HOUSE BILL NO. 64 "An Act relating to permanent motor vehicle registration; and providing for an effective date." Vice-chair Fairclough MOVED committee substitute HB 64(FIN), 27-LS0327/S. Co-Chair Thomas OBJECTED for purpose of discussion. DARRELL BREESE, STAFF, CO-CHAIR STOLTZE, explained the Committee Substitute (CS). He explained that the changes included an adjustment of the fee for acquiring permanent registration for vehicles older than eight years and trailers. The previous version of the bill included three times the biannual fee. The goal was to make the registration affordable for all Alaskans interested in the option. Another change related to the motor vehicle registration tax collected by the Division of Motor Vehicles (DMV). He explained that the change allowed municipalities to adopt a motor vehicle registration tax fee for vehicles that were permanently registered. He noted the change made to the collection of the tax, which allowed DMV to collect the tax one time unless the municipality raised the fee above $100 hundred, the city will be responsible for the collection of the fee. Co-Chair Stoltze explained the intent of the legislation to allow Alaskans to avoid the nuisance of taxes for older cars. 10:05:12 AM Co-Chair Thomas asked about restrictions for non-residents. Mr. Breeze responded that there was no restriction for non- residents. Representative Gara appreciated the intent of the legislation, but expressed difficulty understanding the fiscal note. WHITNEY BREWSTER, DIRECTOR, DIVISION OF MOTOR VEHICLES (via teleconference), responded that the fiscal note for FY 15 and FY 16 showed an increase in revenue, which accounted for the $25 in additional fees collected by the DMV for permanent registration, in and above the bi-annual fee. Following FY 16, the vehicles would no longer be eligible for the bi-annual registration fees collected leading to the significant decrease in collected revenue. Representative Gara asked if the losses continued past FY 18 at a similar rate. Ms. Brewster responded that the rates would remain consistent until approximately $1 million in loss. She noted the difficulty in projecting for future years. The projections relied on citizens operating vehicles beyond eight years. She estimated that approximately 28,400 new vehicles would be eligible each year based on the current vehicle count. She pointed out the significant decrease in revenue in FY 17 and FY 18 because the fiscal note assumed that all registered vehicles were eligible. Co-Chair Stoltze opined that the legislation would lead to increased compliance with registration for trailer and snow machine owners. 10:10:36 AM Vice-chair Fairclough expressed that she herself would qualify for the benefits of the legislation. Co-Chair Thomas shared the sentiment. Representative Guttenberg asked Ms. Brewster about the 700 hours of programing time required to make the changes outlined in the bill. Mr. Brewster responded that the changes to the 30 year-old database required approximately 700 hours of technical labor. The bill would require programming for two potential scenarios. One scenario would exist for taxpayers opting for permanent vehicle registration and another for those who chose against. The 700 programming hours incorporated changes from HB 64 and HB 10. Co-Chair Thomas commented on computer upgrades for other agencies. Vice-chair Fairclough asked how many people accessed DMV counters in person. Ms. Brewster replied that she would provide the requested information to the committee. She stated that approximately 11 percent of customers visit DMV public offices for in- person registration. Vice-chair Fairclough pointed out that the fiscal note might better reflect a deduction for Alaskans who would defer registration. She predicted cost-savings to the consumer and the department. She utilized the online option provided by DMV herself, which saved her $10. 10:14:29 AM Representative Neuman asked about the department's operating costs and revenues. Ms. Brewster replied that DMV received $66 million in revenue per year and operated on approximately $16.5 million. The revenue included the motor vehicle registration tax. Representative Neuman opined that the state did not require revenue from DMV. Ms. Brewster agreed that customer fees could be reduced without affecting the department's operations. Representative Neuman was interested in reducing customer fees further. 10:16:40 AM Vice-chair Fairclough asked if municipalities were charged an administrative fee. Ms. Brewster replied that the DMV did collect 8 percent of the motor vehicle registration taxes, which become part of the general fund. Representative Edgmon believed that the state lacked eligibility for federal funds. Ms. Brewster replied in the affirmative. Representative Edgmon asked about the impact of the legislation on community revenue. Ms. Brewster specified that the local communities that elected to collect motor vehicle registration tax would not be eligible until 2017. She noted the statute's requirement that local communities provide the DMV written notice of the change by January 1, 2015 of the preceding year. The DMV would not collect a motor vehicle registration tax for permanent vehicles until 2017 because of the statutory requirement for notice. Local governments would set their own rates regarding departmental collections. She thought that the question regarding municipality loss or gain was better answered by the local governments. Representative Edgmon pointed out the plethora of non- resident vehicles that travel in his district during the summer months. Co-Chair Thomas WITHDREW his OBJECTION to the committee substitute. There being No further OBJECTION the committee substitute was adopted. Co-Chair Stoltze pointed out that the fiscal note from the Department of Environmental Conservation had zero fiscal impact. Vice-chair Fairclough MOVED to report CSHB 64 (FIN) out of committee with individual recommendations and the accompanying fiscal note(s). CSHB 64(FIN) was REPORTED out of committee with a "do pass" recommendation and with a new fiscal note from the Department of Administration.