04/09/1996 01:50 PM Senate FIN

                                                                               
  CS FOR HOUSE BILL NO. 272(FIN)                                               
                                                                               
       An  Act   relating  to  municipal  taxation   of  motor                 
       vehicles; and providing for an effective date.                          
                                                                               
  Co-chairman Halford directed that CSHB  272 (Fin) be brought                 
  on  for  discussion.   KIP  KNUDSON, aide  to Representative                 
  Hanley,  came  before committee.    He reference  a proposed                 
  amendment and noted  that interested parties would  speak to                 
  two issues therein:                                                          
                                                                               
       1.   Ability to dedicate funds                                          
       2.   The bureaucratic challenge of dedicating the funds                 
                                                                               
  The   bill   is   intended   to   provide   flexibility   to                 
  municipalities  with  regard  to  taxing  ability.   At  the                 
  present time,  only the  legislature can  establish taxation                 
  rates   on   motor   vehicles.     The   bill   would  allow                 
  municipalities  to raise  rates  internally.   It  is a  top                 
  priority  of the  municipal  league.    Municipalities  that                 
  contacted Representative  Hanley's office  are intending  to                 
  use the  measure as  a "net  zero" issue;  if motor  vehicle                 
  taxes are raised, the municipality will lower another tax.                   
                                                                               
  Mr. Knudson  acknowledged the  cooperation of  the Dept.  of                 
  Public Safety in developing the bill.                                        
                                                                               
  KEVIN RITCHIE  next came before  committee on behalf  of the                 
  Alaska Municipal League and Alaska Conference of Mayors.  He                 
  directed attention  to a letter  of support from  the league                 
  and stressed that the propose bill  is an important tool for                 
                                                                               
                                                                               
  municipalities for the  future.  Municipalities do  not plan                 
  large  increases in  the  tax rate.    In  the case  of  the                 
  Municipality of Anchorage, "This is within their tax cap."                   
                                                                               
  JUANITA HENSLEY,  Chief, Driver Services, Division  of Motor                 
  Vehicles, Dept. of  Public Safety, came before  committee to                 
  respond to questions.                                                        
                                                                               
  Senator Rieger  MOVED for  adoption of Amendment  No. 1  and                 
  requested unanimous consent.  Both  Senator Phillips and Co-                 
  chairman Halford noted questions and  asked that the sponsor                 
  speak to the amendment.  Senator Rieger  remarked that roads                 
  in  his  area are  paid  for  by a  property  tax assessment                 
  applied   to   road   servicing.      He   then   referenced                 
  correspondence  from the  Mayor  of  Anchorage  saying  that                 
  passage of the proposed bill would "help communities solve a                 
  nagging problem--which is road maintenance costs."                           
                                                                               
  Senator Rieger voiced his understanding  that the bill would                 
  allow municipalities to raise taxes on residents residing in                 
  road service areas, but there  is no mechanism for  ensuring                 
  that the money being  raised would go to road  service areas                 
  in which  taxpayers reside.  Instead, it represents one more                 
  example of a tax imposed on outlying parts of a municipality                 
  to support the core.  The  legislature must ensure equitable                 
  distribution of  revenues raised  for a  particular purpose.                 
  The proposed amendment would help ensure that the purpose is                 
  fulfilled.                                                                   
                                                                               
  Co-chairman Halford advised  of those who would  prefer that                 
  moneys be allocated  back against  property taxes "that  pay                 
  all  the  bills   for  everyone   else."    Senator   Rieger                 
  acknowledged  the  validity  of that  preference.    The Co-                 
  chairman  voiced   his  understanding   that  every   dollar                 
  increase, as a result  of the proposed bill, would  have "to                 
  come  off  of   property  taxes"  in  the   Municipality  of                 
  Anchorage.  Mr. Knudson concurred in that understanding.                     
                                                                               
  Discussion  followed concerning  allocation of  taxes, using                 
  the Municipality of Anchorage as an example.  Senator Rieger                 
  reiterated  that  the  bill  could  result  in  taxation  of                 
  outlying areas for the  purpose of tax relief for  the core.                 
  Mr. Knudson acknowledged that while that could happen, it is                 
  up to  each municipality to  "fix that  inequity."   Senator                 
  Rieger noted  that  Amendment No.  1  provides a  degree  of                 
  comfort.  He voiced  a lack of confidence in  application of                 
  the bill  by the  Anchorage municipality.   He  referenced a                 
  clear division on the assembly between Eagle River and South                 
  Anchorage  and the "rest of the town."   He suggested that a                 
  Chugach, Eagle  River, or  South Anchorage legislator  could                 
  not  in  good  conscience  allow the  proposed  bill  to  go                 
  forward.                                                                     
                                                                               
  Mrs.  Hensley described  the  present  system of  department                 
                                                                               
                                                                               
  collection   of   motor   vehicle   taxes   on   behalf   of                 
  municipalities.  She  stressed that the department  does not                 
  track road service  areas in  which vehicle are  registered.                 
  That would be a new function not previously performed by the                 
  department,  and additional  computer  programming would  be                 
  required.  Senator Rieger voiced  his understanding that the                 
  department's responsibility is simply to remit moneys to the                 
  municipality  rather  than to  allocate  it service  area by                 
  service area.    Passage of  the  proposed bill  should  not                 
  impact the department.   Mr.  Knudson advised of  indication                 
  that the  municipality would  be saddled  with the  computer                 
  work  associated  with   allocation.    Municipalities  have                 
  advised that it would be difficult and "quite a  challenge."                 
                                                                               
                                                                               
  Co-chairman  Halford  suggested  that  Amendment  No.  1  be                 
  reworded  to say that "money received  shall be allocated to                 
  area-wide services or  tax relief."  Moneys would  thus flow                 
  to the base and  reduce property taxes rather than  apply to                 
  the  downtown service  area or  other service  areas.   That                 
  approach   might   protect  against   negative  application.                 
  Senator Rieger concurred in the approach but voiced need  to                 
  use appropriate  terminology  for area-wide,  so that  outer                 
  perimeters of  municipalities would  be included.   He  then                 
  MOVED for adoption of a conceptual amendment providing that:                 
                                                                               
       money received by  an increase under  this section                      
       shall be used  to reduce the tax mill rate equally                      
       across the entire borough                                               
                                                                               
  Mr. Knudson  expressed concern  that the  foregoing language                 
  might not provide the flexibility sought by  municipalities.                 
                                                                               
                                                                               
  Co-chairman Halford called for objections  to the conceptual                 
  amendment.  No objection having  been raised, the conceptual                 
  amendment was ADOPTED in lieu of Amendment No. 1.                            
                                                                               
  END:      SFC-96, #70, Side 2                                                
  BEGIN:    SFC-96, #71, Side 1                                                
                                                                               
  Discussion  of biennial  licensing followed  between members                 
  and Juanita Hensley.   Both Co-chairman Halford  and Senator                 
  Phillips expressed concern that doubling  the annual cost in                 
  addition  to  increased motor  vehicle  taxes that  might be                 
  levied  by  a   municipality  would  result  in   a  "hefty"                 
  registration  fee.      Co-chairman   Frank   stressed   the                 
  convenience  associated  with   biennial  licensing.    Mrs.                 
  Hensley voiced department  support for both  HB 272 and  Co-                 
  chairman Frank's biennial licensing bill.                                    
                                                                               
  Co-chairman Frank MOVED  for passage of  SCS CSHB 272  (Fin)                 
  with individual  recommendations.  No  objection having been                 
  raised, SCS  CSHB 272  (Fin) was REPORTED  OUT of  committee                 
                                                                               
                                                                               
  with a $44.5 fiscal note from the Dept. of Public Safety and                 
  a  zero  note  from  the Dept.  of  Community  and  Regional                 
  Affairs.  Co-chairman Frank signed the committee report with                 
  a  "do  pass"  recommendation.    Co-chairman  Halford   and                 
  Senators Phillips and Rieger signed "no recommendation."