HB 60-MOTOR FUEL TAX;TRANSPORTATION MAINT. FUND  1:34:05 PM CO-CHAIR WOOL announced that the first order of business would be HOUSE BILL NO. 60, "An Act relating to the motor fuel tax; relating to the disposition of revenue from the motor fuel tax; relating to a transportation maintenance fund; and providing for an effective date." 1:34:30 PM CO-CHAIR STUTES moved to adopt the proposed committee substitute (CS) for HB 60, Version 30-GH1794\D, Nauman, 2/20/17, as a working document. There being no objection, Version D was before the committee. 1:35:07 PM LAURA STIDOLPH, Staff to Representative Adam Wool, Alaska State Legislature, discussed changes to HB 60 proposed under Version D. She said that the first change is in the title on page 1, line 2, and it inserts "establishing" after "fuel tax". She explained that the change in the title makes it clear that the Transportation Maintenance Fund ("the fund") is being established under HB 60. Ms. Stidolph continued that Section 1 is new and it is legislative intent language that clarifies that each subaccount of the fund (motor fuel, aviation/jet fuel, and marine fuel) be used specifically for infrastructure and expenses related to each user group. She explained that Co- Chairs Wool and Stutes wanted the intent of this bill to be clear to ensure that all revenue generated would be used to improve roads, highways, harbors, ports, airports, and ferries. MS. STIDOLPH explained that the next five changes were made to Sections 7, 8, 9, 10, and 11 to ensure funds cannot be used for anything other than that which they are specified. She declared that funds do not lapse and remain available for the next fiscal year. She explained the intent for this was so the Department of Transportation & Public Facilities (DOT&PF) would have to build and maintain infrastructure for each user group being taxed. 1:37:09 PM MATT GRUENING, Staff, Representative Louise Stutes, Alaska State Legislature, stated that the language in Section 12, page 6, lines 26-27, of Version D was added to allow an exemption for commercial fishing watercraft. He noted that a mistake in drafting Version D resulted in the use of the term "commercial watercraft"; the correct term should be ["watercraft engaged in commercial fishing"]. He explained the reason for the exemption was because a fisheries tax would be forthcoming next year, and commercial fishermen are a user group that would be double hit by both the fuel tax increase and the upcoming fisheries tax. Mr. Gruening explained the reason for specifying that the watercraft are engaged in commercial fishing is so that barges and cruise ships would not be included in the exemption. He said that although commercial fisherman would be eligible for a three-cent rebate, they would still have an overall increase. He clarified that the user group currently pays five cents per gallon, under the proposed legislation that amount would be doubled to [10 cents], and then with the rebate commercial fisherman would be paying seven cents per gallon in fuel tax. 1:38:30 PM REPRESENTATIVE NEUMAN offered his understanding that it is the intent to carve out a special reduction for commercial fishing watercraft. MR. GRUENING answered that is correct. REPRESENTATIVE NEUMAN inquired whether a licensed and registered sport guide who used their boat professionally would qualify for the exemption. MR. GRUENING explained that currently the term "commercial watercraft" or "commercial fishing watercraft" are not defined in HB 60 or in statute. He indicated that a forthcoming amendment to Version D would clarify the terminology. 1:39:46 PM MR. GRUENING continued with the sectional analysis. He said that Section 13, page 7, lines 6-8 is another reference to the three-cent rebate for what is supposed to be commercial fishing marine fuel. Mr. Gruening pointed out that the most substantive change is in Section 19, on page 8, line 16, of Version D, which would change the effective date from 2018 to 2019. He noted that Co-Chairs Wool and Stutes feel that a year break in administering the tax increase is necessary to provide a little relief to allow industry time to adapt. REPRESENTATIVE NEUMAN mentioned that the committee had heard from the department about motor fuel tax revenue going back to different user groups. He inquired how the state would keep track of the taxes generated by each user group. He also wanted to know how the state would ensure revenues are equitably allocated to maintain infrastructure for the proper user group. Representative Neuman asked specifically about "snow machine" operators in the Matanuska-Susitna (Mat-Su) Borough and how the state would ensure the revenue generated from off-road fuel purchases would be used on trail maintenance. MR. GRUENING shared that under Alaska State Constitution, funds cannot really be dedicated. He clarified that there is no real mechanism to ensure funds are allocated for use on infrastructure for the proper user group. He noted that one of the reasons for the inclusion of the intent language in Version D is to show the sponsor's attempt to do the most possible to suggest that funds be used for their intended purposes. Mr. Gruening added that the bill sponsors did not specifically address the off-road [vehicle] use in the tightening of the sections in Version D. REPRESENTATIVE NEUMAN offered his understanding that there is already language in statute suggesting that the money go back to where it is collected. He asked whether there is currently any money that goes back into trails from what is collected from all of the people that buy fuel for all-terrain vehicles (ATVs). CO-CHAIR WOOL stated that right now off-road vehicles are eligible for a rebate. He explained that currently users purchasing fuel for heavy equipment, four wheelers, or snow machines have to fill out the paperwork and turn it into the state. Co-Chair Wool noted that under the current fuel tax structure, as well as the proposed legislation, there are no funds allocated for trails. He offered his understanding that there is a current suggested designation for licensing fees from snow machines to go back into trails. He added that there is a rumor the funds were not used for trails. REPRESENTATIVE NEUMAN suggested that the committee could work on something to help designate funds from off-road vehicle fuel purchases to go toward maintenance. He shared his belief that Governor Walker vetoed $250 thousand from the Snowmobile Trails Advisory Council (SnowTRAC) fund in 2016. Representative Neuman shared that he would like the bill to ensure the various user groups feel comfortable knowing the taxes paid go back to the reason why the taxes were propagated in the first place. He provided his recollection that the federal government gives the state money back from federal gasoline taxes collected. Representative Neuman questioned whether any of that money went back toward trails. 1:44:52 PM REPRESENTATIVE SULLIVAN-LEONARD stated that she had Legislative Legal Services draft an opinion in regard to designated funds. She shared her opinion that as much as Version D looks to tighten the allocation of funds, "the true nature of designated funds still are not truly designated for any particular purpose." She asked how it could be ensured that, for example, the Alaska Marine Highway System (AMHS) wouldn't be allowed to pull funds over from motor fuel. Representative Sullivan- Leonard offered that she still had concerns because there is no true mechanism to allow funds to stay in one particular area. MR. GRUENING described that there are dedicated funds and designated funds. He noted that there is no way to dedicate funds for a specific purpose, but future legislators do look at legislative intent as a guide to follow. Mr. Gruening added that commitments from the department and the administration can be secured to help bolster intent language. He said that the more intent that can be put into legislation the easier it is for future committees to look at and see what the committee was thinking. CO-CHAIR WOOL stated that amendments to Version D would be accepted [until] tomorrow at 3 p.m. [HB 60 was held over.]