HOUSE TRANSPORTATION STANDING COMMITTEE February 21, 1996 1:42 p.m. MEMBERS PRESENT Representative Gary Davis, Chairman Representative Beverly Masek, Vice Chair Representative Jeanette James Representative Tom Brice Representative Bill Williams Representative Don Long MEMBERS ABSENT Representative Jerry Sanders COMMITTEE CALENDAR HOUSE JOINT RESOLUTION NO. 49 Proposing amendments to the Constitution of the State of Alaska creating a highway fund. - MOVED OUT OF COMMITTEE * HOUSE BILL NO. 498 "An Act naming the Bette Cato Bridge in Valdez." - MOVED OUT OF COMMITTEE *HOUSE BILL NO. 517 "An Act relating to records and hearings of the Department of Public Safety; relating to a temporary permit to drive a motor vehicle; relating to regulation of motor vehicles and commercial motor vehicles; relating to renewal of a driver's license by mail; increasing the property damage amounts for proof of financial responsibility and proof of motor vehicle eligibility in order to lawfully operate a motor vehicle in the state; relating to certain notifications in accidents involving property damage; relating to motor vehicle registration procedures; and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HJR 49 SHORT TITLE: DEDICATED HIGHWAY FUND BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) JAMES JRN-DATE JRN-PG ACTION 05/16/95 2238 (H) READ THE FIRST TIME - REFERRAL(S) 05/16/95 2239 (H) STATE AFFAIRS, TRANSPORTATION, FINANCE 02/01/96 (H) STA AT 8:00 AM CAPITOL 102 02/01/96 (H) MINUTE(STA) 02/02/96 2597 (H) STA RPT CS(STA) NT 3DP 2NR 02/02/96 2597 (H) DP: PORTER, GREEN, JAMES 02/02/96 2597 (H) NR: OGAN, IVAN 02/02/96 2598 (H) FISCAL NOTE (DOT) 02/02/96 2598 (H) REFERRED TO TRANSPORTATION 02/14/96 (H) TRA AT 1:00 PM CAPITOL 17 02/21/96 (H) TRA AT 1:00 PM CAPITOL 17 BILL: HB 498 SHORT TITLE: BETTY CATO BRIDGE IN VALDEZ SPONSOR(S): TRANSPORTATION JRN-DATE JRN-PG ACTION 02/12/96 2723 (H) READ THE FIRST TIME - REFERRAL(S) 02/12/96 2723 (H) TRANSPORTATION, STATE AFFAIRS 02/21/96 (H) TRA AT 1:00 PM CAPITOL 17 BILL: HB 517 SHORT TITLE: MOTOR VEHICLES: REGULATION & INSURANCE SPONSOR(S): TRANSPORTATION JRN-DATE JRN-PG ACTION 02/14/96 2750 (H) READ THE FIRST TIME - REFERRAL(S) 02/14/96 2751 (H) TRANSPORTATION, JUDICIARY 02/21/96 (H) TRA AT 1:00 PM CAPITOL 17 WITNESS REGISTER BOB BARTHOLOMEW, Deputy Director Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99501-3566 Telephone: (907) 465-2320 POSITION STATEMENT: Testified on CSHJR 49(TRA) SAM S. KITO III, Special Assistant Office of the Commissioner Department of Transportation and Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 Telephone: (907) 465-3904 POSITION STATEMENT: Testified on CSHJR 49(TRA) FRANK DILLON, Executive Director Alaska Trucking Association, Incorporated Board Member, Center for Employment Education 3443 Minnesota Drive Anchorage, Alaska 99501 Telephone: (907) 276-1149 POSITION STATEMENT: Testified on CSHJR 49(TRA) and HB 517 MARLA ATKINS P.O. Box 461 Cordova, Alaska 99574 Telephone: (907) 424-7311 POSITION STATEMENT: Testified on CSHJR 49(TRA) BARBARA HUFF TUCKNESS Teamsters 959 4300 Boniface Parkway Anchorage, Alaska 99504 Telephone: (907) 269-4236 POSITION STATEMENT: Testified on CSHJR 49(TRA) RAY GILLESPIE, Lobbyist representing the City of UnAlaska Gillespie and Associates 9478 Riverbend Court Juneau, Alaska 99801 Telephone: (907) 463-3375 POSITION STATEMENT: Testified on CSHJR 49(TRA) SHERI CAPLES Valdez City Council P.O. Box 307 Valdez, Alaska 99686 Telephone: (907) 835-4313 POSITION STATEMENT: Supported HB 498 REPRESENTATIVE GENE KUBINA Alaska State Legislature State Capitol, Room 406 Juneau, AK 99801 Telephone: (907) 465-4859 POSITION STATEMENT: Supported HB 498 SANDY PERRY-PROVOST, Special Assistant Office of the Commissioner Department of Public Safety P.O. Box 111200 Juneau, Alaska 99811-1200 Telephone: (907) 465-4322 POSITION STATEMENT: Testified on HB 517 JAY N. DULANY, Director Central Office Division of Motor Vehicles Department of Public Safety 5700 East Tudor Road Anchorage, Alaska 99507-1225 Telephone: (907) 269-5559 POSITION STATEMENT: Testified in support of HB 517 BRAD BROWN, State Trooper Central Office Division of Alaska State Troopers Department of Public Safety 5700 East Tudor Road Anchorage, Alaska 99507-1225 Telephone: (907) 278-0312 POSITION STATEMENT: Testified in support of HB 517 JOE CRUM, Director of Training Center for Employment Education 1049 Whitney Street Anchorage, Alaska 99501 Telephone: (907) 279-8451 POSITION STATEMENT: Testified in support of HB 517 and provided information STEVE ALLWINE Alaska Auto Dealers Association 8725 Mallard Street Juneau, Alaska 99801 Telephone: (907) 789-1386 POSITION STATEMENT: Testified in support of HB 517 ACTION NARRATIVE TAPE 96-6, SIDE A Number 000 The House Transportation Standing Committee was called to order by Chairman Gary Davis at 1:42 p.m. Members present at the call to order were Representatives G. Davis, James, Brice, Long, and Williams. A quorum was present. This meeting was teleconferenced to Anchorage, Cordova and Valdez. CHAIRMAN GARY DAVIS announced that the agenda was HJR 49, HB 498, and HB 517. HJR-49 DEDICATED HIGHWAY FUND  CHAIRMAN GARY DAVIS said a subcommittee met last week to discuss the language of HJR 49. He apologized for the oversight of not including a member of the minority in those discussions. He said this discussion led to a work draft form of CSHJR 49(TRA), version 9-LS1178\K. REPRESENTATIVE BILL WILLIAMS made a motion to adopt CSHJR 49(TRA) as the working document. Hearing no objection, CSHJR(TRA) was adopted as the working document for the House Standing Committee on Transportation. CHAIRMAN GARY DAVIS said the essence of the change made and incorporated in CSHJR 49(TRA) is a change from a highway to a transportation fund. The transportation fund creates a fund for the revenues derived from the propulsion of motor vehicles for the operation and maintenance of roads and highways and also sets up a fund for revenues derived from marine fuel taxes to be used for the construction and improvement of harbor facilities. Number 151 REPRESENTATIVE JAMES expressed concern relating to the inclusion of marine taxes within CSHJR 49(TRA). She said she had kept the original HJR 49 narrow in order to get the two-thirds vote needed to put the resolution on the ballot, and to get the votes necessary to make it a constitutional amendment. Number 213 REPRESENTATIVE JAMES said the fiscal note, she believed, would prevent the passage of CSHJR 49(TRA). She said the fiscal note identifies that marine fuel taxes go for construction and improvement, of which only 37 percent have been utilized in the past. She said the remaining 63 percent of the taxes had gone into the general fund used for ordinary expenses. She said, as a result, a huge fiscal note would be required for CSHJR 49(TRA). Number 295 CHAIRMAN GARY DAVIS, "you yourself have addressed the fiscal note with the three-fifths vote to spend outside of the dedication area, so that is the only answer or area we could go to, to address that, whether that is enough to satisfy that concern or not, I'm not sure." He believed that the inclusion of the marine component would improve its chances of passing because of gaining support from the coastal communities in the state of Alaska. Number 420 REPRESENTATIVE BRICE asked how the two funds would be segregated in the fiscal note. He mentioned that only a minimal amount of money should be spent on administrative costs, leaving as much as possible for use on construction and development of transportation needs in the state. Number 506 BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division, Department of Revenue, responded to the question regarding the fiscal note. He said currently the marine fuel taxes are deposited into the general fund with appropriations coming out of the fund. He said research would need to be done to determine whether the amount spent on harbor facilities, in the capital or operating budget, is equal to the amount of the taxes. He said information from Office of Management and Budget (OMB) would need to be received to make that determination and whether a fiscal note is needed. Number 596 CHAIRMAN GARY DAVIS commented that it might be possible that we are spending all the marine fuel tax revenues collected. MR. BARTHOLOMEW said that it might be possible. Number 621 REPRESENTATIVE JAMES said according to testimony from the Department of Transportation and Public Facilities (DOT/PF), currently, only 37 percent of the marine fuel tax is being spent on maintenance of harbor facilities. She said the rest of the money is remaining in the general fund. She requested that Mr. Kito comment on this information. Number 676 SAM S. KITO III, Special Assistant, Office of the Commissioner, Department of Transportation and Public Facilities, commented that the reference to 37 percent was an average taken over five years. The 37 percent, of the marine fuel tax, included revenue that went to the DOT/PF for harbor construction projects. The maintenance dollars that the state or department expends on the harbors is an unknown amount at this time. CHAIRMAN GARY DAVIS remarked that this might be a negligible fee and commented that operation costs and basic maintenance costs come from local slippage and moorage fees. Number 715 MR. KITO said many of these harbors are managed by the municipalities. Number 726 REPRESENTATIVE JAMES pointed out that 63 percent of the marine fuel tax goes into the general fund to pay for other things. She said a vacancy of 63 percent, from the general fund, would need an attached fiscal note. She said either the general budget would have to be cut by that amount or the capital budget would need to be increased by this amount. She added that the inclusion of a legislative four-fifths vote to use any additional funds for other purposes would be difficult. REPRESENTATIVE JAMES said it is in this area where the difference between a fund for highway and marine fuel taxes differ. Currently the revenue derived from the highway fuel tax is less than the amount expended, whereas there is money derived from the marine fuel tax being used for other things. Number 835 REPRESENTATIVE DON LONG mentioned the 37 percent of the marine fuel tax and said he hadn't seen anything in the constitution that dedicated that marine fuel tax to a marine fund. Number 855 MR. KITO said the 37 percent of the marine fuel tax is an estimate based on what DOT/PF has spent on capital expenditures on marine or harbor systems, averaged out, compared to the amount collected in taxes. Number 871 REPRESENTATIVE LONG clarified that everything goes into the general fund, but this 37 percent has been identified as the amount of money expended. Number 880 REPRESENTATIVE BRICE said approximately three times as much is being spent on highway maintenance out of the general fund than what is being brought in from the highway fuel tax. Number 925 FRANK DILLON, Executive Director, Alaska Trucking Association, Incorporated, was next to testify via teleconference from Anchorage. He was in support of a dedicated fund as specified in CSHJR 49(TRA). He said in 1990, his company suggested a dedicated fund derived from highway money collected from highway users to be put back for the maintenance of the highway. Number 969 MR. DILLON said the language contained, on page two, line two, "or operating costs", is of concern. He said his company would not support CSHJR 49(TRA) if that language is included. He said this fund should be established for maintenance only in a manner that is clear and narrowly defined. He said the language of this definition should indicate that it is for maintenance of the existing transportation infrastructure with current vehicle rights- of-way. Number 1015 MR. DILLON said his industry does not envision that the DOT/PF's budget should be covered by what is collected in a maintenance fund. He said the community of Alaska highway users is small and cannot fund DOT/PF's budget. He said the fund should collect taxes, that are reasonable, to maintain the highways and desist from the practice of deferred maintenance. He said this policy of deferred maintenance means that the job is done later at a greater expense. He said the situation now, is that the maintenance has been deferred to the point where the DOT/PF is, in some areas, uncertain about the longevity baseline of their highways. He said money will need to be expended to bring the highways and roads up to par. Number 1093 MR. DILLON said the industry looks at the DOT/PF's budget with trepidation. He said the average tractor-trailer currently pays a little bit in excess of $7,000 in state, local and federal taxes and fees, to operate in the state of Alaska. The combined contribution, by truck users within the state and truck users outside the state, is approximately $90 million per year to the treasury of the state of Alaska. He said this figure was derived from the fact that the industry gets back approximately seven to one on highway truck fund dollars, and approximately 40 percent of the federal highway trust fund is money that comes directly out of the trucking industry's pocket. This money is paid by truck users within and outside of the state. He said his industry makes a significant contribution for highway maintenance and new construction. He hoped that the reauthorization of the highway bill in 1997 will free up money for general highway maintenance purposes so that more maintenance can occur then has in the past. MR. DILLON said by establishing a dedicated fund, with a clear understanding that this fund is going to be used to improve the situation for Alaska highway users, is a marketable device in getting people to accept a higher highway fuel tax. The polling done by his industry indicates that without some sort of dedication to funding, people don't trust that paying a higher fuel tax will result in better roads. He cautioned that if a higher fuel tax merely results in higher spending at DOT/PF, the state gains nothing and the public feels they are paying an even greater subsidy to the general fund and other uses than they do now. Number 1205 CHAIRMAN GARY DAVIS said, from committee discussions, there is agreement concerning the language, "or operating costs". He said the definition suggested by Mr. Dillon would put everyone agreement. He said, in discussions by the subcommittee relating to operating costs, the proposals included maintenance of the roads and facilities. He said the discussion of facility maintenance included the fencing around the DOT maintenance facility, the buildings, the occasional need of new fuel pumps, painting of the buildings, as well as other things. He said you could get as detailed as the operating expenses, operators, superintendents and supervisors. He said these are the things the committee is addressing when maintenance and operating cost is included and are found in statutory definitions. He asked if Mr. Dillon had the same understanding in his definition of maintenance. Number 1289 MR. DILLON said his perception of maintenance included more than simply maintaining the highway features such as ditches and drainage, but he wanted to see the language confined as narrowly as possible to the actual maintenance of the roadway itself. He mentioned the confusion surrounding the marine highway system and exactly what things would be eligible, in terms of maintenance expenses. He mentioned that the Alaska Marine Highway System is defined as a highway. He said, even with a tax of 50 cents a gallon, the fund would probably not have enough money to take care of the DOT/PF's maintenance desires. He said the DOT/PF has been inadequately funded for some period of time as seen in their budget over the past ten years. The DOT/PF has been asked to do more, in terms of added lane miles and meeting federal requirements, without receiving adequate funding. He said the state is behind, in terms of bridge maintenance and pavement maintenance, to the point that it will cripple the state's economy. He said without an investment in the infrastructure, a steady and ongoing quality maintenance program, economic development won't occur because people will not locate in such an area. Number 1385 CHAIRMAN GARY DAVIS said the committee would consider all of his concerns and would address them in the legislation. Number 1413 MARLA ATKINS testified via teleconference from Cordova. She asked for clarification of whether the state cross- uses funds for maintenance of roads, harbors and new construction or whether they are separated individually by mode. Number 1441 CHAIRMAN GARY DAVIS said the tax revenues are all put into the general fund and, as needed and approved by the legislature, they are distributed to different accounts. Number 1446 MS. ATKINS referred to page one, Section 7, discussing dedicated funds, she read "the proceeds of any state tax or license shall not be dedicated to any special purpose. This provision shall not prohibit the continuation of any dedication existing prior to 1956", and asked if this meant that there were dedicated taxes from gas taxes. Number 1474 CHAIRMAN GARY DAVIS said there are dedicated funds, not specifically fuel taxes, but that Section 7 relates to any dedicated funds in the state and mentioned the Fisherman Fund as an example. Number 1499 MS. ATKINS referred to Section 18, on page one, regarding the transportation fund and asked if the taxes from the various modes would be placed into one account or whether it would be segregated into specific accounts relating to the specific taxes. Number 1524 CHAIRMAN GARY DAVIS said the fund is broken down by subparagraph one and two, which separated the highway funds from the marine funds. Number 1539 MS. ATKINS asked how this was going to work if there was not currently enough money for the highways. CHAIRMAN GARY DAVIS said hopefully funds would be established for highway maintenance. He said, currently, only $24 million is being generated and $75 million is being spent. He said CSHJR 49(TRA) is only a first step. MS. ATKINS clarified that currently the funds can be crossed over, but under CSHJR 49(TRA) this couldn't happen. Number 1569 CHAIRMAN GARY DAVIS said money could be utilized for other purposes with a three-fifths vote of the legislature. Number 1580 MS. ATKINS said she supports the concept of the dedicated gas fuel tax. She felt the gas tax would need to be raised in order to maintain the highways. She said the highway infrastructure is badly in need of work throughout the state. She said, if we are going to develop tourism and economic development in Alaska, we need to provide an infrastructure. She said the state gets a higher return on the gas tax than states back in the East Coast receive. MS. ATKINS said she supports a gas tax and would want a dedication of the fuel taxes to improve the road system, bring maintenance up to standard and for new roads. She mentioned that Alaska has fewer line miles than any state in the union which is difficult in terms of tourism. MS. ATKINS expressed concern over administrative costs versus maintenance costs. She referred to the former Lieutenant Governor Coghill (indiscernible) "understood that they were going to revamp everything down there if they could and try to leave more people in the field and less people in the Administration, instead, it turned out we're back to cutting in the field." She referred to Cordova and mentioned the states cutback of eleven to six men for maintenance. She said they cannot keep up with the maintenance in Cordova. MS. ATKINS concluded that she wanted to see a raised gas tax that is dedicated to a specific fund in order to get the public to vote for it. Number 1704 BARBARA HUFF TUCKNESS, Teamsters Local 959, testified via teleconference from Anchorage. She said her organization represent truckers and various people who use the highway infrastructure. She said truckers deal with the infrastructure when they are going up mountain passes with double loaders and de-booting them in order to take one trailer at a time through some of those areas. She said this is less of a problem then it has been in the past. She said Teamsters Local 959 supports CSHJR 49(TRA). She said a focus needs to be placed on the maintenance of the highways. Number 1782 REPRESENTATIVE LONG asked how the motor fuel and water taxes are separated, especially in areas where there is only one pump station. Number 1803 MR. BARTHOLOMEW said, currently, the identification is made by the qualified fuel dealer or wholesaler who is paying the taxes upstream from a central spot. When the fuel is sold a determination is made regarding how the fuel will be used. He said there is some inevitable crossover, but the Department of Revenue (DOR) records the type of fuel tax according to how it is placed in the tax returns. Number 1850 CHAIRMAN GARY DAVIS clarified that it is up to the wholesale dealer to record it and hopefully they are doing this to the best of their ability. Number 1862 MR. BARTHOLOMEW said there would need to be some sort of education process put on by the DOT/PF and the DOR. Number 1872 REPRESENTATIVE BRICE questioned how the different types of tax, associated with different fuel use, was going to be differentiated, especially in rural Alaska. He also questioned the staff turnover and whether or not that would impact this process. Number 1958 MR. BARTHOLOMEW said the DOR would set up some guidelines when the wholesalers are dispatching it to the rural retailers, so they can try to come up with an average, periodically reviewed and altered. Number 1976 REPRESENTATIVE BRICE said this system should not be too precise. MR. BARTHOLOMEW said the concern would be one of creating more paperwork. He said the DOR and the industry could develop some guidelines to allow the industry to do some fuel tax determinations. REPRESENTATIVE BRICE said fuel used for marine purposes "probably runs 35, 40, up to 50 percent of gas sales." REPRESENTATIVE LONG said it would also depend on the time of the year. REPRESENTATIVE JAMES clarified that unleaded gas could be put in boat motors. Number 2035 REPRESENTATIVE LONG asked if these taxes included snow machines and all terrain vehicles. MR. BARTHOLOMEW said there is a separate tax called the off-highway use tax. He said if a vehicle was used off-highway there is a 2 cent tax. He explained that the 8 cent per gallon tax is paid, but an exemption can be filed to receive a 6 cent per gallon rebate. He said the rebate allows the DOR to track how much off highway use there is in the state. Number 2082 MR. DILLON interjected that there is some strict accounting by the federal government for fuel tax purposes in order to prevent people from paying the tax. He mentioned that because marine fuel tax was a lesser amount than the highway fuel tax, he wouldn't be surprised if trucks in Southeast were running around using boat fuel. Number 2125 RAY GILLESPIE, Lobbyist representing the City of UnAlaska, Gillespie and Associates, was next to testify. He said the city of UnAlaska supports CSHJR 49(TRA) with the inclusion of the marine fuel as they believe it is a good first step to addressing some of the funding inadequacies for ports and harbors. He mentioned the inclusion of marine fuel tax in the CSHJR 49(TRA) will have a broader appeal statewide. Number 2154 REPRESENTATIVE JAMES asked what the total amount of revenues collected from marine fuels was. MR. KITO said this information was passed out and available in the committee packet. REPRESENTATIVE JAMES said a fiscal note, prepared for the highway use fund, changing $21 million from general fund to the highway fund, should incorporate the total amount being received from marine fuels from the general fund to the transportation fund. Number 2200 CHAIRMAN GARY DAVIS said he would like to pass CSHJR 49(TRA) with the understanding that an updated fiscal note is requested. He then asked Mr. Kito if the definition of maintenance and operating cost was clearly understood in CSHJR 49(TRA). Number 2222 MR. KITO felt it was clearly understood, but added the definition of items, funded by this dedicated fund, could be clarified under statute. Number 2234 REPRESENTATIVE BRICE said, as he understood Mr. Dillon's concern, that a statute could be developed allowing CSHJR 49(TRA) more expenditures to be used for the administrative costs of DOT/PF versus direct maintenance. Number 2258 MR. KITO said the language, as worded in CSHJR 49(TRA), would have to include some direct relationship to maintenance of the highway system. Number 2271 REPRESENTATIVE BRICE said by definition, Mr. Kito's and the commissioners salary can be attributable to maintenance costs. He suggested tightening the language of CSHJR 49(TRA). Number 2298 CHAIRMAN GARY DAVIS asked if the administration could allocate a portion of their time under the language of CSHJR 49(TRA). Number 2309 MR. KITO said the only place the DOT/PF has any type of cost allocation is in the federal highway funding. He said DOT/PF tries to build a federal highway department for whatever costs the department can, so within the DOT/PF a figure is made and incorporated into that budget. In regards to maintenance, the realistic approach would not include DOT/PF administrate costs within that budget. He said the accounting procedures involved would be tremendous. Number 2338 REPRESENTATIVE JAMES said, in accounting principles, that maintenance would include any appropriate administrative or other costs that directly related to the maintenance. She expressed concern over the openness of such language. TAPE 96-6, SIDE B Number 000 REPRESENTATIVE JAMES said taking operating costs out of CSHJR 49(TRA), makes it perfectly clear and that the legislature is not intending to allow administrative costs relating to roads and highways out of this fund. She added that statutes could be added to define what the maintenance definition covers. Number 029 REPRESENTATIVE JAMES made a motion to delete, page two, line two, "or operating costs". Hearing no objections this deletion was made to CSHJR 49(TRA). Number 046 REPRESENTATIVE JAMES expressed concern about combining the marine fuel tax with the highway fuel tax. She said this inclusion might gain support in some areas, but lose support in others. Number 061 REPRESENTATIVE WILLIAMS made a motion to move CSHJR 49(TRA) amended from committee with individual recommendations and the attached to- be-amended fiscal note. Hearing no objections, CSHJR 49(TRA) was moved from the House Standing Committee on Transportation. HB 498-BETTY CATO BRIDGE IN VALDEZ  Number 084 CHAIRMAN GARY DAVIS announced that the committee would next address HB 498. He said in discussion with Representative Kubina, he agreed that he would submit HB 498 as a transportation bill. Number 137 SHERI CAPLES, Valdez City Council, testified via teleconference from Valdez. She said Ms. Cato was instrumental in the construction of the bridge over Mineral Creek. It was through Ms. Cato's support of a grant proposal awarded by the state of Alaska that the bridge was built. In August of 1995, the Valdez City Council took action to dedicate the bridge to Ms. Bette Cato, a plaque was made and a dedication ceremony will be held in June of 1996. Number 158 REPRESENTATIVE GENE KUBINA said Ms. Cato's part in the development of this bridge opened up a whole new section of the community of Valdez. He added that Ms. Cato knew and was excited about dedication and the plaque. He thanked the transportation committee for officially submitting HB 498. CHAIRMAN GARY DAVIS said any minutes or any resolution from the city of Valdez would be the only information needed to settle the matter. REPRESENTATIVE KUBINA said he would get this information. Number 240 REPRESENTATIVE BRICE made a motion to move HB 498 with accompanying fiscal note and individual recommendations. Hearing no objections HB 498 was moved from the House Standing Committee on Transportation. REPRESENTATIVE JAMES said, as it was Chairman Gary Davis' bill, she would entertain a request to waive HB 498 from the House Standing State Affairs Committee. HB 517-MOTOR VEHICLES: REGULATION & INSURANCE Number 268 CHAIRMAN GARY DAVIS announced that HB 517 was next on the agenda. He said he did not intend to move HB 517 today and drew the committee's attention to amendments that have been submitted for committee review. Number 312 SANDY PARR-PROVOST, Special Assistant, Office of the Commissioner, Department of Public Safety, said that Jay Dulany would provide information on HB 517. Number 329 JAY N. DULANY, Director, Central Office, Division of Motor Vehicles, Department of Public Safety, testified via teleconference from Anchorage. He said he would provide a brief overview on what HB 517 would do. He said the most important aspect of HB 517 is the commercial motor vehicle provisions. (Indiscernible due to coughing).."approximately $22 million in highway construction funds and to a lesser amount for commercial vehicle enforcement." He said the state needs to disqualify commercial drivers for violations of service orders and to bring other provisions of the states commercial vehicle laws into compliance with federal requirements. He said Sergeant Bob Brown would address the enforcement issues and mentioned that there were a number of sections that deal with these provisions. Number 380 MR. DELANY said the other sections further the efficiency measures within the Division of Motor Vehicles (DMV). HB 517 allows the DMV to officially use electronic records in essentially the same manner as paper records. HB 517 authorizes telephone hearings in lieu of in-person hearings for administrative hearings to save transportation costs. HB 517 increases the motor vehicle dealer temporary permit from 30 to 60 days giving adequate time to the dealers and their customers for title processing especially in circumstances when it is an out-of-state title or lien. Number 408 MR. DELANY said HB 517 also removes some restrictions for renewing a driver's license by mail and increases the property damage threshold to $1500 for financial responsibility and for mandatory insurance reporting purposes. He said, finally, that HB 517 repeals the legislative section of statute that set up the original staggered registration system back in 1978. Number 438 CHAIRMAN GARY DAVIS remarked that federal funds are in jeopardy unless the state of Alaska comes into compliance with regulations. Number 450 MR. DELANY said if those commercial motor vehicle provisions are not in place by October of 1996, then the state does tend to lose substantial highway construction funds and potentially the Motor Carrier Safety Action fund as well, which is up to $20 million. Number 469 REPRESENTATIVE JAMES referred to a letter in the committee packet from a Donald B. Harris, and asked if a provision mentioned was going to be addressed. CHAIRMAN GARY DAVIS said yes, it was, and added that one of the committee members had expressed a concern for the change from 300 miles to 150 miles. REPRESENTATIVE JAMES expressed concern over this provision as well and suggested that a waiver be requested. She said that 300 miles is appropriate distance within Alaska. Number 505 CHAIRMAN GARY DAVIS began to clarify the provision being discussed to Mr. Delany when he received a note saying that Trooper Brown would address this provision. Number 566 MR. DELANY said in the original commercial drivers license legislation located in the Alaskan statutes, set the mileage factor at 150 miles. He said he didn't feel that this is an issue in regards to safety inspections as this is the only issue covered by the 300 mile exemption. Representative Masek joined the committee meeting at 2:43 p.m. REPRESENTATIVE JAMES said her concern was in the drivers license, but added that it is another issue which she would address separately. Number 593 CHAIRMAN GARY DAVIS referred to the sectional analysis and was told that Sections 1,2,3,5,9-15,6,8,22,23 are all housekeeping measures. Number 639 BRAD BROWN, Central Office, Division of Alaska State Troopers, Department of Public Safety, testified via teleconference from Anchorage. He referred to a question regarding the variance of 150 miles versus 300 miles. He said the state attempted to obtain a variance, but was turned down. He added the state applies for federal money under the guidance of the federal code of regulations, Title 49, Part 350. Part 350 stipulates that the state of Alaska needs to be in compliance with the federal motor carrier standards. He said the state is out of compliance primarily with the verbiage of 300 miles versus 150 miles. He said, to this date, the enforcement unit has not encountered a problem per se of 150 miles versus 300 miles. He said the language must be changed in order for the state to continue receiving federal funding. Number 695 MR. BROWN referred to a letter from the Alaska Division Program Specialist of the Office of Motor Carriers, this letter indicated that the state is subject to losing at least 50 percent of the states grant for the commercial vehicle enforcement unit as a result of non-compliance with Part 350. He said this loss is subject to immediate implementation because the state has been out of compliance ever since the law was initially past, years ago. Number 719 REPRESENTATIVE JAMES said she had no contention with the safety inspections and in fact encouraged them. She expressed her concern over the commercial licenses and because she was told that this was already in affect, she had no concern with this issue. Number 753 JOE CRUM, Director of Training, Center for Employment Education (CEE), testified via teleconference from Anchorage. He said his company is the only authorized and licensed commercial driving school in the state of Alaska. He said a week ago, Mark Johnson, the president of CEE, testified before the House State Affairs Committee. At that time Mr. Crum was told CEE should seek a different bill in which to address their concerns and offer recommendations and Mr. Crum stated that this was his purpose today. MR. CRUM asked for HB 517 to be amended, or a section be added, placing stricter penalties on would-be personal truck driver trainers who fail to meet the standards set forth by the state to operate this type of training. Number 800 MR. CRUM said CEE has invested nearly $500,000 to develop a program that meets the minimal proposed national standards. He said CEE is licensed and bonded with instructors who have received formal training, extensive background checks, have been finger printed and tested and eventually licensed by DMV. The facility and equipment has been inspected by both DMV and post secondary education. CEE has expended effort to follow the standards set forth by state and federal laws to comply with established guidelines to open CEE. The CEE has discovered a number of organizations which have not complied with those standards and are being allowed to operate within the state of Alaska. Number 845 MR. CRUM said complaints regarding those organizations were submitted to DMV and post secondary education. The DMV issued cease and desist orders to all known violators, but these violators are still in business today. He said an on going investigation is being conducted by the Alaska State Troopers, but he was unaware of the investigations status. He said the organizations do not have instructional licenses for the company or the instructors and added that some instructors do not have commercial drivers licenses. He said the students are not made to follow any guidelines for safety and these organizations do not even have minimum instructional course permits which allows the students to receive driver training on the streets. MR. CRUM read a letter reply from a current violator, this letter was directed to the Driver Improvement Officer, and says, "just what I need a nosey neighbor and another bureaucrat sticking his nose into my business. The straight facts are that I rented trucks for people to take drivers test in, that is a necessity. I show each one enough about the truck to be safe and familiar in." Mr. Crum said the organizations spend days and weeks showing students how to be familiar with the vehicles. He continued reading from the letter, "while warning them that most fail on the walk around." He said CEE has a 100 percent passing on this part, with no one failing on the walk around. The letter goes on to say, "we also drive the truck to the test point as they are not legally able to. If you interpret this as training, you are mistaken. Please don't clutter up my time or my mail with any more unsolicited packets to explain state law to me. Truly you can find better use of your time, as for me I will continue on trying to eke out a living and help my fellow man as the occasion arises." He said of all the replies received from the state cease and desist letters, this is one of the more tame examples. Number 956 MR. CRUM said one Anchorage company trained and provided equipment for commercial driver license tests to an astonishing 700 people within the last two years. A Fairbanks operator is guilty of over 400 similar violations and yet still refuses to comply with the set standards. Others, when they are told of the requirements needed to operate legally, decline to do so. He referred to (indiscernible due to coughing) federal highway administration's study of truck driver training advocacy. This study has been going on for about two years by federal, state and private companies to assist with decreasing truck driver accident rates. Number 999 MR. CRUM, referring to the study, said only 8.1 percent of motor carriers hiring entry level drivers provide adequate training for those drivers. Of the students trained by proprietary and public schools, like CEE, only 25.5 percent are adequately trained on a national survey. Mr. Crum added that 97.8 percent of students taught at CEE passed the DMV commercial drivers license test the first time. Students trained by the illegal competitors usually needed to take the test three or four times on average. He concluded that stricter penalties need to be imposed for those who fail to obey the law. He said there is not a substantial penalty or otherwise these organizations would stop operating outside the law. He suggested a minimum $5,000 fine per violation, in lieu of the $100 fine currently in place, to raise the standards for heavy haulers and penalize those who operate outside the law. Number 1066 MR. CRUM said he supported HB 517 with the addition of this proposed amendment. CHAIRMAN GARY DAVIS said HB 517 would be held in committee and asked him to send information centered around this request. Number 1104 MR. DELANY said the situation described by Mr. Crum is absolutely true. He said an attempt was made, when it was discovered that there were schools operating outside of the statutes, to make them stop. He said this situation was turned over to the State Troopers to obtain evidence. He said, that even if those schools are found to be in violation and were convicted of the offense, it is a misdemeanor and doesn't affect them economically and they would probably continue to operate. REPRESENTATIVE JAMES asked what standards are listed for instruction to obtain a commercial drivers license in the Alaska statutes. Number 1181 MR. DELANY said there were some commercial driver school statutes and also some regulations that were promulgated as a result of those statutes. He said he does not have any objection to the proposed provision incorporated into HB 517. Number 1219 MR. DILLON said he is also a member of the board for CEE since its conception. He said it has been difficult to set up their business when there is competition from people who do not comply with the rules and regulations. He said if you are not going to comply with the rules, there should be some sanctions that make sense. He concluded that he would encourage support of this legislation. Number 1265 MR. DILLON said HB 517 includes things that his organization has been advocating for over a number of years to bring the state into compliance with the federal regulations and gives the state one set of regulations to operate from. He said the greatest difficulties occur, in the operational sense and in terms of safety regulations, when there are conflicting regulations and statutes. The federal government has reminded the state of Alaska continually that we are out of compliance and facing sanctions. He said Alaska could be the state that the federal government makes an example to the rest of the country. He encouraged the passage of HB 517. Number 1323 STEVE ALLWINE, Alaska Auto Dealers Association, was next to testify. He said he was in support of HB 517, especially page two, Section 3, line 20 through 22, dealing with temporary permit of vehicles. He said this section has created problems with automobile dealers, customers and DMV. He said it has the perception of the association that the DMV has been severely understaffed and underfunded for the last number of years, and although this segment of HB 517 does not provide for additional staffing, it is believed that this segment will assist the DMV staff, automobile dealers, and general public to do the work in a timely manner. He encouraged the committee to retain Section 3. CHAIRMAN GARY DAVIS clarified that Section 3 relates to any vehicle that is sold. ADJOURNMENT As there was no further business to come before the House Transportation Standing Committee, Chairman Gary Davis adjourned the meeting at 3:00 p.m.