Legislature(2019 - 2020)SENATE FINANCE 532
02/03/2020 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB115 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 115 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
February 3, 2020
9:00 a.m.
9:00:29 AM
CALL TO ORDER
Co-Chair von Imhof called the Senate Finance Committee
meeting to order at 9:00 a.m.
MEMBERS PRESENT
Senator Natasha von Imhof, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Donny Olson
Senator Bill Wielechowski
MEMBERS ABSENT
Senator Lyman Hoffman
Senator David Wilson
ALSO PRESENT
Senator Cathy Giessel; Darwin Peterson, Staff, Senator
Click Bishop; Nils Andreassen, Alaska Municipal Legal,
Juneau; Mary Siroky, Deputy Commissioner, Department of
Transportation and Public Facilities, Juneau.
PRESENT VIA TELECONFERENCE
Joe Michel, Alaska Trucking Association, Anchorage; Alicia
Siira, Executive Director, Associative General Contractors
of Alaska, Anchorage; Mike Coons, Self, Palmer; Cris
Eichenlaub, Self, Eagle River; Patrick Mulligan, Petro
Marine Services, Anchorage; Herman Morgan, Self, Aniak;
David Neef, Self, Anchorage; Vikki Kennedy, Self, Juneau;
Clark Milne, Self, Fairbanks; Bert Houghtaling, Self, Big
Lake; Sheila Schatz, Self, Wasilla; Adam Hykes, Self,
Homer; Wes Humbyrd, Self, Homer; Colleen Bagot, Self,
Palmer; Brandon Spanos, Deputy Director, Tax Division,
Department of Revenue, Anchorage.
SUMMARY
SB 115 MOTOR FUEL TAX
SB 115 was HEARD and HELD in committee for
further consideration.
SENATE BILL NO. 115
"An Act relating to the motor fuel tax; and providing
for an effective date."
9:02:18 AM
SENATOR CLICK BISHOP, SPONSOR, presented the legislation.
He stated that the bill would increase the motor fuel tax
by $0.80. He commented that he had supported a motor fuel
tax for several years at various iterations. He remarked
that there was a growing use of hybrid and electric
vehicles, so the fuel revenue was continuing to trend
downward. He noted that five maintenance stations had
recently closed in his district. He remarked that only two
other states would have a lower fuel tax than Alaska,
should the bill pass: Maine and Vermont. He remarked that
the administration in the year prior had wanted an $800,000
increment for Maintenance and Operations in the Department
of Transportation and Public Facilities (DOT/PF) budget. He
felt the reason for the request was because the motor fuel
tax receipts were trending downward. He stated that the
request of the governor did not move forward, but there was
another maintenance closure in the meantime. He understood
that there would be a Constitutional amendment to ensure
that the tax was used for maintenance. He referenced the
Revenue Sources Book, which stated that remaining motor
fuel tax revenue was considered designated funds. He
remarked that it would be a meaningful step toward the
ability to maintain the roads. He stressed that safety
should always be the most important consideration, and felt
that DOT/PF should not always have the burden in deciding
which roads would get attention. He recalled that he had
attended a meeting in Fairbanks with the Alaska Truckers
Association, and noted that there was such an expensive
year to repair the trucks travelling to Prudhoe Bay. He
stated that, in 1970, the motor fuel tax attributed 6
percent of the operating budget. He did not know what the
math would attribute to in modern times, but he felt that
it would be at much lower current percentage.
Co-Chair von Imhof acknowledged Senator Giessel in the
meeting.
9:08:03 AM
DARWIN PETERSON, STAFF, SENATOR CLICK BISHOP, discussed the
presentation, "Senate Bill 115; Motor Fuel Tax; Senator
Click Bishop; February 3, 2020; Senate Finance Committee"
(copy on file). He looked at slide 2, "Motor Fuel Tax
History":
1945 Alaska's first motor fuel tax levied at
$.01/gallon
1970 Motor fuel tax was increased to $.08/gallon
1977 Marine fuel tax was increased to $.05/gallon
1994 Aviation fuel tax was increased to $.047/gallon
Sept. 1, 2008 Aug. 31, 2009 Motor fuel tax
suspended on all fuel types
2015 HB 158 added a $.0095/gallon surcharge on motor
fuel intended for spill prevention and response fund
Mr. Peterson explained that in 1970, 8 cents a gallon was
considered very typical compared to other states. He stated
that, since then, every other state had gradually increased
its motor fuel tax rates to keep pace with inflation.
9:09:59 AM
Mr. Peterson highlighted slide 3, "Motor Fuel Tax Rates
(cents/gallon)":
Highway Fuel
Current: $.08; SB 115 (proposed): $.16
Marine Fuel
Current: $.05; SB 115 (proposed): $.10
Aviation Fuel
Current: $.047; SB 115 (proposed): $.047
Jet Fuel
Current: $.032; SB 115 (proposed): $.032
Off-Road Use Refund
Current: $.06; SB 115 (proposed): $.12
Co-Chair Stedman wondered how many people applied for the
refunds, and the bureaucratic costs of the overhead.
Mr. Peterson agreed to provide that information.
Co-Chair von Imhof noted the requested a bar graph of all
50 states to show how Alaska compared to other states. She
noted that the jet fuel was remaining constant, and
reiterated the comments regarding maintaining
competitiveness in Alaska. She stressed the importance of
keeping Alaska competitive. She noted the "uplift charge",
which was unique in Alaska, which increased the cost of the
jet fuel taxes that went toward the local jurisdictions.
9:14:24 AM
Senator Wielechowski noted that Anchorage had a gas tax,
and wondered whether other states had local community
taxes. He asked whether that changed the state's ranking
against the other states.
Mr. Peterson replied that there would be a slide on the
competitiveness. He remarked that he had intended to
discuss it at that point, but agreed to currently discuss
the point. He explained that there was documentation that
showed each state's charge as their base tax rate for motor
fuel as well as state fees combined with local taxes. He
pointed out that most other states did not separate marine
fuel and highway fuel, because they were taxed the same in
other states. He shared that Alaska would still be the
lowest in the nation for marine fuel. He shared that with
highway fuel tax at 16 cents a gallon would bring Alaska to
48th in the nation, above New Jersey and Vermont. He
stressed that other New Jersey and Vermont taxes and state
fees were still significantly higher than Alaska. He
explained that taking the local Anchorage tax into
consideration would still keep Alaska very low in
comparison to the other states. He felt that, taking into
consideration fees and taxes in other states would still
result in Alaska being the lowest in the nation.
Co-Chair von Imhof felt that a one-page table with that
information would be more useful to the committee.
Co-Chair Stedman remarked on the marine fuel tax. He stated
that in the decade prior, the legislature had moved of the
harbor systems to the local communities. He remarked that
the harbors had since been rebuilt. He questioned how the
tax would be integrated back to the user group, because the
harbors were under local control. He noted that the highway
fuel had a target of road maintenance, but queried the need
and impact on marine fuel. He stressed that the local
harbors needed to create separate funds for the harbor
system, and in doing so there would not be a need to
request funds from the state in the future. He stated that
the state would help to build the harbor, but would not
provide funds to repair old infrastructure. He looked at
the road maintenance portion, and felt that there should be
more funds for roads. He was concerned that the net benefit
would be zero. He felt that there should be an assurance
that it was an additive, rather than supplementing other
funds, otherwise there was not a maintenance net gain on
the highways. He requested a conversation about ensuring
that the tax increase the maintenance rather than
supplement what is already allotted in spending.
9:22:22 AM
Senator Olson noted the off-road use for the refund, and
noted the application to snowmobiles and four-wheelers. He
wondered whether there was relief for those who live
throughout the state without harbors or boat slips to
maintain.
Mr. Peterson responded that there was no relief for marine
fuel tax that was purchased in an area without harbors or
boat slips. He agreed to work with Senator Olson on that
issue. He explained that the off road use refund was
currently in statute.
Senator Bishop furthered that the refunds could be
submitted on a quarterly basis.
Mr. Peterson agreed.
Co-Chair von Imhof stated that there would be an
opportunity to address the bill with clarifying
information.
9:24:34 AM
Mr. Peterson addressed slide 4, "Impact on Average Alaska
Consumer":
Registered Passenger Vehicles (cars and trucks only) =
654,826 (per DOT/PF)
Average Miles per Year per Vehicle = 15,000 (per
Kelley Blue Book)
Average Miles Per Gallon (24.2 (cars) + 17.5 (trucks)
/ 2) = 20.85 (per DOT/PF)
Gallons of Fuel per Year (15,000/20.85) = 719
Annual Cost per Vehicle (719 x $.08) = $57.52
Co-Chair Stedman understood that the state always struggled
with ensuring that all the constituents received fair
treatment. He noted an interest in a clearer directional
change from piston-fired engines to electrical cars. He
wondered how there would be fairness to ensure all vehicles
were sharing the burden of maintenance. He queried the
thought around ensuring that the electric cars paid their
fair share, and the implementation thereof.
Mr. Peterson replied that there were many considerations of
that issue, and stated that there was a draft committee
substitute which would propose an increase to the
registration fee for electric vehicles. He explained that
many other states had an additional registration fee for
electric vehicles.
9:31:23 AM
Co-Chair von Imhof wondered how much the money in
registration would replace the lost fuel tax. She wanted to
see the bill in the future, and wanted to hear any possible
amendments from the committee members to be included in the
committee substitute.
Mr. Peterson displayed slide 5, "Comparison to Other
States":
Alaska has the lowest tax rate on highway fuel and
marine fuel of any state (in most states, the marine
rate is the same as the highway rate).
With passage of SB 115, Alaska would remain well below
the national average moving from 50th to 48th with New
Jersey ($10.5 cents/gallon) and Vermont ($12.1
cents/gallon) being lower.
Alaska currently has a more competitive ranking among
other states for jet fuel (36th) and aviation fuel
(40th).
Co-Chair von Imhof requested a Sectional Analysis.
Senator Wielechowski requested information about the state
financial effects of the 3 cent refund for miners.
Senator Bishop wanted to see the effect on the civil heavy
and highway contractors.
9:34:51 AM
Mr. Peterson discussed the Sectional Analysis (copy on
file):
Sec. 1 Changes the per-gallon tax rates for qualified
dealers for two categories of motor fuel: highway fuel
and gasohol from $0.08 to $0.16; and marine fuel from
$0.05 to $0.10.
Sec. 2 Changes the per-gallon tax rates for users for
two categories of motor fuel: highway fuel and gasohol
from $0.08 to $0.16; and marine fuel from $0.05 to
$0.10.
Sec. 3 Changes the refund for non-road use of taxed
motor fuel from $0.06 to $0.12 per gallon.
Sec. 4 Transition language allowing for the Department
of Revenue to adopt regulations.
Sec. 5 Provides for an immediate effective date for
Section 4.
Sec. 6 Provides for a July 1, 2019 effective date for
all other provisions of the bill.
Senator Olson noted that the states that were included in
most of the comparisons were "back east." He remarked that
there were a fair amount of toll roads in that area of the
country, which was different than Alaska's road system. He
wondered how those toll roads factored into the
comparisons.
Senator Bishop replied that he believed that toll roads
were built with private funds.
Mr. Peterson agreed to provide the research information.
Co-Chair von Imhof OPENED public testimony.
9:39:43 AM
JOE MICHEL, ALASKA TRUCKING ASSOCIATION, ANCHORAGE (via
teleconference), testified in support of the legislation.
He looked forward to working with the sponsor. He stated
that the association has always supported a fuel tax
increase, because of the wear and tear caused to his
member's vehicles.
9:41:00 AM
ALICIA SIIRA, EXECUTIVE DIRECTOR, ASSOCIATIVE GENERAL
CONTRACTORS OF ALASKA, ANCHORAGE (via teleconference),
spoke in support of the bill. She remarked that Alaska had
not increased its motor fuel tax rates since 1970. She
stated that Alaska had the lowest motor fuel tax rates in
the nation. The proposed increase would only slightly
adjust that ranking.
9:42:29 AM
MIKE COONS, SELF, PALMER (via teleconference), spoke
against the proposed the legislation. He stated that he had
submitted an email detailing his opposition. He felt that
there were aspects of the presentation that were laughable,
particularly related to the electric and hybrid vehicles.
9:45:17 AM
CRIS EICHENLAUB, SELF, EAGLE RIVER (via teleconference),
spoke in opposition to the bill. He felt that it was a way
to "nickel and dime" the private sector. He noted that
Alaska had the second highest fuel prices in the nation.
9:47:31 AM
PATRICK MULLIGAN, PETRO MARINE SERVICES, ANCHORAGE (via
teleconference), spoke against the marine fuel tax aspect
of the bill.
Co-Chair Stedman noted that Dutch Harbor was also a large
fishing hub. He noted that Petro Marine Services was mostly
in Southeast Alaska.
Mr. Mulligan agreed. He felt that the same dynamic in
Southeast Alaska would apply to Dutch Harbor.
9:51:19 AM
HERMAN MORGAN, SELF, ANIAK (via teleconference), spoke in
opposition to the bill. He stressed that gas was over $6.00
a gallon in his community. He remarked that many people in
his community were on a fixed income, so the tax increase
would have a detrimental effect on them.
9:53:56 AM
DAVID NEEF, SELF, ANCHORAGE (via teleconference), remarked
that there was a problem with information, and felt that
the American Petroleum Institute information about all
income for taxes and the impacts should be included in the
presentation. He shared that he worked for the cruise
lines. He felt that there should be further examination of
the history of the tax.
9:56:27 AM
VIKKI KENNEDY, SELF, JUNEAU (via teleconference), opposed
the legislation, because it would not be fair for the older
population. She stated that a toll road could also be
beneficial. She also spoke in support of an income tax.
9:59:07 AM
NILS ANDREASSEN, ALASKA MUNICIPAL LEGAL, JUNEAU, spoke in
support of the legislation. He remarked that the members
had voted in support of the bill. He noted that the tax had
not kept pace with behavior, inflation, and increased need
for maintenance. He remarked that the municipal budgets
included transportation budgets that were significantly
high.
10:02:09 AM
CLARK MILNE, SELF, FAIRBANKS (via teleconference), spoke in
support of the bill. He shared that he was a civil engineer
and had been following the information about motor fuel tax
for many years. He had significant experience on the
subject. He explained the difference between dedication and
designation.
10:04:51 AM
BERT HOUGHTALING, SELF, BIG LAKE (via teleconference),
spoke against the legislation. He stressed that, because
Anchorage had increased its fuel tax, he no longer used
Anchorage to purchase gas. He felt that the focus should be
on opening Pebble Mine and encouraging the logging
industry. He also added that other ways to open various oil
rigs should be a part of the consideration.
10:06:44 AM
SHEILA SCHATZ, SELF, WASILLA (via teleconference),
testified in opposition to the legislation. He stressed
that there were many increases in expenses for the
residents of the state, and the Permanent Fund Dividend
(PFD) was experiencing continued reductions. She felt that
the budget could be fixed without taxation.
10:07:29 AM
ADAM HYKES, SELF, HOMER (via teleconference), spoke against
the bill. He did not believe that money could not return to
the people through designated or dedicated funds. He did
not support any new taxes until the there was a balanced
budget.
10:08:12 AM
WES HUMBYRD, SELF, HOMER (via teleconference), testified in
opposition to the marine fuel tax aspect of the
legislation. He had been a commercial fisherman, and did
not understand how that money could be used for maintenance
on the water. He remarked that there was already a 25 cent
sales tax on fuel in Homer.
10:09:01 AM
COLLEEN BAGOT, SELF, PALMER (via teleconference), spoke
against the bill. She remarked that there were many older
people in the state who did not even use the roads. He
encouraged the committee to balance the budget.
Co-Chair von Imhof CLOSED public testimony.
10:10:30 AM
MARY SIROKY, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, JUNEAU, discussed the
fiscal note. She stated that the legislature appropriated
all of the motor fuel tax and aviation fuel tax to DOT/PF.
She explained that in the current fiscal year, DOT/PF
received $33.3 million in motor fuel tax; $4.7 million in
aviation tax; and $3.6 million in motor fuel tax receipts
for the Alaska Marine Highway. She stated that in 2020, the
legislature appropriated all of the motor fuel tax to
DOT/PF, however the state would not collect the motor fuel
tax.
Co-Chair Stedman noted that the budgetary process had not
yet begun, and encouraged the department to draft a
lookback of 15 years of maintenance dollars across the
state for the subcommittee. He noted that there had been a
substantial increase in highway maintenance dollars ten
years prior, so he wanted to see the impact of that
appropriation.
Ms. Siroky agreed to provide that information. She stressed
that the fiscal note would be the vehicle to getting
funding into the department's budget.
Co-Chair von Imhof felt that Co-Chair Stedman's was
requesting a list of priorities for deferred maintenance.
Co-Chair Stedman added that there was a similar request a
few years prior, and he recalled that DOT/PF would not see
an added increase on maintenance, rather it would only be a
tax on the citizens. Therefore, DOT/PF's maintenance budget
would remain unchanged. He felt that implementing the tax
increase would result in the maintenance budget.
Senator Bishop requested that the staffing levels be
included in the lookback.
10:18:31 AM
Senator Wielechowski wondered whether the administration
was in support or opposition to the bill.
Ms. Siroky replied that she was available to provide
information on the bill.
Senator Wielechowski wondered the governor would veto the
legislation.
Ms. Siroky agreed to ask that question to the governor.
Co-Chair von Imhof wondered whether there was more
information.
Ms. Siroky replied "no."
10:19:45 AM
BRANDON SPANOS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE, ANCHORAGE (via teleconference), addressed the
fiscal note. He explained that there was an anticipation of
doubling in revenue for the motor fuel tax.
Co-Chair von Imhof noted the estimation of capital costs
for the revenue management systems. She recalled that the
governor added $1.7 million in UGF in the operating budget
for the tax revenue management system, which would be added
to the base budget. She wondered whether the extra $50,000
would be needed if the $1.7 million was also added to the
base budget.
Mr. Spanos replied that they would not need the additional
revenue for the fund.
10:21:55 AM
Co-Chair von Imhof felt that it made sense to include the
system in the budget, because the conversations about the
issue were important to process.
Senator Wielechowski requested an explanation of what point
the tax was captured.
Mr. Spanos wondered whether the question was about where
the tax was paid.
Senator Wielechowski replied in the affirmative. He further
explained that he wanted to know who would be directly
taxed.
Mr. Spanos replied that the distributor was taxed.
Senator Wielechowski recalled testimony related to a
company who was shipping gas to themselves. He wondered
whether that person would be considered a distributor.
Mr. Spanos replied that there were some allowances in the
regulation for someone who was buying gas for a tax-off
purpose.
Senator Wielechowski queried the types of fuel exempt
purposes, and an estimate of how much was used for exempt
purposes.
Mr. Spanos replied that it was not reported from the
distributors for their tax-off sales. He stated that the
information could be found during an audit. He remarked
that there were some estimates that had been included in
some past legislation. He stated that some exemptions were
for heating fuel; federal, state, and government use;
foreign fuel used in foreign flights; fuel used in exports;
charitable institutions; and fuel transferred between
qualified dealers.
Co-Chair von Imhof requested the previous information about
the estimate. She wondered whether the ferry pay the marine
fuel tax.
Mr. Spanos replied that he did not know, and agreed to
provide that information.
Ms. Siroky stated that the state ferry was exempt from that
tax.
10:27:37 AM
Co-Chair Stedman requested an analysis of Department of
Transportation and Public Facilities (DOT/PF) by region.
Co-Chair von Imhof requested that amendments and concerns
be submitted to her office as soon as possible. She
discussed the following day's agenda.
SB 115 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:29:28 AM
The meeting was adjourned at 10:29 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 115 2018 Motor Fuel Tax Report Tax Division Department of Revenue.pdf |
SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 Fall 2019 Revenue Sources Book Chapter 5.pdf |
HFIN 3/20/2020 9:00:00 AM HTRA 3/12/2020 1:00:00 PM SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 FAQs by Sponsor 1.15.2020.pdf |
SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 Federation of Tax Administrators motor fuel tax rates January 2019.pdf |
HFIN 3/20/2020 9:00:00 AM SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 Leg. Research MFT revenue 1993-2018.pdf |
HFIN 3/20/2020 9:00:00 AM SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 LFD FundSources_Motor Fuel Tax_2018.pdf |
HFIN 3/20/2020 9:00:00 AM SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 Sectional Analysis v. A 1.15.2020.pdf |
HTRA 3/12/2020 1:00:00 PM SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 Sponsor Statement 1.15.2020.pdf |
HTRA 3/12/2020 1:00:00 PM SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB115 support letter AML 1.30.20.pdf |
SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 PowerPoint 2.3.2020.pdf |
SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 Testimony Erickson.pdf |
SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 Public Testimony Edens.pdf |
SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB115 Public Testimony Coleman.pdf |
SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 Public Testimony S. Erickson.pdf |
SFIN 2/3/2020 9:00:00 AM |
SB 115 |
| SB 115 Public Testimony Brock.pdf |
SFIN 2/3/2020 9:00:00 AM |
SB 115 |