SENATE TRANSPORTATION COMMITTEE February 1, 1994 3:35 p.m. MEMBERS PRESENT Senator Bert Sharp, Chair Senator Randy Phillips, Vice Chair Senator Tim Kelly Senator Jay Kerttula MEMBERS ABSENT Senator Georgianna Lincoln COMMITTEE CALENDAR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 260 "An Act naming the Petersburg James A. Johnson Airport." SENATE BILL NO. 261 "An Act relating to municipal sales and use taxes involving air carriers; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 260 - No previous senate committee action. SB 261 - No previous senate committee action. WITNESS REGISTER Robert Hallford, Vice President Northern Air Cargo 3900 International Airport Rd., Anchorage AK 99502¶243-3545 POSITION STATEMENT: in favor of SB 261 Kent Swisher Alaska Municipal League 217 2nd St., Juneau, AK 99801¶586-1325 POSITION STATEMENT: testified on SB 261 Reed Stoops Alaska Air Carriers Association 240 Main Street, #600, Juneau, AK 99801¶463-3223 POSITION STATEMENT: in favor of SB 261 ACTION NARRATIVE TAPE 94-2, SIDE A Number 001 CHAIRMAN SHARP calls the Senate Transportation Committee meeting to order at 3:35 p.m. Number 005 CHAIRMAN SHARP announces that SB 260 NAMING PETERSBURG AIRPORT will not be heard today at the request of the sponsor. Number 007 CHAIRMAN SHARP brings up SB 261 NO MUNICIPAL SALES TAXES ON AIR CARRIERS as the next order of business before the committee. The chairman notes that there is a sponsor statement and a committee substitute for SB 261 and calls the first witness. Number 037 ROBERT HALLFORD, Vice President, Northern Air Cargo, testifying from Anchorage, states Northern Air Cargo supports SB 261 because it will clarify federal regulations regarding municipal taxing of interstate air carriers. Number 084 CHAIRMAN SHARP notes for the record that Senators' Kerttula, Sharp, Randy Phillips, and Kelly are in attendance. Number 095 SENATOR RANDY PHILLIPS asks Mr. Hallford how the weather in Anchorage is. Mr. Hallford replies it has been hot and dusty. SENATOR KERTTULA asks if the Wasilla airport is open. Mr. Hallford responds that it is open. Number 106 CHAIRMAN SHARP calls the next witness on SB 261. Number 109 KENT SWISHER, Alaska Municipal League, says the municipal league has some reservations about SB 261, because the league is unsure of the impact of the legislation upon municipalities. The league generally opposes any state mandated exemptions on local taxing authority. The municipal league believes any necessary exemptions could be addressed locally, as they have been among various modes of transportation. Mr. Swisher states the Alaska Municipal League concerned with the retroactive date of January 1, 1993. A retroactive date would disrupt 1994 budgets of communities involved and would require a refund for 1993 collections. The municipal league does not know to what extent the legislation will effect communities, and the public will be injured for what was an appropriate and lawful action at the time the taxes were collected. If this statute is enacted, we ask that the effective date not be before January 1, 1995. The Alaska Municipal League believes this subject to be more complex than it appears and would like to know all the ramifications of SB 261. Number 155 SENATOR RANDY PHILLIPS notes for Mr. Swisher that SB 261 will go to the Senate Community and Regional Affairs and Finance Committees, so there will be ample time to review any concerns with SB 261. Number 163 SENATOR KERTTULA asks how much tax has been or is being collected that would be affected by SB 261. Number 169 CHAIRMAN SHARP responds that none of the legal opinions or results of court cases in the possession of the committee show that not much, if any, tax has been collected. The committee has requested the Department of Community & Regional Affairs (DC&RA) to report what collections have been made that would be affected by SB 261. The information should be available to the legislature by the time the Senate Community & Regional Affairs Committee has their first hearing on the bill. Number 184 MR. HALLFORD comments he supports the Alaska Municipal League's stand on opposing any state mandated exemptions on local taxing authority, however, the issue SB 261 addresses is not a viable revenue source for the communities. He supports SB 261 in order to clear up the issue so communities and air carriers don't spend fortunes and years of time and effort battling the issue in court. SB 261 should not change any community's revenue situation. Number 209 CHAIRMAN SHARP notes that committee files on SB 261 include legal opinions by Bogle & Gates, and a copy of the Federal Aviation Act of 1958. Number 212 SENATOR KELLY asks Mr. Hallford if Northern Air Cargo is currently paying any taxes affected by SB 261. Number 216 MR. HALLFORD replies Northern Air Cargo is not paying taxes that would be affected by SB 261, nor does he know of any other carrier paying taxes that would be affected by SB 261. However, Northern Air Cargo is challenging a case in the city of St. Marys. Number 218 SENATOR KELLY says since it does not appear any carriers have paid taxes affected by SB 261, it is not an issue. Number 219 SENATOR KERTTULA states Senator Kelly is probably correct in his analysis, but he would feel more comfortable if there was no potential for municipalities to have to refund any payments made to them by air carriers. Senator Kerttula would rather not see a retroactive effective date on SB 261. Number 235 CHAIRMAN SHARP explains that is the reason the committee asked for an analysis from DC&RA. Number 238 SENATOR KELLY asks the chairman why the air carriers referred to in the committee substitute for SB 261 are defined as federally certificated. Number 240 CHAIRMAN SHARP replies that the term "federally certificated air carriers" tracks the mandated federal exemption. Most air carriers in the state are federally certified. Number 250 SENATOR KERTTULA asks if there is any legal advice contrary to the opinion of Bogle and Gates. Number 255 CHAIRMAN SHARP responds he has been unable to find an opinion contrary to that of Bogle and Gates. The chairman calls the next witness. Number 256 REED STOOPS, Alaska Air Carriers Association, states the association supports SB 261. The association is not aware of any municipalities collecting an air cargo tax at present and presumes SB 261 will not have an effect on current municipal revenues. The Alaska Air Carriers Association's position is premised on the fact that they are attempting to avoid the expense of litigation that comes up from time to time on an issue that is unclear to the parties involved. Number 273 SENATOR KELLY moves the adoption of CSSB 261(TRA). Number 275 CHAIRMAN SHARP, hearing no objection, states CSSB 261(TRA) has been adopted. Number 276 SENATOR KELLY makes a motion to discharge CSSB 261(TRA) from committee with individual recommendations. Number 277 CHAIRMAN SHARP, hearing no objection, orders CSSB 261(TRA) be released from the Senate Transportation Committee with individual recommendations. The chairman announces that the next meeting of the Senate Transportation Committee will be Thursday, February 3, 1994 at 4:30 p.m. and will be a joint meeting with the House Transportation Committee. Number 285 CHAIRMAN SHARP adjourns the meeting at 3:49 p.m.