1999-01-21                     Senate Journal                      Page 0053
SB 39                                                                        
SENATE BILL NO. 39 BY THE SENATE RULES COMMITTEE                               
BY REQUEST OF THE GOVERNOR, entitled:                                          
                                                                               
An Act relating to the motor fuel tax; and                                    
providing for an effective date.                                               
                                                                               
was read the first time and referred to the Transportation and                 
Finance Committees.                                                            
                                                                               
Fiscal notes published today from Department of Transportation and             
Public Facilities, Department of Revenue.                                      
                                                                               
Governors transmittal letter dated January 20:                                 
                                                                               
Dear President Pearce:                                                         
                                                                               
In order for Alaska's economy to grow and diversify, we must                   
improve our transportation infrastructure.  With additional funds              
available under the new federal transportation law, the state can              
secure $400 million in federal highway construction dollars each year          
for the next five years by meeting the required $50.6 million state            
match.  We can meet the state match for this enormous opportunity              
with a reasonable user-pays motor fuels tax increase of nine cents             
per gallon, as proposed in this bill I transmit today.                         
                                                                               
At the current eight cents per gallon, Alaska's gas taxes are now the          
lowest in the nation.  Even after the proposed increase, forty-five            
states would have higher rates.  We would still be well below the              
23.4 cent average for large western states.  In fact, had the tax rate         
been indexed for inflation when it was last raised in 1961, it would           
currently be 43 cents per gallon.                                              
                                                                               
Under existing law, revenue from the motor fuel tax used on roads              
and highways is deposited in a highway fuel tax account in the                 
general fund.  Under the bill, that account is renamed the highway             
construction and maintenance account.  Its recommended use is, first,          
for  planning,  design,  and construction of highway projects, ferries,        
                                                                               
                                                                               

1999-01-21                     Senate Journal                      Page 0054
SB 39                                                                        
and ferry terminals and, second, for secondary road paving and                 
deferred maintenance projects.  This bill would not affect taxes on            
aviation or marine fuel nor the current seasonal tax reduction allowed         
for gasohol users.                                                             
                                                                               
This proposal represents a modest, user-pays approach to leveraging            
valuable federal highway dollars.  The benefit to Alaska would be              
multiplied many times over.                                                    
                                                                               
					Sincerely,                                                                
					/s/                                                                       
					Tony Knowles                                                              
					Governor