with                                                               
a car rental tax but no  retail sales tax.  This proposal doesn't                                                               
solve anything, he said.  Mr.  Halcro said he wanted all visitors                                                               
to  Alaska to  pay.   He suggested  amending this  legislation to                                                               
make it a 2-3 percent statewide  sales tax and a cruise ship head                                                               
tax,  and therefore  the  problem has  been  solved while  giving                                                               
industries the ability to grow and prosper.                                                                                     
Number 4011                                                                                                                     
CO-CHAIR  HAWKER asked  if  Mr.  Halcro is  saying  that the  car                                                               
rental industry  in Alaska should  be excluded  from contributing                                                               
to the cost of the state's development of its tourism industry.                                                                 
MR.  HALCRO clarified  that the  car rental  industry is  already                                                               
paying and contributing,  last year $3.7 million.   If the desire                                                               
is to  have the  car rental industry  contribute more,  then have                                                               
others contribute  as well.   "Stop singling  out the  car rental                                                               
industry," he said.   He agreed that there is  a huge fiscal gap,                                                               
but the  problem isn't  being solved.   He  explained that  as an                                                               
employer he  wants to grow  his business, he wants  his employees                                                               
to make more and  he wants to make more.   However, that can't be                                                               
achieved  when government  singles out  the car  rental industry.                                                               
In 1990, the  average cost of a car for  [Avis] was approximately                                                               
$9,500.   This  year, the  average cost  of a  car in  the [Avis]                                                               
fleet is approximately $19,000;  however, rates have not doubled.                                                               
Yet, every year communities and  now the legislature have singled                                                               
out  the  car rental  industry  to  pay  an  unfair burden.    He                                                               
reiterated the need to review  the other industries.  He informed                                                               
the committee  that the growth  in the tourism industry  has been                                                               
isolated to  the cruise ship  companies because at the  same time                                                               
the state has decreased its  commitment to tourism marketing, the                                                               
cruise ships have  gotten larger and the industry  has spent more                                                               
on marketing.   The  problems created  by the  aforementioned are                                                               
realized  by  the  car  rental   industry  as  well  as  bed  and                                                               
breakfasts and hotels.  Mr.  Halcro concluded by saying, "This is                                                               
just one more in a number of questionable ideas."                                                                               
Number 4407                                                                                                                     
CO-CHAIR  HAWKER   announced  that  some  amendments   have  been                                                               
proposed and there are more  potential amendments.  Therefore, HB
271 will be held over.                                                                                                          
There being no  further business before the  committee, the House                                                               
Special Committee on Ways and Means was adjourned at 9:23 a.m.                                                                  

Document Name Date/Time Subjects