Legislature(2013 - 2014)SENATE FINANCE 532
04/01/2014 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB178 | |
| HB305 | |
| HB297 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| = | SB 178 | ||
| = | HB 305 | ||
| = | HB 297 | ||
SENATE FINANCE COMMITTEE
April 1, 2014
1:40 p.m.
1:40:23 PM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 1:40 p.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
Rudy VonImhof, President, Delta Leasing, LLC; Tom Wright,
Staff, Representative Mike Chenault; Representative Mike
Chenault; Representative Lance Pruitt; Dirk Craft, Staff,
Representative Lance Pruitt; Robert Brean, Director,
Research and Rural Development, Alaska Housing Finance
Corporation (AHFC);
PRESENT VIA TELECONFERENCE
Matt Fonder, Director, Tax Division, Department of Revenue;
Jon Cook, Chief Financial Officer, Airport Equipment
Rentals Inc., Fairbanks; Randy Johnson, Tyler Rental,
Ketchikan; Louise Bray, Shnitzer Steel, Tacoma, Washington;
Phil Steyer, Chugach Electrical Association, Anchorage;
John MacKinnon, Executive Director, Alaska Association of
General Contractors, Anchorage; Al Barrette, Self,
Fairbanks.
SUMMARY
SB 178 PASSENGER VEHICLE RENTAL TAX
SB 178 was HEARD and HELD in committee for
further consideration.
CSHB 297(FIN)
HOME ENERGY RATING SYSTEMS
CSHB 297(FIN) was HEARD and HELD in committee for
further consideration.
CSHB 305(FIN)
JUNK DEALER & METAL SCRAPPER LICENSING
CSHB 305(FIN) was HEARD and HELD in committee for
further consideration.
SENATE BILL NO. 178
"An Act relating to the application of the passenger
vehicle rental tax; and providing for an effective
date."
1:42:13 PM
Senator Hoffman inquired how the passenger vehicle rental
tax would be implemented, particularly for vehicles rented
for use only on the North Slope.
MATT FONDER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE
(via teleconference), responded that all vehicles on the
North Slope, rented for a period of at least 28 days, would
be exempt from the tax.
Senator Hoffman surmised that a vehicle rented for 21 days
would be subject to the tax.
Mr. Fonder replied in the affirmative.
Co-Chair Meyer understood that vehicles that were purchased
on the North Slope did not need to be registered and were
not subject to a registration tax.
Mr. Fonder responded that the question was not under the
per-view of the Department of Revenue.
1:43:58 PM
Senator Olson inquired if Co-Chair Meyer referencing the
road system that was maintained by the North Slope Borough.
Co-Chair Meyer responded in the affirmative.
Senator Olson explained that the North Slope Borough did
not require the tax on roads that it owned and maintained,
but that not all roads were included; the Dalton Highway,
for example, was part of the state system and would require
payment of a registration tax.
Co-Chair Meyer thought that roads at Prudhoe Bay, Kuparuk,
and Alpine were all exempt from having registered vehicles.
Senator Olson pointed out that those were private roads.
1:44:33 PM
Senator Hoffman inquired whether the legislation applied to
all the vehicles that were rented regardless of whether
they were driven on borough or state roads.
Mr. Fonder believed that there was a provision in existing
statute that pertained to driving on a public right-of-way.
He thought that if a vehicle was rented in Anchorage for a
three week period, traveled up the Dalton Highway to
Deadhorse, the passenger vehicle rental tax would be
applied regardless of the roads taken.
Senator Hoffman requested that DOR clarify the
interpretation of the law and get back to him.
1:46:08 PM
Co-Chair Meyer thought that if the vehicle was used on
private roads on the North Slope, the Department of Motor
Vehicles did not require vehicle registration.
Vice-Chair Fairclough referenced a prior fiscal note which
had proposed a higher cost due to retroactivity. She noted
that the current fiscal note before that was zero.
Mr. Fonder replied that the original fiscal note had
addressed legislation that had a retroactivity of
approximately 10 years; the burden would have been on the
department to ensure that any taxes paid during that
period, that should not have been paid, would be refunded.
The current draft of the bill had an immediate effective
date, which had resulted in the new fiscal note.
1:48:19 PM
Vice-Chair Fairclough understood that individual tax payers
had paid vehicle rental tax in the past.
Mr. Fonder responded in the affirmative. He and added that
the tax was paid through the rental companies and submitted
to the department on a quarterly basis.
Vice-Chair Fairclough asked if the proposition of
retroactivity would mean that the state would be forced to
seek individual tax payers, rather than the rental
entities.
Mr.Fonder said yes.
Vice-Chair Fairclough asserted that the tax should be fair
and equitable and that the funds from the tax should be
used to maintain state roads.
Mr. Fonder agreed.
Mr. Fonder returned to Senator Hoffman's question regarding
the public right-of-way. He stated that current statue
defined a passenger vehicle in AS 28.90.990 as a vehicle
that was driven, or moved on a highway, or other public
right-of-way in the state.
Co-Chair Meyer OPENED public testimony.
1:52:03 PM
JON COOK, CHIEF FINANCIAL OFFICER, AIRPORT EQUIPMENT
RENTALS INC., FAIRBANKS (via teleconference), spoke in
support of SB 178. He pointed out that the bill addressed
several unintended consequences of the original vehicle tax
legislation. He believed that issues regarding the rental
tax on the North Slope should not be addressed in the bill.
He noted that rentals under 28 days out of Deadhorse would
be subject to the tax. He asserted that his business was
located on a private road system should not be subject to
the tax. He believed that the DOR had no right to impose
the tax on the North Slope.
1:59:05 PM
RUDY VONIMHOF, PRESIDENT, DELTA LEASING, LLC, spoke in
support of SB 178. He relayed that his company had been
corresponding with DOR on the issue since 2010. In 2013 the
department had asked the company to file returns on the tax
and the company had responded that they did not need to pay
the tax. He noted that he had written a letter to the
department detailing the 2010 correspondence (copy on
file). He said that on November 2, 2013 his Prudhoe Bay and
Anchorage offices were the subject of a raid by the
Department of Revenue the results of which were that DOR
confiscated 70 boxes of files and computers. The files had
not been returned. He opined that BP had written a letter
to DOR explaining that the DMV did not consider the greater
Prudhoe Bay area taxable for vehicle registration; a map of
operations was included with the letter that detailed where
state maintenance began and ended on the Dalton Highway. He
shared that the checkpoints between public and private
roads were monitored by strong security and required badges
for access. He expressed concern with the current version
of the bill and opined that DOR maintained possession of
the files confiscated in 2013.
2:06:24 PM
Mr. VonImhof related that his company had never felt that
the tax was applicable to its customers and had never
collected the tax.
2:08:53 PM
Co-Chair Meyer assumed that Mr. VonImhof's business
operated out of Deadhorse.
Mr. VonImof replied in the affirmative.
2:09:06 PM
Senator Olson wondered if the security guards at the
checkpoints were armed.
Mr. VonImof replied that he was unsure.
2:09:54 PM
Senator Hoffman spoke to an intent letter and asked whether
the contents of the letter were meant to be included in the
legislation.
Mr. VonImof believed that an intent letter had been slated
to be drafted into the legislation, but that it had not
been written into the current version.
2:10:24 PM
Vice-Chair Fairclough inquired whether the electronic
information seized in the raid had been returned.
Mr. VonImhof stated that the company maintained the server,
which was imaged. He said that front desk computers and
technician computers in the maintenance facility had not
been seized. He relayed that the hard drives of three
computers had been returned in January 2014.
Vice-Chair Fairclough probed whether when the computers
were seized, the company had been able to perform a back-up
and if the business had been totally disabled by the
seizure.
Mr. VonImhof replied that the IT conversion had been
unexpected. He said that most of the information resided on
a server and that his business was allowed to keep its
server. Employees personal downloads on work computers had
not been returned.
2:12:31 PM
Mr. VonImof reiterated that he supported the current bill.
Co-Chair Meyer believed that the current bill would still
charge a tax on private roads on the North Slope.
Mr. VonImhof responded that he was surprised at the
Department of Revenue's position on Prudhoe Bay. He
expressed concern for that aspect of the legislation.
2:13:25 PM
Co-Chair Meyer asked whether the company leased vehicles
for longer than a 30 day period.
Mr. VonImhof responded that it varied. He offered that the
vast majority of business operations were long-term leases,
meaning more than 6 months. He opined that there were
outstanding issues between industry and DOR on the topic.
2:15:36 PM
RANDY JOHNSON, TYLER RENTAL, KETCHIKAN (via
teleconference), spoke in support of SB 178. He expressed
reservations regarding truck rentals on non-public roads
and support for a retroactivity clause. He related that his
company had never received notice on the tax since its
inception in 2004 and as a result had never collected the
tax from its customers. He understood that most of the
vehicle rental companies had received notice of the tax and
that he could only assume that the reason it was not
notified was because it was not originally the intent to
tax businesses like Tyler Rental.
2:19:11 PM
Co-Chair Meyer CLOSED public testimony.
Senator Hoffman questioned whether the sponsor had intended
that the legislation would not apply to certain vehicles.
2:19:53 PM
Senator Bishop stated that the sponsor's intent was to
clarify that Prudhoe Bay would be exempt from the tax.
2:20:21 PM
Senator Hoffman offered that if the DOR thought that the
intent was that the Prudhoe Bay should be taxed, there
needed to be clarification.
Senator Olson asked whether only vehicles rented on state
maintained roads should be taxed.
Senator Bishop noted that the original intent had been for
passenger vehicles during the summer tourist season and
that it had never been to target rentals in Prudhoe Bay or
remote mine sites.
2:21:24 PM
Senator Olson inquired if the bill's original intent had
been to tax people on private mining roads in Southeast
Alaska.
Senator Bishop responded that it had not been the intent to
do so.
Senator Olson stressed the need for further clarification
in order to stave future raids on small businesses.
2:22:15 PM
Vice-Chair Fairclough asserted that ignorance of the law
was not defensible in court and that it would be impossible
for the state to notify every single business of every law.
Co-Chair Meyer thought that his staff needed to work with
Senator Bishop's staff in order to craft a comprehensive
piece of legislation. He believed that the 28 day rental
period was workable.
Vice-Chair Fairclough urged communication with the
Department of Law in order to draft language that spoke to
the North Slope but also addressed mining operations in
Southeast Alaska.
Co-Chair Meyer said that DMV already knew which roads were
private or public.
Vice-Chair Fairclough believed that the work would need to
be done by both DOT and DMV.
2:25:55 PM
SB 178 was HEARD and HELD in committee for further
consideration.
2:26:00 PM
AT EASE
2:28:03 PM
RECONVENED
CS FOR HOUSE BILL NO. 305(FIN)
"An Act relating to the records of metal scrappers;
repealing the requirement that a junk dealer or metal
scrapper obtain a license; and providing for an
effective date."
TOM WRIGHT, STAFF, REPRESENTATIVE MIKE CHENAULT, read from
a sponsor statement:
HB 305 as originally introduced proposed to repeal a
pre-statehood requirement for junk dealers and metal
scrappers to obtain a state license. Research could
not identify any licenses which were issued under the
statute and therefore, it was felt the statute served
no public purpose and should be repealed. Although the
original intent of the legislation was to eliminate an
unneeded law from the books, the process led to the
identification of an area where Alaska state law was
deficient and needed improvement.
The junk dealer statute was discovered during
discussions by a working group of contractors,
utilities and scrap metal dealers looking for ways to
deter metal theft in Alaska. Due to the higher value
of metals such as copper, metal theft has been
increasing nationwide. However, Alaska remains as the
only state without a law specifically targeting metal
theft.
Thieves often target utilities, construction sites,
and other locations with significant volumes of
copper. In some cases, the value of the scrap metal
stolen pales in comparison to the damage done by
thieves. For utilities, theft can result in life
threatening situations, service outages for many
customers, and be very costly to repair. For
construction sites, significant costs and project
delays can result from theft.
The main goal of metal theft laws is to provide law
enforcement with additional tools to track down metal
thieves as well as provide a deterrent to the crime by
closing down avenues to sell stolen property. In many
cases, other states have adopted very comprehensive
laws, which are costly to implement as well as
burdensome to businesses. This bill takes a different
approach. Through the input of a those impacted
(utilities, contractors, law enforcement, and scrap
metal dealers), the legislation implements those tools
the working group felt would be most effective in a
manner which add as little burden as possible.
Specifically, the bill adds new recording keeping
requirements on the sale of scrap metal. Basic
information includes date, time, location, and value
of the metal as well as information about the seller
including the name, address, driver's license number,
and vehicle plate number. The legislation also
requires the seller to sign a statement that the metal
is not stolen.
2:31:43 PM
Co-Chair Meyer clarified that the committee was working
with version R of the bill.
Mr. Wright replied in the affirmative.
Senator Dunleavy understood that the bill would not prevent
someone from selling wire or metal to someone else.
Mr. Wright replied that it would not.
Senator Dunleavy thought that there could be a way around
the law.
Mr. Wright agreed. He surmised that there were ways to
circumvent nearly any law.
2:33:01 PM
Co-Chair Meyer asked how many junk dealers or scrappers
there were in the state.
Mr. Wright deferred the question to available experts in
the field.
Co-Chair Meyer wondered if a scrappers/junk dealer license
was the same as business license.
Mr. Wright replied in the affirmative.
2:33:33 PM
LOUISE BRAY, SHNITZER STEEL, TACOMA, WASHINGTON (via
teleconference), spoke in support of HB 305. She felt that
the bill was a first small step to combat metal theft and
to provide additional tools for law enforcement to track
thieves. She believed that there would always be non-
compliant dealers, but once the law was implemented those
dealers would be easier to locate.
2:36:47 PM
PHIL STEYER, CHUGACH ELECTRICAL ASSOCIATION, ANCHORAGE (via
teleconference), testified in support of HB 305. He stated
that the Chugiak Electrical Association had been the victim
of theft and property damage. He said that the cost of
repairs for the damage and lost business was expensive
inconvenient.
2:39:19 PM
JOHN MACKINNON, EXECUTIVE DIRECTOR, ALASKA ASSOCIATION OF
GENERAL CONTRACTORS, ANCHORAGE (via teleconference),
testified in support of HB 305. He stated that the Alaska
Association of General Contractors' hoped that the
legislation would make to more difficult for thieves to
sell scrap metal without adding more regulations or
requirements for dealers.
2:41:17 PM
AL BARRETTE, SELF, FAIRBANKS (via teleconference), spoke
against the reporting requirements in HB 305. He questioned
the constitutionality of the portion of the bill that would
require that records be kept available for inspection by
law enforcement during normal business hours. He opined
that he should have to collect data or file burdensome
paperwork for the sake of public safety.
2:44:27 PM
Co-Chair Meyer CLOSED public testimony.
Senator Bishop inquired whether the metal scrappers and
dealers had been involved in crafting the bill.
Mr. Wright replied yes.
Vice-Chair Fairclough queried to what extent the record
keeping proposed in the legislation would inconvenience
business owners.
2:46:46 PM
REPRESENTATIVE MIKE CHENAULT, replied that it was not the
sponsor's intent make the reporting any more burdensome
than what was considered good business practice. He
asserted that it would be best for businesses to keep
accurate records. He noted that if enforcement came into a
pawn shop and found that things were stolen, the items were
confiscated and given back to the rightful owner, resulting
in a loss for the store owner; proper record keeping offers
the proprietor the ability to recoup the costs from whoever
pawned the item. He understood that there would be more
paperwork and acknowledged the concerns; however, it was
better business practice to keep the information regarding
customers. He stressed that the legislation was an attempt
to address theft concerns in the most innocuous way
possible.
2:48:49 PM
Vice-Chair Fairclough questioned the reasoning behind
repealing the licensing requirement of junk dealers and
metal scrappers.
Mr. Wright replied that it was handed over as an arcane law
that pre-dated statehood. He cited the Legislative Research
Services Research Brief (copy on file):
Because the licensing of junk dealers and metal
scrappers involved the payment of fees, the Department
of Revenue inherited the provision through passage of
duties from territorial offices to the newly created
state offices.
Mr. Wright furthered that the law was not enforced by DOR
and that the issue was now the per view of the Department
of Commerce, Community and Economic Development (DCCED)
under their business license division.
Vice-Chair Fairclough stated if the number of metal
scrappers/dealers was unknown, and there were increasing
instances of metal scrappers buying stolen merchandise,
then it would be in the state's best interest to require
then to hold a license under DOR.
Representative Chenault replied that the state did know how
many there were and that they were all licensed under
DCCED. He said that the original intent of the legislation
was to terminate the section pertaining to DOR and not
DCCED.
2:51:43 PM
CSHB 305(FIN) was HEARD and HELD in committee for further
consideration.
2:51:54 PM
AT EASE
2:52:20 PM
RECONVENED
CS FOR HOUSE BILL NO. 297(FIN)
"An Act recognizing the Alaska Housing Finance
Corporation as the authorizing agency to approve home
energy rating systems for the state; and providing for
an effective date."
2:52:41 PM
REPRESENTATIVE LANCE PRUITT, introduced HB 297. He stated
that the Alaska Finance Housing Corporation (AHFC) was the
state's home energy rating system authorizing agency for
the purpose of approving home energy rating systems in the
state. He relayed that the bill sought to protect the
state's investment via AHFC in developing its own rating
system, AkWarm. He shared that the AkWarm system had been
in use since 1996, and was designed specifically for the
unique climate and environment of Alaska. The bill would
highlight that AHFC was the authorizing agency in charge of
approving Home Energy Rating Systems (HERS).
2:54:19 PM
Senator Dunleavy inquired whether and authorizing agency
was currently recognized.
Representative Pruitt said no.
Co-Chair Meyer noted the zero fiscal note. He inquired
whether there were federal funds available to assist this
program.
DIRK CRAFT, STAFF, REPRESENTATIVE LANCE PRUITT, responded
that the intent of the bill was to protect any potential
federal funds.
2:56:25 PM
ROBERT BREAN, DIRECTOR, RESEARCH AND RURAL DEVELOPMENT,
ALASKA HOUSING FINANCE CORPORATION (AHFC), added that the
corporation did not receive additional federal funds as a
result of exercising the program, but by formula AHFC
received approximately 300 thousand dollars from the United
States Department of Energy. The corporation anticipated
that to use any federal funds on an analysis of any rating
systems introduced that might benefit the state.
2:57:09 PM
Senator Bishop wondered whether AHFC would interface with
the Cold Climate Research Housing in Fairbanks as it
developed the regulations.
Mr. Brean replied that it was possible. He said that AHFC
had extended a great deal of time and energy developing the
current software rating system. He relayed that the current
system had weather regimes and weather systems built in as
well as construction techniques in the state. He concluded
that AHFC planned on working closely with Cold Climate
Housing on the project.
Co-Chair Meyer CLOSED public testimony.
2:59:07 PM
HB 297(FIN) was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
3:00:05 PM
The meeting was adjourned at 3:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSSB 178 BP Backup.pdf |
SFIN 4/1/2014 1:30:00 PM |
SB 178 |