Legislature(2019 - 2020)SENATE FINANCE 532
02/21/2020 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 104 | TELECONFERENCED | |
| += | SB 115 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 21, 2020
9:02 a.m.
9:02:32 AM
CALL TO ORDER
Co-Chair von Imhof called the Senate Finance Committee
meeting to order at 9:02 a.m.
MEMBERS PRESENT
Senator Natasha von Imhof, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Lyman Hoffman
Senator Donny Olson
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Darwin Peterson, Staff to Senator Bishop; Mary Siroky,
Deputy Commissioner, Department of Transportation and
Public Facilities; Brandon Spanos, Deputy Director, Tax
Division, Department of Revenue.
PRESENT VIA TELECONFERENCE
Joanne Olsen, Interim Director, Division of Motor Vehicles,
Department of Administration.
SUMMARY
SB 115 MOTOR FUEL TAX
CSSB 115(FIN) was REPORTED out of committee with
three "do pass" recommendations, three "no
recommendation" recommendations, one "do not
pass" recommendation and with two new fiscal
impact notes from the Department of Revenue and
the Department of Administration and one new zero
note from the Department of Transportation and
Public Facilities.
SENATE BILL NO. 115
"An Act relating to the motor fuel tax; and providing
for an effective date."
9:03:00 AM
Co-Chair von Imhof explained that the committee had heard
the bill on February 3rd, 2020; and had taken public
testimony and reviewed the fiscal notes. There was a
committee substitute (CS) for the committee's
consideration.
DARWIN PETERSON, STAFF TO SENATOR BISHOP, addressed the
presentation "Senate Bill 115 - Motor Fuel Tax" (copy on
file). He stated he would highlight the changes in the CS.
Mr. Peterson advanced to slide 5, "Electric Vehicle
Registration Fee":
Electric Vehicle a vehicle that is powered solely by
an electric motor drawing current from rechargeable
batteries, fuel cells or other portable sources of
electrical current and manufactured primarily for use
on public streets, roads and highways.
? Biennial registration fee increases from $100 to
$200
? Collected by the Division of Motor Vehicles and
deposited into the highway maintenance fund
? Approximately 600+ in Alaska
Plug-In Hybrid Vehicle a vehicle that is capable of
using gasoline, diesel fuel, or alternative fuel and
is powered in part by electrical energy using a
battery storage system capable of being recharged from
an external source of electricity and manufactured
primarily for use on public streets, roads and
highways.
? Biennial registration fee increases from $100 to
$150
? Collected by the Division of Motor Vehicles and
deposited into the highway maintenance fund
? Approximately 300+ in Alaska
Mr. Peterson noted that in previous testimony he had
estimated that there were 28,000 electric vehicles and
hybrids in the state. The number had come from the Division
of Motor Vehicles (DMV) the previous year. After his
testimony he had learned from utilities companies that had
hired consultants to determine the number of vehicles and
the number from DMV had been hugely exaggerated due to a
lack of specificity in reporting. The numbers on slide 5
had come from Chugach Electric, which had hired a private
consultant. The fiscal note from the Department of
Administration, DMV had estimated there were 675 electric
vehicles in the state.
9:07:15 AM
Mr. Peterson continued to address slide 5. In total, there
were about 1,000 vehicles for the additional registration
fee, which would generate a total of just under $100,000.
He thought the number of vehicles that qualified would only
increase in the future. He noted that there had been a
letter submitted to the committee by the Juneau Electric
Vehicle Association (copy on file). The letter expressed
support for the legislation and found that the proposed
fees were "fair" since the plug-in hybrid and electrical
vehicle users would not be contributing through a fuel tax.
9:09:10 AM
Mr. Peterson referenced slide 6, "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 41st in
comparison to other states.
Alaska currently has a more competitive ranking among
other states for jet fuel (36th) and aviation fuel
(40th).
9:09:50 AM
Mr. Peterson showed slide 7, "State Motor Fuels Tax
Comparison," which showed a bar graph with data from the
American Petroleum Institute. He noted that there was a
larger copy of the bar graph in members' packets. The bar
graph showed what taxes were collected for motor fuel in
all states; including base excise taxes, other fees imposed
by the state, and local taxes. He summarized that on the
graph, with the change in SB 117, Alaska would rank 41st
for total taxes collected.
Mr. Peterson continued to address the bar graph on slide 7.
He noted that the orange portion of the bars showed other
fees and taxes but did not include the 18.4 cents per
gallon federal excise tax in all states. He noted that
Alaska's current tax rate was shown on the far left. The
amount included the base tax plus the .95 cent per gallon
refined fuel surcharge. The other taxes in orange for
Alaska included a 1.1 percent weighted average sales tax
for all cities and boroughs. With the passage of SB 115,
Alaska would rank 41 out of 50.
Mr. Peterson explained that Section 1 of the CS had a
definition of electric and plug-in hybrid vehicles.
Additionally, the section had set a $100 biannual
registration fee for electric vehicles and a $50 fee for
hybrids. The section also clarified that the additional
funds would be deposited into the special highway account.
He addressed Section 2 of the bill, which was conforming
language. Currently in state law there was special
individual traction permit, which anyone could apply for,
which would allow for a person to use chains or studs
beyond the allowable window of September 15 through May 1.
Current statute charged a permit fee of one-third of the
registration cost. Section 2 excluded the additional
registration fee if paying the one-third special individual
traction permit fee.
9:13:05 AM
Senator Wilson asked if any other states were similar to
Alaska in having a narrower scope for the funding.
Mr. Peterson did not know what other states did with the
funding specifically. He knew many other states were
charging additional registration fees for electric
vehicles.
Senator Wilson asked if there were additional registration
fees for automobiles that used natural gas.
Mr. Peterson stated that there was nothing in the
legislation that would capture a vehicle that ran on
natural gas. If there was a vehicle that ran on natural gas
and electricity, it would fall under the bill.
Senator Olson could see the reason for the proposed Motor
Fuels Tax, but he thought the tax could be seen as a
disincentive for ecological efforts and a penalty for
people trying to improve the environment.
Mr. Peterson stated that the sponsor had taken the matter
under consideration and had not wanted to penalize electric
vehicle owners. He had learned that electric vehicles were
heavier than those with internal combustion engines, and
thereby caused more wear and tear on the road. He explained
that under the bill a driver of an internal combustion car
would pay from $100 to $114 per year in gas taxes, while a
driver of an electric vehicle would pay a registration of
$50 per year. He explained that the sponsor thought the
amount was fair. He referenced the letter from the Juneau
Electric Vehicle Association, which indicated the majority
of the members agreed they should contribute something.
9:16:52 AM
Co-Chair Stedman had a couple of concerns. He wanted to see
projected differences in marine fuel consumption in
dollars. He suggested that if the Motor Fuels Tax was
imposed and future budgets were reduced, other funds would
be supplanted. He referenced general maintenance of
potholes. He suggested a tax on marine fuel could fund
construction of harbors. He wanted to ensure a net increase
for the Department of Transportation and Public Facilities
(DOT) maintenance.
Co-Chair von Imhof asked if Co-Chair Stedman had a question
or had made a comment.
Co-Chair Stedman clarified that his question was about the
dollars to be generated by the passage of the bill, and how
to ensure there was a net increase in maintenance funds.
Senator Bishop suggested asking DOT.
9:19:24 AM
Co-Chair von Imhof addressed Co-Chair Stedman's comment,
and did not think that the committee could guarantee any
action of a future legislature. She thought the committee
could provide intent only. She thought if the funds went to
the General Fund, there was nothing the committee could do
about the choices of future legislators. She asked how far
the legislature could go to put the funds towards potholes.
MARY SIROKY, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, stated that DOT would
take any funds directed to the agency. She recognized that
DOT had done things to make the agency more efficient. She
referenced the current heavy snow year and acknowledged the
challenge faced by the agency. She stated that the
department would spend any funds as effectively and
efficiently as possible.
Co-Chair Stedman thought that a year previously, the bill
was a net neutral and would not constitute an increase in
the DOT budget. He asked what steps DOT would take in its
budget submissions to the governor and then legislature to
ensure the tax was a net increase towards badly needed
maintenance.
Ms. Siroky stated that the department would take direction
from the fiscal note associated with the bill when it
passed. She continued that if there was no reduction in the
department's General Fund funding and there was an increase
in the Motor Fuel Tax receipts it received, the agency
would start the next budget utilizing the numbers.
9:22:58 AM
Senator Wilson questioned how to guarantee how potholes
would be repaired and maintenance stations would be
reopened or extended. He questioned how DOT would utilize
the funds to the best interest of the state. He commented
that his district most likely had the most road miles and
commuters in the state. He pondered how the Motor Fuels Tax
funds would be used for his district versus other
districts. He considered that the tax was a user base fee.
He asked how DOT would use the fees to enhance current
operations, and how would DOT guarantee that the additional
funds were a new baseline.
Ms. Siroky reminded that the legislature was the
appropriating body. The department could guarantee using
the funds as efficiently as possible. If DOT received
additional Motor Fuel Tax funds, commensurate with the
unrealized Motor Fuel Taxes currently existing in the
budget, the department would use the funds to reinstate
items that were closed the previous year due to budget
cuts. If further funds were received, the department would
reopen maintenance stations, purchase additional equipment,
and move maintenance positions around. She explained that
DOT tried to balance maintenance funds among the three
regions and acknowledged the vastly different
transportation needs in the different regions of the state.
9:26:16 AM
Senator Wilson thought the previous year the legislature
had funded DOT to capacity, but there had been additional
decisions that had been made to reduce funds such as
shutting off lights on the Glenn Highway and closing
maintenance stations. He wanted to ensure that the funding
was a new baseline rather than supplemental funds.
Co-Chair von Imhof referenced a presentation by the
Department of Administration the previous Monday that had
shown labor costs among the different negotiated contracts.
She commented that there were embedded costs in every
department, and DOT had a large employee count. She thought
with increased labor costs, healthcare, and a cost-of-
living increase; there was a risk that any additional fund
from the proposed tax would be absorbed by labor without
additional maintenance being addressed.
Ms. Siroky acknowledged that the department did have
annually increasing costs in its budget yet did not receive
the commensurate funding increase in appropriations. She
recalled that the previous year, the department had
communicated to the finance committees that the Motor Fuel
Tax receipts that were appropriated were unrealizable in
the amount of approximately $1.2 million. She recalled that
the department had requested the General Funds, and the
final budget had the authority but not the dollars. The
department had been forced to reduce maintenance and
operation activities to spend within the funds that were
received. The department had reduced lighting in a variety
of areas. She noted that very few people had been affected
by the lighting change.
9:29:35 AM
Senator Hoffman asked about the department's number one
priority that was not funded in the governor's FY 21
budget.
Ms. Siroky stated that the department had conversations
with the governor's office that ranged from a lot more
funding to the funding that it had actually received. In
such discussions, the department was cognizant that there
were budget limitations in matching expenses with revenue.
The department was always clear that it had ongoing needs
for funding for maintenance and operation of ferries and
highways. She did not think the department's existing needs
were new to any administration.
Senator Hoffman asked if the request was for additional
personnel, more equipment, or more material for potholes.
He explained that members represented constituencies, and
the department submitted requests to the governor that may
or may not reflect the priorities of the committee. He was
trying to determine the priorities of the department. He
asked where the department might direct an additional $10
million.
Ms. Siroky stated the department's first priority was
safety, so it would spend additional funds on activities
that would increase the safety of the travelling public.
She anticipated that in the current year any additional
funds would go towards increased snow removal activities
that had been reduced over time. The department would put
any additional funds into roads, people, and airports.
9:32:43 AM
Senator Wielechowski asked if the governor supported the
bill.
Ms. Siroky stated that as with all previous
administrations, the governor had never made a commitment
on a bill until a final version had passed.
Senator Wielechowski asked if the governor supported the
current version of the bill.
Ms. Siroky stated that the department had not asked.
Senator Wielechowski asked if Ms. Siroky thought it was
important to ascertain if her boss supported the bill. He
asked if Ms. Siroky supported the bill.
Ms. Siroky stated that the department had been providing
Senator Bishop's office with as much information as
possible.
Co-Chair Stedman noted for the public that some bills were
supported by governors, and some were not. He thought it
was not uncommon for any governor to support or not support
legislation.
9:34:22 AM
Senator Wielechowski asked if Ms. Siroky would advise the
governor that the bill was good policy and the funds would
be put to good use if the bill was to pass.
Ms. Siroky noted that the department's fiscal note had been
approved by the governor's office; and she thought the
approval spoke to the fact that the governor's office
understood how the department would spend the money if it
was appropriated.
Senator Bishop mentioned that there were problems beyond
potholes such as very deteriorated roads. He thought that
problems started with potholes and resulted in larger
problems. He emphasized that the legislature was the
appropriating body.
Co-Chair Stedman MOVED to ADOPT proposed committee
substitute for SB 115, Work Draft 31-LS0895\K (Nauman,
2/18/20). There being NO OBJECTION, it was so ordered.
Co-Chair von Imhof discussed the fiscal notes. She relayed
that here would be no change to the new fiscal note from
the Department of Revenue. She detailed that the $50,000
in FY 21 capital costs would be zeroed out as discussed in
the previous bill hearing. There was a $1.7 million
Unrestricted General Fund (UGF) increment in the operating
budget for the tax revenue management system and the
department verified on record that the capital funds would
not be needed if the UGF funds were approved.
Co-Chair von Imhof mentioned a draft fiscal note from the
Department of Administration Division of Motor Vehicles
(DMV).
9:37:31 AM
AT EASE
9:40:28 AM
RECONVENED
Co-Chair von Imhof relayed that the director of the DMV was
present to address the fiscal note.
9:41:00 AM
JOANNE OLSEN, INTERIM DIRECTOR, DIVISION OF MOTOR VEHICLES,
DEPARTMENT OF ADMINISTRATION (via teleconference),
explained that the division did not track fuel sources and
had to do research to determine the number of electric
vehicles. The division had come up with a number for
electric vehicles of 675; but by looking at the make and
model a variance was observed. She estimated that 10
percent of the quantity denoted plug-in hybrid vehicles;
and noted that there was a discrepancy between the
division's report and that of the Department of Revenue.
Co-Chair von Imhof remarked on a $59.9 thousand dollars
change in General Fund revenues shown on the fiscal note.
She asked if the amount was correct or if Ms. Olsen wanted
to comment on the revenue change.
Ms. Olsen explained that what she submitted for electric
vehicles was correct, but the division had estimated the
number for hybrid vehicles.
Co-Chair von Imhof addressed a fiscal note for the
Department of Revenue, OMB Component 2476.
9:43:05 AM
BRANDON SPANOS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE, addressed the fiscal note from Department of
Revenue. He relayed that the fiscal noted added $33.8
million. He specified that there was a mistake on the
fiscal note, and the funds should be Designated General
Funds rather than UGF. All the funds for the four specific
fuel types were deposited into a special fund within the
General Fund that were designated and may be appropriated
for use at airports or on highways.
Co-Chair von Imhof thought the funds were already being
designated and would continue to be used in the same way.
Co-Chair Stedman MOVED to report CSSB 115(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSSB 115(FIN) was REPORTED out of committee with three "do
pass" recommendations, three "no recommendation"
recommendations, one "do not pass" recommendation and with
two new fiscal impact notes from the Department of Revenue
and the Department of Administration and one new zero note
from the Department of Transportation and Public
Facilities.
Co-Chair von Imhof discussed the agenda for the next
committee meeting.
ADJOURNMENT
9:45:11 AM
The meeting was adjourned at 9:45 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 115 Public Testimony Churchill.pdf |
SFIN 2/21/2020 9:00:00 AM |
SB 115 |
| SB 115 Power Point 022020 .pdf |
SFIN 2/21/2020 9:00:00 AM |
SB 115 |
| SB 115 ver. K Sectional Analysis 2.19.20.pdf |
SFIN 2/21/2020 9:00:00 AM |
SB 115 |
| SB 115 DOR Response to SFC 2.15.2020.pdf |
SFIN 2/21/2020 9:00:00 AM |
SB 115 |
| SB 115 Work Draft v. K 2.18.2020.pdf |
SFIN 2/21/2020 9:00:00 AM |
SB 115 |
| SB 115 Public Testimony JEVA.pdf |
SFIN 2/21/2020 9:00:00 AM |
SB 115 |