03/30/2012 09:00 AM House FINANCE

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
(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.