Legislature(2021 - 2022)BELTZ 105 (TSBldg)
05/12/2022 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| HB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 104 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
May 12, 2022
1:33 p.m.
MEMBERS PRESENT
Senator Robert Myers, Chair
Senator Peter Micciche
Senator Jesse Kiehl
MEMBERS ABSENT
Senator Mike Shower, Vice Chair
Senator Click Bishop
COMMITTEE CALENDAR
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 104(FIN) AM
"An Act relating to the refined fuel surcharge; suspending the
tax on motor fuel; and providing for an effective date."
- MOVED SCS CSHB 104(TRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 104
SHORT TITLE: REFINED FUEL SURCHARGE; SUSP MTR FUEL TAX
SPONSOR(s): REPRESENTATIVE(s) JOSEPHSON
02/19/21 (H) READ THE FIRST TIME - REFERRALS
02/19/21 (H) TRA, FIN
03/04/21 (H) TRA AT 1:30 PM BARNES 124
03/04/21 (H) Heard & Held
03/04/21 (H) MINUTE(TRA)
03/16/21 (H) TRA AT 1:30 PM BARNES 124
03/16/21 (H) Moved HB 104 Out of Committee
03/16/21 (H) MINUTE(TRA)
03/17/21 (H) TRA RPT 3DP 3DNP 1NR
03/17/21 (H) DP: DRUMMOND, HANNAN, SPOHNHOLZ
03/17/21 (H) DNP: CRONK, MCKAY, MCCABE
03/17/21 (H) NR: HOPKINS
05/07/21 (H) FIN AT 9:00 AM ADAMS 519
05/07/21 (H) Heard & Held
05/07/21 (H) MINUTE(FIN)
05/11/21 (H) FIN AT 9:00 AM ADAMS 519
05/11/21 (H) Heard & Held
05/11/21 (H) MINUTE(FIN)
05/18/21 (H) FIN AT 9:00 AM ADAMS 519
05/18/21 (H) Heard & Held
05/18/21 (H) MINUTE(FIN)
05/19/21 (H) FIN AT 1:30 PM ADAMS 519
05/19/21 (H) <Bill Hearing Canceled>
03/08/22 (H) FIN AT 9:00 AM ADAMS 519
03/08/22 (H) Scheduled but Not Heard
03/09/22 (H) FIN AT 1:30 PM ADAMS 519
03/09/22 (H) Moved CSHB 104(FIN) Out of Committee
03/09/22 (H) MINUTE(FIN)
03/14/22 (H) FIN RPT CS(FIN) NEW TITLE 3DP 5NR
03/14/22 (H) DP: ORTIZ, JOSEPHSON, FOSTER
03/14/22 (H) NR: LEBON, JOHNSON, WOOL, RASMUSSEN,
MERRICK
05/04/22 (H) TRANSMITTED TO (S)
05/04/22 (H) VERSION: CSHB 104(FIN) AM
05/05/22 (S) READ THE FIRST TIME - REFERRALS
05/05/22 (S) TRA, FIN
05/10/22 (S) TRA AT 1:30 PM BELTZ 105 (TSBldg)
05/10/22 (S) -- Public Testimony --
05/12/22 (S) TRA AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
REPRESENTATIVE ANDY JOSEPHSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 104.
ELISE SORUM-BIRK, Staff
Representative Andy Josephson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided a sectional analysis for HB 104 on
behalf of the sponsor.
TIFFANY LARSON, Director
Division of Spill Prevention and Response (SPAR)
Department of Environmental Conservation (DEC)
Fairbanks, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 104.
JASON WERNER, Chief Financial Officer
Petro Marine Services
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 104.
CATHY SCHLINGHEYDE, Staff
Senator Jesse Kiehl
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions on behalf of the sponsor
of Amendment 1 to HB 104.
ACTION NARRATIVE
1:33:33 PM
CHAIR ROBERT MYERS called the Senate Transportation Standing
Committee meeting to order at 1:33 p.m. Present at the call to
order were Senators Kiehl, Micciche, and Chair Myers.
HB 104-REFINED FUEL SURCHARGE; SUSP MTR FUEL TAX
1:33:56 PM
CHAIR MYERS announced the consideration of CS FOR HOUSE BILL NO.
104(FIN) am "An Act relating to the refined fuel surcharge;
suspending the tax on motor fuel; and providing for an effective
date."
1:34:24 PM
REPRESENTATIVE ANDY JOSEPHSON, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 104, explained the bill's genesis. He said
he introduced the bill to double the motor fuel tax, which the
Alaska Trucking Association supported to provide funding for
road maintenance. However, the House Finance committee deleted
the tax increase and suspended the motor fuel tax until next
summer, leaving a surcharge.
REPRESENTATIVE JOSEPHSON noted Senator Micciche introduced a
bill to create a surcharge on the sale of wholesale refined
fuels in 2015. Then-Representative Munoz introduced a companion
bill, House Bill 158, which became the vehicle.
1:36:26 PM
REPRESENTATIVE JOSEPHSON paraphrased the sponsor statement for
HB 104:
Sponsor Statement for CSHB 104(FIN)am Refined Fuels
Surcharge and Motor Fuels Tax Holiday
CSHB104(FIN)am increases the exiting surcharge on
refined fuels by $.0055 per gallon bringing the total
surcharge amount to a penny and a half. The current
surcharge of $.0095 was put in place in 2015. Less
revenue has been actualized than was projected from
this surcharge leading to a need for this increase.
The bill will allow the Spill Prevention and Response
unit of Department of Environmental Conservation (DEC)
to be fully funded without any UGF support and is
supported by the Commissioner of DEC. This modest
increase aims to keep the Oil and Hazardous Substance
Release Prevention Account solvent.
The cost of this increase to the typical urban driver,
per year, per car, is in the range of $4.00. (This
amount will vary depending on the user.)
The department expects to see about $3.5 million in
additional revenue through this legislation. The
upstream oil industry will see no direct impact from
this legislation as the surcharge is not part of the
nickel per barrel TAPS throughput tax. In addition, an
amendment adopted on the House floor added a provision
to HB 104 suspending the tax on motor fuels for one
year. The tax holiday will take effect on the first
day of the month following the bill's enactment and
will expire on June 30, 2022. There was language
included in the amendment to ensure entities selling
motor fuel would pass the saving from the tax pause
onto consumers. This should equate to a decrease of 8
cents per gallon at the gas pump for Alaskans.
Additionally, taxes on Marine Fuel and Aviation Fuel
would also be suspended for this period.
1:36:43 PM
REPRESENTATIVE JOSEPHSON characterized this effort as
cooperative since Alaskans use gas stations and experience fuel
spills. The bill would provide a net benefit for urban drivers
of about $36 due to the moratorium on the motor fuel tax. He
highlighted that the Alaska Oil and Gas Association supported
the principle behind the bill. It will also benefit the Prince
William Sound Regional Citizen's Advisory Council. He noted that
he had not received any opposition to the bill.
1:38:08 PM
ELISE SORUM-BIRK, Staff, Representative Andy Josephson, Alaska
State Legislature, Juneau, Alaska, paraphrased the sectional
analysis for HB 104, which read:
Section 1: Amends the refined fuel surcharge in AS
43.40.005(a) from $.0095 to $.015 per gallon on
refined fuel sold, transferred, or used in the state.
Section 2: Suspends the tax on motor fuels under AS
43.40.010(a) and (b). This suspension will take effect
on the first of the month following the effective date
of this section and will expire on June 30, 2023. This
section also contains a provision requiring dealers to
reduce fuel costs by the amount of the suspended tax.
Section 3: Transitional language that allows the
Department of Revenue to adopt regulations needed to
implement the tax pause.
Section 4: Provides an immediate effective date for
sections 2 and 3 of the bill
Section 5: Provides an effective date of January 1,
2023, for section 1 of the bill.
1:39:46 PM
REPRESENTATIVE JOSEPHSON added the surcharge was necessary
because the throughput has diminished since it was created seven
years ago. At that time, Senators Micciche and Stevens noted
that it would likely need to be increased. He emphasized that
the department would like the surcharge to be self-funding. He
indicated that the state had to dip into Undesignated General
Fund (UGF) dollars this year, partly due to a dispute about how
the sweep impacts the Oil and Hazardous Substance Release
Prevention and Response Fund. This is designed to keep the
account self-sufficient. He anticipated that the remaining
balances would soon be depleted at the current rate. He stated
that the DEC commissioner, Jason Brune, indicated his support
for the bill.
1:40:59 PM
SENATOR MICCICHE recalled that the surcharge ranged from just
under a penny to a penny and a half. At the time, some fuels
were not exempt from the surcharge. He identified home heating
oil as one of Alaska's most significant sources of spills. He
stated that the funds are used for cleanup. He related that the
industry depends on the fund to meet federal requirements. He
highlighted that industry pays its share of costs, the fund is
valuable, and the surcharge needs to be increased. He thanked
Representative Josephson for bringing this bill forward.
1:42:43 PM
CHAIR MYERS stated his support conceptually. He expressed
concern that retailers might not pass on the surcharge to
consumers and may use it to offset their costs.
REPRESENTATIVE JOSEPHSON deferred to Ms. Sorum-Birk.
MS. SORUM-BIRK directed attention to the language on page 1,
lines 13-14, and page 2, line 1, which read:
During the suspension, a dealer or user of refined
fuel shall reduce the cost of fuel to the final
consumer by an amount equal to the amount of the tax
suspended under this section.
REPRESENTATIVE JOSEPHSON pointed out that someone would need to
monitor it to ensure it happened.
CHAIR MYERS indicated enforcement was always an issue.
1:44:07 PM
SENATOR MICCICHE asked for the fiscal note figures. He
highlighted that these dollars were directed to road maintenance
and snow removal. He wondered how the state would make up the
gap.
1:44:37 PM
REPRESENTATIVE JOSEPHSON recalled that the total amount DOTPF
would need for the approximately $37 million shortfall would be
derived from UGF. He was unsure how the department would meet
that shortfall.
1:45:32 PM
SENATOR KIEHL asked why the refined fuel surcharge goes up. He
wondered how the Oil and Hazardous Substance Release Prevention
and Response Fund, funded by $.05 per barrel, was expected to be
self-supporting when highway maintenance and match for federal
highway funds were not self-supporting. He suggested that the
state support the Oil and Hazardous Substance Release Prevention
and Response Fund in the same way it does for road maintenance
and state match.
REPRESENTATIVE JOSEPHSON related his understanding Senator Kiehl
was interested in why there was a difference in how the state
pays for things. He offered his view that Senator Micciche and
then-Representative Munoz made the case that 75-80 percent of
the spills occur from Alaskans, the government, or schools. The
Alaska Oil and Gas Association was funding cleanup for those.
However, AOGA indicated it would no longer do so, which sounded
reasonable. He stated that that is what the legislature is
trying to supplement. He highlighted that DEC doesn't have a lot
of UGF dollars. The legislature has funded highway maintenance
with tax revenue, but it was the will of the House that the
Motor Fuel Tax was suspended for a year. He offered his belief
that the administration supports the moratorium, which is being
imposed by other states. He remarked that gas prices are high.
1:47:45 PM
SENATOR KIEHL stated that individuals damage guardrails during
crashes, and studded tires adversely impact highways. He
highlighted that AOGA and investment accounts pay for some of
these costs.
1:48:44 PM
MS. SORUM-BIRK noted that it was also due to a statutory
imperative. She referred to a statement of legislative intent in
AS 46.08.030, which read:
It is the intent of the legislature and declared to be
the public policy of the state that funds for the
abatement of a release of oil or a hazardous substance
will always be available.
MS. SORUM-BIRK emphasized the importance of always having funds
available for spill prevention and response.
1:49:31 PM
REPRESENTATIVE JOSEPHSON noted that AS 29.60.500 has similar
language related to the importance of the Oil and Hazardous
Substance Municipal Program, which read, in part:
(a) The legislature finds and declares that a major release
of oil or hazardous substances into the environment
presents a real and substantial threat to the economy and
public welfare of the municipalities, villages, and
school districts that are affected by the release and the
resultant activities to contain and clean up the release.
(b) The legislature concludes that it is in the best interest
of the state and its citizens to provide a readily
available fund for the payment of the expenses incurred
by municipalities, villages, and school districts to
mitigate the social and economic effects that arise out
of a major release of oil or hazardous substances and
resultant cleanup activities.
1:49:51 PM
SENATOR MICCICHE asked whether someone from the Department of
Environmental Conservation (DEC), Division of Spill Prevention
and Response (SPAR) could speak to the elements of the program.
He recalled that SPAR provides education and prevention as well
as spill response. He recalled that the legislature previously
recognized significant industry investment, including funding
for the Prince William Sound Regional Citizens' Advisory
Council, dues, and infrastructure. The legislature determined
that other users should be responsible for their impacts. He
stated that then-Representative Munoz's bill, created the first
tax increase in 40 years. He noted he had introduced the
companion bill in the Senate, which had not passed.
1:52:00 PM
REPRESENTATIVE JOSEPHSON echoed Senator Micciche's comments. He
recalled his testimony in March 2015 indicating that $175
million was spent annually by the oil industry on spill
prevention and response and related cleanup activities, in
addition to $500 million in response assets. He reiterated that
75-80 percent of spills were from Alaskans. He offered his view
that allocating each user group's share was fundamentally
impractical. However, the state needs the source of funds to
respond to spills discovered when someone dies, leaving behind a
leaking fuel tank.
1:52:52 PM
CHAIR MYERS deferred to DEC to respond.
SENATOR MICCICHE said it would be helpful for the director to
expand on the elements of the division's programs.
1:53:35 PM
TIFFANY LARSON, Director, Division of Spill Prevention and
Response (SPAR), Department of Environmental Conservation (DEC),
Fairbanks, Alaska, introduced herself.
CHAIR MYERS asked for a high-level view of activities conducted
by the division.
1:54:01 PM
MS. LARSON responded that approximately 70 percent of SPAR's
operating budget comes from spill prevention funding. She stated
that SPAR works with the industry on ways to avoid spills and
response planning when spills occur or a home-heating fuel tank
leaks. She noted that staff was at Manley Hot Springs checking
on vapor issues related to flooding. She highlighted that the
division works extensively on preparedness plans, so it is ready
to respond to specific situations. She stated that the
division's Contaminated Sites program oversees the remediation
of approximately 2,400 contaminated sites throughout the state.
The division's Response Fund Administration program manages the
funds for these programs.
1:55:50 PM
SENATOR MICCICHE asked what percentage remains of the refined-
fuel underground or above-ground storage tanks.
MS. LARSON highlighted that the division has an Underground
Storage Tank component in its Contaminated Site Program. She
offered to provide more information to the committee.
1:56:49 PM
REPRESENTATIVE JOSEPHSON thanked the committee and indicated he
had a House Finance Committee to attend.
1:57:14 PM
CHAIR MYERS opened public testimony HB 104.
1:57:44 PM
JASON WERNER, Chief Financial Officer, Petro Marine Services,
Anchorage, Alaska, stated that Petro Marine Services was neutral
on the current version of the bill. He directed attention to a
letter dated May 5, 2022, which provided some specifics. He
summarized that Petro Marine brings fuel from the Seattle area
on a US-hull vessel to Skagway, then trucks it to Canada. He
explained that Petro Marine Services is exempt from the excise
tax but is subject to the fuel surcharge. However, if a
Canadian-hull barge brought fuel from Vancouver, Canada, to
Skagway and trucks it, it would be exempt from the fuel
surcharge.
MR. WERNER said Petro Marine also competes against fuel brought
to Whitehorse from Edmonton. He characterized it as a desire to
level the playing field and not penalize a company bringing
domestic fuel in on a domestic hull. He stated that the
wholesale fuel industry relates to pennies, and cost increases
and exchange rates complicate the matter. He said Petro Marine
would appreciate any relief the committee could provide.
CHAIR MYERS noted that Senator Micciche would be proposing an
amendment later to address Mr. Werner's concern.
1:59:55 PM
CHAIR MYERS closed public testimony on HB 104.
2:00:16 PM
SENATOR KIEHL moved to adopt Amendment 1, work order 32-
LS0444\I.A.1.
32-LS0444\I.A.1
Nauman
5/10/22
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: CSHB 104(FIN) am
Page 1, line 1, following "Act":
Insert "relating to vehicle registration and
registration fees; relating to the motor fuel tax;"
Page 1, following line 3:
Insert new bill sections to read:
"* Section 1. AS 28.10.421 is amended by adding a
new subsection to read:
(k) In addition to the other fees imposed under
this section, the owner of an electric vehicle shall
pay a special biennial registration fee of $100, the
owner of a vehicle powered by alternative fuel shall
pay a special biennial registration fee of $100, and
the owner of a plug-in hybrid vehicle shall pay a
special biennial registration fee of $50. Fees
collected under this subsection shall be deposited in
the special highway fuel tax account described in
AS 43.40.010(g). In this subsection,
(1) "alternative fuel" includes hydrogen
and natural gas;
(2) "electric vehicle" means a vehicle that
is
(A) powered solely by an electric motor
drawing current from rechargeable batteries, fuel
cells, or other portable sources of electrical
current; and
(B) manufactured primarily for use on
public streets, roads, and highways;
(3) "plug-in hybrid vehicle" means a
vehicle that is
(A) 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
(B) manufactured primarily for use on
public streets, roads, and highways.
* Sec. 2. AS 28.35.155(a) is amended to read:
(a) It is unlawful to operate a motor vehicle
with studded tires or tires with chains attached on a
paved highway or road from May 1 through September 15,
inclusive, north of 60 North Latitude and from
April 15 through September 30, inclusive, south of 60
North Latitude, except that at any latitude on a paved
portion of the Sterling Highway a person may not
operate a motor vehicle with studded tires or tires
with chains attached from May 1 through September 15,
inclusive. The commissioner of public safety shall by
emergency order provide for additional lawful
operating periods based on unusual seasonal or weather
conditions. An emergency order adopted under this
section is not subject to AS 44.62 (Administrative
Procedure Act). Upon application, a special individual
traction permit may be issued by the Department of
Administration allowing the operation of a motor
vehicle with studded tires or chains at any time at
the discretion of the vehicle owner. The fee for the
special individual permit is one-third of the biennial
registration fee applicable to that class of vehicle
under AS 28.10.421(b), (c), or (h) [AS 28.10.421]. The
department may provide an appropriate sticker or other
device identifying the vehicle to which the permit
applies."
Page 1, line 4:
Delete "Section 1"
Insert "Sec. 3"
Renumber the following bill sections accordingly.
Page 1, following line 6:
Insert new bill sections to read:
* Sec. 4. AS 43.40.010(a) is amended to read:
(a) In addition to the surcharge levied under
AS 43.40.005, there is levied a tax of 11 [EIGHT]
cents a gallon on all motor fuel sold or otherwise
transferred within the state, except that
(1) the tax on aviation gasoline is four
and seven-tenths cents a gallon;
(2) the tax on motor fuel used in and on
watercraft of all descriptions is five cents a gallon;
(3) the tax on all aviation fuel other than
gasoline is three and two-tenths cents a gallon; and
(4) the tax rate on motor fuel that is
blended with alcohol is the same tax rate a gallon as
other motor fuel; however, in an area and during the
months in which fuel containing alcohol is required to
be sold, transferred, or used in an effort to attain
air quality standards for carbon monoxide as required
by federal or state law or regulation, the tax rate on
motor fuel that is blended with alcohol is six cents a
gallon less than the tax on other motor fuel not
described in (1) - (3) of this subsection.
* Sec. 5. AS 43.40.010(a), as amended by sec. 4 of
this Act, is amended to read:
(a) In addition to the surcharge levied under
AS 43.40.005, there is levied a tax of 14 [11] cents a
gallon on all motor fuel sold or otherwise transferred
within the state, except that
(1) the tax on aviation gasoline is four
and seven-tenths cents a gallon;
(2) the tax on motor fuel used in and on
watercraft of all descriptions is five cents a gallon;
(3) the tax on all aviation fuel other than
gasoline is three and two-tenths cents a gallon; and
(4) the tax rate on motor fuel that is
blended with alcohol is the same tax rate a gallon as
other motor fuel; however, in an area and during the
months in which fuel containing alcohol is required to
be sold, transferred, or used in an effort to attain
air quality standards for carbon monoxide as required
by federal or state law or regulation, the tax rate on
motor fuel that is blended with alcohol is six cents a
gallon less than the tax on other motor fuel not
described in (1) - (3) of this subsection.
* Sec. 6. AS 43.40.010(a), as amended by secs. 4
and 5 of this Act, is amended to read:
(a) In addition to the surcharge levied under
AS 43.40.005, there is levied a tax of 16 [14] cents a
gallon on all motor fuel sold or otherwise transferred
within the state, except that
(1) the tax on aviation gasoline is four
and seven-tenths cents a gallon;
(2) the tax on motor fuel used in and on
watercraft of all descriptions is five cents a gallon;
(3) the tax on all aviation fuel other than
gasoline is three and two-tenths cents a gallon; and
(4) the tax rate on motor fuel that is
blended with alcohol is the same tax rate a gallon as
other motor fuel; however, in an area and during the
months in which fuel containing alcohol is required to
be sold, transferred, or used in an effort to attain
air quality standards for carbon monoxide as required
by federal or state law or regulation, the tax rate on
motor fuel that is blended with alcohol is six cents a
gallon less than the tax on other motor fuel not
described in (1) - (3) of this subsection.
* Sec. 7. AS 43.40.010(b) is amended to read:
(b) In addition to the surcharge levied under
AS 43.40.005, there is levied a tax of 11 [EIGHT]
cents a gallon on all motor fuel consumed by a user,
except that
(1) the tax on aviation gasoline consumed
is four and seven-tenths cents a gallon;
(2) the tax on motor fuel used in and on
watercraft of all descriptions is five cents a gallon;
(3) the tax on all aviation fuel other than
gasoline is three and two-tenths cents a gallon; and
(4) the tax rate on motor fuel that is
blended with alcohol is the same tax rate a gallon as
other motor fuel; however, in an area and during the
months in which fuel containing alcohol is required to
be sold, transferred, or used in an effort to attain
air quality standards for carbon monoxide as required
by federal or state law or regulation, the tax rate on
motor fuel that is blended with alcohol is six cents a
gallon less than the tax on other motor fuel not
described in (1) - (3) of this subsection.
* Sec. 8. AS 43.40.010(b), as amended by sec. 7 of
this Act, is amended to read:
(b) In addition to the surcharge levied under
AS 43.40.005, there is levied a tax of 14 [11] cents a
gallon on all motor fuel consumed by a user, except
that
(1) the tax on aviation gasoline consumed
is four and seven-tenths cents a gallon;
(2) the tax on motor fuel used in and on
watercraft of all descriptions is five cents a gallon;
(3) the tax on all aviation fuel other than
gasoline is three and two-tenths cents a gallon; and
(4) the tax rate on motor fuel that is
blended with alcohol is the same tax rate a gallon as
other motor fuel; however, in an area and during the
months in which fuel containing alcohol is required to
be sold, transferred, or used in an effort to attain
air quality standards for carbon monoxide as required
by federal or state law or regulation, the tax rate on
motor fuel that is blended with alcohol is six cents a
gallon less than the tax on other motor fuel not
described in (1) - (3) of this subsection.
* Sec. 9. AS 43.40.010(b), as amended by secs. 7
and 8 of this Act, is amended to read:
(b) In addition to the surcharge levied under
AS 43.40.005, there is levied a tax of 16 [14] cents a
gallon on all motor fuel consumed by a user, except
that
(1) the tax on aviation gasoline consumed
is four and seven-tenths cents a gallon;
(2) the tax on motor fuel used in and on
watercraft of all descriptions is five cents a gallon;
(3) the tax on all aviation fuel other than
gasoline is three and two-tenths cents a gallon; and
(4) the tax rate on motor fuel that is
blended with alcohol is the same tax rate a gallon as
other motor fuel; however, in an area and during the
months in which fuel containing alcohol is required to
be sold, transferred, or used in an effort to attain
air quality standards for carbon monoxide as required
by federal or state law or regulation, the tax rate on
motor fuel that is blended with alcohol is six cents a
gallon less than the tax on other motor fuel not
described in (1) - (3) of this subsection.
* Sec. 10. AS 43.40.030(a) is amended to read:
(a) Except as specified in AS 43.40.010(j), a
person who uses motor fuel to operate an internal
combustion engine is entitled to a motor fuel tax
refund of 75 percent of the tax levied under
AS 43.40.010(a) or (b) [SIX CENTS A GALLON] if
(1) the tax on the motor fuel has been
paid;
(2) the motor fuel is not aviation fuel, or
motor fuel used in or on watercraft; and
(3) the internal combustion engine is not
used in or in conjunction with a motor vehicle
licensed to be operated on public ways."
Renumber the following bill sections accordingly.
Page 2, line 8:
Delete "sec. 2"
Insert "sec. 11"
Page 2, line 9:
Delete "sec. 2"
Insert "sec. 11"
Page 2, line 10:
Delete "sec. 2"
Insert "sec. 11"
Page 2, line 11:
Delete "Sections 2 and 3"
Insert "Sections 11 and 12"
Page 2, line 12:
Delete "Except as provided in sec. 4 of this
Act,"
Insert "Section 1 of"
Page 2, following line 12:
Insert new bill sections to read:
"* Sec. 15. Sections 4 and 7 of this Act take
effect July 1, 2023.
* Sec. 16. Sections 5 and 8 of this Act take effect
July 1, 2024.
* Sec. 17. Sections 6 and 9 of this Act take effect
July 1, 2025."
2:00:19 PM
CHAIR MYERS objected for discussion purposes.
2:00:32 PM
SENATOR KIEHL explained that Amendment 1 would gradually
increase the motor fuel tax to 8 cents per gallon over three
years. It would also impose a registration surcharge on battery
electric vehicles and plug-in hybrids so everyone would pay to
maintain Alaska's highways.
2:01:07 PM
SENATOR KIEHL acknowledged that it would not bring it to the Oil
and Hazardous Substance Release Prevention and Response Fund but
would gradually double the motor fuel tax. He offered his belief
that it would cover about two-thirds of the federal match or the
highway maintenance & operation (M&O) costs for the three
regions. He highlighted the conforming language related to
existing permits. He summarized that Amendment 1 would increase
the motor fuel tax to 11 cents in July 2023, 14 cents in July
2024, and 16 cents in July 2025.
SENATOR MICCICHE noted that he had not previously reviewed
Amendment 1. He stated that he was inclined not to increase the
motor fuel tax even though the bill would phase in the tax over
time. Although he supported the motor fuel tax increase a few
years ago, people are currently disturbed by motor fuel costs.
He offered his support for the first portion of Amendment 1
because alternative fuel and electric vehicles use the highways
and should pay their share of highway maintenance.
SENATOR MICCICHE asked for clarification on Section 2.
SENATOR KIEHL deferred to his staff to explain.
2:05:07 PM
CATHY SCHLINGHEYDE, Staff, Senator Jesse Kiehl, Alaska State
Legislature, Juneau, Alaska, on behalf of the sponsor of
Amendment 1, explained that Section 2 was conforming language.
She noted there is a fee for a special individual traction
permit in existing law to use studded tires or tires with chains
attached when they are not in season, which is tied to the
registration fee. Section 2 of Amendment 1 would require someone
with an electric vehicle would pay the same special fee as
someone operating a car that runs on motor fuel.
2:05:40 PM
SENATOR MICCICHE objected. He stated that he could only support
part of Amendment 1 at this time.
2:06:21 PM
CHAIR MYERS noted that the trucking industry supports Amendment
1, but his constituents do not. He tended to agree that it would
be unusual to pass a tax "holiday" bill and subsequently pass a
tax increase.
SENATOR KIEHL indicated he would be receptive to a conceptual
amendment to reinstate the motor fuel tax at the current rate of
$.08 in 2023 and begin the gradual increase in 2024.
2:07:19 PM
SENATOR MICCICHE responded that he supported Sections 1 and 2 of
Amendment 1. He was unsure of the effect of the language on page
2, lines 22-24.
2:07:55 PM
CHAIR MYERS related his understanding that the language on page
2, lines 22-24 was renumbering.
SENATOR KIEHL agreed.
2:08:09 PM
SENATOR MICCICHE offered his belief that the legislature will
need to increase the motor fuel tax, but this is not the right
time to do so.
2:08:32 PM
SENATOR MICCICHE moved to adopt Conceptual Amendment 1 to
Amendment 1 to eliminate the language in the bill after page 2,
line 25.
2:08:43 PM
CHAIR MYERS objected for discussion purposes.
2:08:59 PM
SENATOR KIEHL asked for the effective date of those provisions.
SENATOR MICCICHE stated he assumed it would match the bill's
effective date.
SENATOR KIEHL clarified that it has an immediate effective date
for some provisions and January 1, 2023, for others.
SENATOR KIEHL indicated it was jarring to him that there would
be a motor fuel tax holiday but an increase in the registration
fees for non-motor fuel vehicles.
2:10:02 PM
CHAIR MYERS stated that it might depend on the region since some
regions rely more on fossil fuels for their electricity. He
noted that other parts of the state rely more on hydroelectric
or renewable resources.
2:11:10 PM
SENATOR MICCICHE stated his willingness to have the biennial fee
become effective in June 2023 when the motor fuel holiday is
lifted.
SENATOR KIEHL stated that it made sense to him.
2:11:46 PM
CHAIR MYERS summarized Conceptual Amendment 1 to Amendment 1 to
remove the language from page 2, line 26 to the end of the bill.
The effective date of the new Sections 1 and 2 would be June 30,
2023.
SENATOR MICCICHE agreed that was the intent of Conceptual
Amendment 1 to Amendment 1.
CHAIR MYERS withdrew his objection to Conceptual Amendment 1 to
Amendment 1; he found no further objection, and Conceptual
Amendment 1 to Amendment 1 was adopted.
2:12:28 PM
CHAIR MYERS stated that Amendment 1, as amended, was before the
committee.
2:12:34 PM
SENATOR KIEHL stated that he operates an electric vehicle on the
roadways. He noted the importance of having infrastructure such
as guardrails in good shape.
2:12:56 PM
CHAIR MYERS withdrew his objection to Amendment 1, as amended.
SENATOR MICCICHE noted he had also objected to Amendment 1. He
withdrew his objection.
2:13:11
CHAIR MYERS found no further objection, and Amendment 1, as
amended, was adopted.
2:13:31 PM
SENATOR MICCICHE moved to adopt Amendment 2, work order 32-
LS0444\I.A.2.
32-LS0444\I.A.2
Nauman
5/10/22
AMENDMENT 2
OFFERED IN THE SENATE
TO: CSHB 104(FIN)
Page 1, lines 4 - 6:
Delete all material and insert:
"* Section 1. AS 43.40.005 is amended to read:
Sec. 43.40.005. Refined fuel surcharge levied.
(a) Every dealer or user of refined fuels shall pay a
surcharge of $.015 [$.0095] a gallon on refined fuel
sold, transferred, or used in the state.
(b) The following refined fuels are exempt from
the surcharge imposed under this section:
(1) fuel sold to a federal or state
government agency for official use;
(2) fuel consigned to a foreign country
[REFINED AND USED OUTSIDE THE UNITED STATES];
(3) liquefied petroleum gas;
(4) aviation fuel;
(5) fuel sold or transferred between
qualified dealers."
2:13:35 PM
CHAIR MYERS objected for discussion purposes.
2:13:39 PM
SENATOR MICCICHE explained Amendment 2. He stated that the bill
worked against Alaskan and US-owned companies in favor of
Canadian-owned companies. He characterized it as a fairness
issue.
SENATOR MICCICHE explained that Amendment 2 would eliminate the
refined fuel tax surcharge on fuel consigned to a foreign
company, resulting in a fiscal note of approximately 4 to 5
percent of the annual surcharge collections. He noted that the
bill would bring in $10 million, and SPAR needs between $8
million and $8.5 million. He offered his belief that it would
result in a surplus of $1 million. He stated his intent to have
Alaskan and US companies have a level playing field against
Canada or other foreign companies.
2:15:04 PM
CHAIR MYERS indicated he held some conversations about Amendment
2. He stated that he had previously hauled fuel from North Pole
to Whitehorse, Canada. He acknowledged that the fuel market had
changed, so little has happened recently, but if so, that fuel
would be exempt since it represents sales outside the US.
2:15:42 PM
SENATOR KIEHL asked for clarity on the revenue estimate. He
asked for the amount of the added income for the first full year
of implementing the surcharge.
2:16:05 PM
SENATOR MICCICHE stated that his figure included the revenue for
the entire program.
2:16:23 PM
SENATOR KIEHL agreed with the need for parity and that the
state's tax policy should not create competitive disadvantages.
He stated that he did not object to Amendment 2.
2:16:45 PM
CHAIR MYERS removed his objection; he found no further
objection, and Amendment 2 was adopted.
2:17:08 PM
SENATOR MICCICHE moved to report the committee substitute (CS)
for HB 104 (FIN)am, work order 32-LS0444\I.A, as amended, from
committee, with individual recommendations, attached fiscal
note(s), and forthcoming revised fiscal notes.
CHAIR MYERS found no objection, and SCS CSHB 104(TRA) was
reported from the Senate Transportation Standing Committee.
2:17:45 PM
At ease
2:18:52 PM
CHAIR MYERS reconvened the meeting.
2:19:02 PM
There being no further business to come before the committee,
Chair Myers adjourned the Senate Transportation Standing
Committee meeting at 2:19 p.m.