Legislature(1993 - 1994)
03/31/1994 03:38 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE TRANSPORTATION COMMITTEE March 31, 1994 3:38 p.m. MEMBERS PRESENT Senator Bert Sharp, Chair Senator Tim Kelly Senator Jay Kerttula MEMBERS ABSENT Senator Randy Phillips, Vice Chair Senator Georgianna Lincoln COMMITTEE CALENDAR SENATE BILL NO. 327 "An Act amending the motor fuel tax to establish a different tax levy on residual fuel oil used in and on watercraft; and providing for an effective date." SENATE BILL NO. 343 "An Act relating to the operation of courtesy cars at certain airports." SENATE RESOLUTION NO. 4 Requesting the federal government to reduce automobile emissions inspections in Alaska to every two years. SENATE BILL NO. 227 "An Act relating to terminal rental adjustment clauses for motor vehicles and trailers." CS FOR HOUSE BILL NO. 407(STA) "An Act relating to issuance of commemorative gold rush motor vehicle license plates; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 327 - See Transportation minutes dated 3/10/94. SB 343 - No previous senate committee action. SR 4 - No previous senate committee action. SB 227 - See State Affairs minutes dated 2/16/94 and Labor & Commerce minutes dated 3/10/94. HB 407 - No previous senate committee action. WITNESS REGISTER Gary Paxton, City Administrator City & Borough of Sitka 304 Lake Street, Sitka, AK 99835¶747-3294 POSITION STATEMENT: in favor of SB 327 Jim Burns, Senior Vice President Marketing Petro Marine Services 3111 C St., Suite 500, Anchorage, AK 99503¶562-5000 POSITION STATEMENT: in favor of SB 327 Dan Coffey, Co-Owner Dollar Rent-a-Car 207 E. Northern Lights, #200, Anchorage, AK 99503¶274-3385 POSITION STATEMENT: in favor of SB 343 Helvi K. Sandvik, Deputy Commissioner Department of Transportation & Public Facilities 3132 Channel Drive, Juneau, AK 99801-7898¶465-6973 POSITION STATEMENT: opposes SB 327 Gary Zimmerman Alaskan Rent-a-Car, Inc., Avis P.O. Box 190028, Anchorage, AK 99519¶243-4300 POSITION STATEMENT: opposes SB 343 Glenn Holdahl Hertz Corporation 4555 Int'l Airport Rd., Anchorage, AK 99502¶243-3376 POSITION STATEMENT: opposes SB 343 Teresa Winter Budget Rent-a-Car 2580 W. 50th Ave., Anchorage, AK 99502¶243-6750 POSITION STATEMENT: opposes SB 343 Bernie Smith Tesoro Alaska Petroleum Company P.O. Box 3369, Kenai, AK 99611¶776-8191 POSITION STATEMENT: in favor of SB 327 Leonard Verrelli, Chief Air Quality Management Section Department of Environmental Conservation 410 Willoughby Ave., Suite 105, Juneau, AK 99801-1795¶465-5100 POSITION STATEMENT: testified on SR 4 ACTION NARRATIVE TAPE 94-10, SIDE A Number 001 CHAIRMAN SHARP calls the Senate Transportation Committee meeting to order at 3:38 p.m. Number 006 CHAIRMAN SHARP brings up SB 327 (TAX ON RESIDUAL MARINE FUEL OIL) as the first order of business before the Senate Transportation Committee and notes the presence of a proposed committee substitute. Number 021 SENATOR KERTTULA makes a motion to adopt the CSSB 237(TRA) in lieu of the original bill. Number 023 CHAIRMAN SHARP acknowledges the motion and says it will be approved when the committee has a quorum. The chairman calls Mr. Paxton to testify and asks Mr. Paxton if he has the committee substitute in front of him. Number 030 GARY PAXTON, City Administrator for the City & Borough of Sitka, testifying from Sitka, replies he does have the cs in front of him. Mr. Paxton states he submitted a letter to the committee on behalf of the City & Borough of Sitka. Mr. Paxton highlights several aspects of that letter. SENATOR KERTTULA asks Mr. Paxton how much local tax the City & Borough of Sitka will add if the legislature reduces the state tax. Number 078 MR. PAXTON replies the intention of the City & Borough of Sitka is not to add a local tax, except for the local sales tax. There is a cap on the local sales tax of 1,000$. Number 085 CHAIRMAN SHARP thanks Mr. Paxton for his testimony and calls the next witness. Number 088 JIM BURNS, Senior Vice President for Marketing, Petro Marine Service (PMS), testifying from Anchorage, states he has testified previously on SB 327 and supports the committee substitute. Mr. Burns says he would be happy to answer any questions committee members might have. Number 095 CHAIRMAN SHARP asks if there are any questions for Mr. Burns. Hearing none, the chairman refers people to the sectional analysis of the cs for explanation of the changes to the bill. The cs guarantees that the state will continue to receive the present amount of revenue of 205,000$ before the tax is reduced from 5 cents to 1 cent. It would be done on a refundable basis by the Department of Revenue. The bill defines passenger watercraft and residual fuel oil. It also establishes an immediate effective date and a sunset date of June 30, 1998. Those are the primary changes that were desired by the committee at the last meeting. The chairman asks if anyone else wishes to testify. SENATOR KERTTULA makes a motion to discharge CSSB 327(TRA) from the Senate Transportation Committee. CHAIRMAN SHARP says the bill will be moved when the committee gets a quorum. In the meantime, the bill will be set aside. Number 115 CHAIRMAN SHARP brings up SB 343 (COURTESY CARS OPERATED AT AIRPORTS) as the next order of business before the Senate Transportation Committee meeting. The chairman calls the first witness. Number 127 DAN COFFEY, Co-Owner, Dollar Rent-a-Car, testifying from Anchorage, states Dollar Rent-a-Car supports SB 343. Mr. Coffey supports the changes being worked on in the house legislation, which would state the department would not be able to impose a charge or a fee based on the revenue of a business located outside the terminal area which operates a courtesy car. Dollar Rent-a-Car supports those changes because they think a tax of 8% of the gross revenue of their business from the airport is a confiscatory rate of taxation. For comparison, in-terminal rental agencies receive a counter, covered parking for rental vehicles, uncovered parking, and all the benefits associated with being on-terminal for a fee of approximately 9.1% of their gross revenues. For only a 1.1% higher fee, the in-airport agencies receive disproportionately higher benefits. The off-airport rental agencies would not be opposed to a permitting system or a fee system, if it were imposed relative to the benefits received. We view SB 343 as an effort by the airport and the on-airport agencies to protect their turf. MR. COFFEY states the airport is, unfortunately, looking towards small business to make up their revenue shortfall, and is doing it in a manner which is very onerous to the small business operator. Number 198 CHAIRMAN SHARP asks if there are any questions for Mr. Coffey from committee members. Hearing none, the chairman calls a representative from the Department of Transportation & Public Facilities (DOT) to testify. Number 212 HELVI SANDVIK, Deputy Commissioner, Department of Transportation, states she is representing the airports in this particular case. Ms. Sandvik states DOT has submitted a position paper and a zero fiscal note on SB 343. In reanalyzing SB 343, Ms. Sandvik has concluded that there will probably be a slight fiscal impact of about 6,000$ per year to collect the fees with an initial start-up cost of about 25,000$. DOT is opposed to the bill, primarily because they believe it interferes with the airports responsibility to assess fees to those companies that derive a benefit from the airport. MS. SANDVIK states this issue has been upheld in every court of law, including the United States Supreme Court that this is a fee, and is distinct from a tax. Her basic understanding of the distinction, as determined by the U.S. Supreme Court, is that a tax applies to revenues that would be thrown into the general fund, whereas a fee, as in this particular case, would go into the International Airport Revenue Fund for payment of the maintenance and operations of the airport or public facility. Number 232 MS. SANDVIK states SB 343 would essentially expand the definition of a courtesy car to include car rental vehicles that pick up customers at the airport. Across the country there has been significant competition by off-airport agencies. She believes it is inappropriate to say that the benefit derived by off-airport operators is limited to the curb where they pick up customers. They do advertise in the airport. Currently, there is a 25$ per year permit fee assessed to courtesy vehicles. That fee is paid by all courtesy vehicles, airport, car rental agencies, etcetera. Number 263 CHAIRMAN SHARP asks Ms. Sandvik if there will be room for an expanded number of car rental agencies to bid and receive on- airport counter space. MS. SANDVIK replies the Anchorage Airport is expanding from six counter spaces to seven for the next bid period. There is room in the airport to expand the counter space, but DOT does not believe it would be appropriate to create space to fill all the demand. Ms. Sandvik thinks it would be appropriate to delay the creation of more space at least a year or two, because it comes into play with a competitive environment. Number 274 CHAIRMAN SHARP asks Ms. Sandvik if the present on-airport rental agencies pay the same percentage of gross revenues. MS. SANDVIK responds they do not. It is her understanding the amount is based on a sliding scale according to their level of business. She is not familiar with the details. She trusts Mr. Coffey's figure of an average amount being about 9.1% of gross revenue. Number 281 CHAIRMAN SHARP asks if there is any indication how many agencies plan to submit bids for counter space during the next bid period. MS. SANDVIK replies DOT's assessment of demand is that the seven counter spaces will adequately address those companies interested in bidding for on-airport space in Anchorage. She will add that the Fairbanks counter spaces were up for bid recently, and there is now a vacant counter space there because a rental agency that was formerly on airport, chose to move off-airport during the last bidding period. Number 295 CHAIRMAN SHARP asks how the sliding scale works. MS. SANDVIK responds there is a lesser fee for off-airport agencies, and DOT intends to impose a fee of 8% of gross revenues. That is directly applied to those passengers the agencies pick up at the airport. The off-airport agencies will need to distinguish between business originating from the airport, and business originating from another source. Number 301 SENATOR SHARP asks if there are further questions from committee members. The chairman announces he does not intend to move SB 343 from committee until he can see what work was done on the subject in the house. The chairman calls the next witness. Number 313 GARY ZIMMERMAN, Alaskan Rent-a-Car Inc., which is the Alaska franchise for Avis, testifying from Anchorage, reads a prepared statement. Number 351 SENATOR KELLY asks Mr. Zimmerman if Avis pays rent for counter space and or parking spaces. Number 354 MR. ZIMMERMAN responds that they do pay rent for their space on a sliding scale of a percentage of their revenue, and also pay a fee for counter space based on square footage. For parking space, it is 55$ per space per month. SENATOR KELLY asks if Mr. Zimmerman pays a separate rental fee for the space in the airport building. MR. ZIMMERMAN replies they do pay a rental fee separate from the percentage of their gross revenue that they pay to the airport. The on-airport rental agencies are basically paying three different fees. SENATOR KELLY asks Mr. Zimmerman if it wouldn't be advantageous, with all the fees his company has to pay to the airport, to move off airport. Number 365 MR. ZIMMERMAN responds his company does not feel it would be advantageous to be off airport. CHAIRMAN SHARP thanks Mr Zimmerman for his testimony and calls the next witness. Number 373 GLENN HOLDAHL, Representative for Hertz Corporation, testifying from Anchorage, reads a prepared statement. SENATOR KERTTULA adds that airports are not entirely self- supporting and do get considerable government subsidies. Number 413 CHAIRMAN SHARP asks if there are any questions for Mr. Holdahl. Hearing none, he calls the next witness. Number 415 TERESA WINTER, Budget Rent-a-Car, testifying from Anchorage, states Budget Rent-a-Car is opposed to SB 343. Budget feels that the airport generates customers for off-airport rental agencies, and they should pay a fee for that. It is unfair for on-airport agencies. Number 420 CHAIRMAN SHARP thanks Ms. Winter for her testimony and notes there is no one else who wishes to testify. Number 427 SENATOR KELLY makes an observation that when he rents a car in Anchorage, he goes directly to the airport rental agencies, and never goes to an off-airport agency. It is easier for him to do so. SENATOR KERTTULA adds he also rents only from on-airport agencies. Number 433 CHAIRMAN SHARP thanks people for their testimony and announces the committee will hold SB 343 to work on possible amendments. Number 435 CHAIRMAN SHARP brings SB 327 (TAX ON RESIDUAL MARINE FUEL OIL) back up before the Senate Transportation Committee and notes there is a motion pending for adoption of the committee substitute (cs). CHAIRMAN SHARP, hearing no objection to the adoption of the cs, notes it has been adopted in lieu of the original bill. CHAIRMAN SHARP calls Mr. Smith to testify. Number 447 BERNIE SMITH, Tesoro Alaska Petroleum Company, testifying from Soldotna, states Tesoro does support SB 327. It will be good for the economy of the Kenai Peninsula. That concludes Mr. Smith's testimony; he would be happy to answer any questions. Number 452 CHAIRMAN SHARP thanks Mr. Smith. The chairman comments he thinks the bill will do two things: open the door for selling more residual fuel, and still guarantee the state revenue. SENATOR KERTTULA makes a motion to discharge SB 327 from the Senate Transportation Committee with individual recommendations. Number 458 CHAIRMAN SHARP, hearing no objection, orders SB 327 released from committee with individual recommendations. Number 459 CHAIRMAN SHARP brings up SR 4 (MOTOR VEHICLE EMISSION INSPECTION) as the next order of business before the Senate Transportation Committee. The chairman calls a representative from the prime sponsor's office to testify. Number 463 MICHAEL FINKELSTEIN, Aide, Senator Donley, reads the sponsor statement on SR 4. Number 480 SENATOR KERTTULA comments SR 4 makes sense to him. Number 487 SENATOR KELLY asks if there isn't a requirement in California to put an emissions control package on new cars sold in the state. He wonders if the California figures might not be applicable to Alaska. Number 490 SENATOR KERTTULA thinks it might make sense anyway to not burden the system with inspections every year. Number 494 CHAIRMAN SHARP asks if there are any more questions for Mr. Finkelstein. Hearing none, he calls a representative from the Department of Environmental Conservation to testify. Number 500 LEONARD VERRELLI, Chief, Air Quality Management Section, Department of Environmental Conservation (DEC) says SR 4 conflicts with plans submitted by Anchorage and Fairbanks to the Environmental Protection Agency (EPA). Anchorage and Fairbanks' programs are based on a stringency factor that requires that the automobiles be checked annually. SR 4 would be construed by EPA as a relaxation to the applications submitted just days ago. MR. VERRELLI states that two year emissions testing programs are not without controversy, and California is not the bellwether of emissions testing programs for Alaska. DEC does not recommend passing this resolution unless it is modified in some way so that it appears to be credible as far as Anchorage and Fairbanks' proposals to meet emissions reduction criteria. Number 525 MR. VERRELLI also says he begs to differ with the sponsor's assertion that vehicle emissions would stay in calibration for two years. The EPA has tested hundreds of thousands of tests, and nine months to a year is probably the maximum that a car will stay in tune. Newer cars are getting better, but the majority of cars in Alaska are still elderly. SR 4 could be strengthened to offer the EPA something in exchange for a two-year emissions test. But that would put a burden on Anchorage and Fairbanks to come up with strategies which may be onerous to meet the reductions. Number 534 SENATOR KERTTULA notes SR 4 is just a simple resolution, so it does not have the strength of a formal conveyance. MR. VERRELLI says he just wants the committee to be aware that SR 4 does conflict with the proposals submitted to the EPA by Anchorage and Fairbanks. Number 541 SENATOR KELLY asks Mr. Verrelli that, if the EPA was to allow two year emissions testing, Anchorage and Fairbanks wouldn't take advantage of that. MR. VERRELLI replies that the EPA couldn't authorize two year registration or inspections at this point in time, unless both Anchorage and Fairbanks did something to replace the reductions that are gained by the one year inspection program. Number 545 SENATOR KELLY asks if SR 4 is asking the federal government to go from one year inspections to two year inspections. Several people answer that is correct. SENATOR KELLY states, if that change is made, then Anchorage and Fairbanks would no longer be required to have inspections every year. MR. VERRELLI responds that, without an annual registration, there would not be enough credit for Anchorage and Fairbanks to meet the required air quality standards. Number 553 SENATOR KERTTULA suggests that, by deleting lines 14 and 15 on page one, SR 4 might not be in conflict with the proposals just submitted to the EPA by Anchorage and Fairbanks. Senator Kerttula proposes an amendment to delete that language. CHAIRMAN SHARP, hearing no objection, notes that Senator Kerttula's amendment has been adopted. The chairman asks the pleasure of the committee. Number 564 SENATOR KERTTULA makes a motion to discharge SR 4 from the Senate Transportation Committee with individual recommendations. Number 566 CHAIRMAN SHARP, hearing no objection, orders SR 4 released from committee with individual recommendations. Number 568 CHAIRMAN SHARP brings up SB 227 (MOTOR VEHICLE RENTAL TERMS) as the next item of business before the Senate Transportation Committee. SENATOR KERTTULA, the prime sponsor of SB 227, calls one of his aides to testify. Number 573 BILL KELDER, Aide to Senator Kerttula, reads the sponsor statement for SB 227. Mr. Kelder states no one has spoken in opposition to the bill so far. He believes it will enhance commerce. SB 227 has zero fiscal notes. Twenty states already have similar statutes in place. The absence of this law has created some confusion in the courts as to where the assets belong in a bankruptcy case. TAPE 94-10, SIDE B Number 594 CHAIRMAN SHARP asks if there are any questions. Hearing none, he asks the pleasure of the committee. Number 593 SENATOR KERTTULA makes a motion to discharge SB 227 from the Senate Transportation Committee with individual recommendations. Number 591 CHAIRMAN SHARP, hearing no objection, orders SB 227 released from committee with individual recommendations. Number 589 CHAIRMAN SHARP brings up HB 407 (COMMEMORATIVE GOLD RUSH LICENSE PLATES) as the next order of business before the Senate Transportation Committee. Number 587 SENATOR KELLY makes a motion to discharge HB 407 from the Senate Transportation Committee with individual recommendations. Number 586 CHAIRMAN SHARP, hearing no objection, orders HB 407 released from committee with individual recommendations. Number 582 CHAIRMAN SHARP adjourns the Senate Transportation Committee at 4:26 p.m.