Legislature(2017 - 2018)SENATE FINANCE 532
05/02/2018 01:30 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB135 | |
| HB346 | |
| HB409 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 409 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 135 | TELECONFERENCED | |
| += | HB 346 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 409(FIN) am
"An Act relating to identification cards; relating to
permanent motor vehicle registration; relating to
vehicle registration fee rates; relating to changes of
address; relating to driver's license fees; and
relating to financial responsibility for motor
vehicles."
2:22:31 PM
REPRESENTATIVE JONATHAN KREISS-TOMKINS, SPONSOR, shared
that HB 409 was a House State Affairs Committee bill that
had originated from the indirect expenditure report
produced by the Legislative Finance Division (LFD) as well
as from some statute change recommendations from the
Department of Administration legislative finance
subcommittee process in the House. He detailed that an
amendment had been made in the House Finance Committee,
which resulted in the bill before the committee. The bill
included a variety of indirect expenditure reductions or
eliminations as well as several streamlining statute
changes to enable the Division of Motor Vehicles (DMV) to
deliver services more efficiently. He noted that in light
of budget cuts the bill would enable DMV to do more with
the same funding or do more with less. He asked if the
committee wanted to hear the sectional analysis.
2:24:07 PM
Senator Micciche asked for the sponsor's philosophy on the
bill.
Representative Kreiss-Tompkins answered that the bill
included two categories of changes. The first was indirect
expenditure reduction or elimination. The second, included
statute or policy changes that allow DMV to streamline its
operations or get rid of statutes that were no longer
relevant or were hindering the agency's ability to deliver
services.
CATHY SCHLINGHEYDE, STAFF TO REPRESENTATIVE KREISS-TOMKINS,
discussed the sectional analysis (copy on file):
Section 1: This section standardizes the age for
senior citizen fee waivers by changing the age for a
senior citizen identification card from 60 to 65.
Ms. Schlingheyde elaborated that currently there was a
senior citizen waiver on vehicle registration, which was
not in any way affected by the bill. The waiver went into
effect when someone turned 65. She continued with the
analysis:
Section 2: This section allows a person to authorize
the Division of Motor Vehicles (DMV) to update their
address based on the United States Postal Service
(USPS) database.
Ms. Schlingheyde expounded that currently DMV had access to
the USPS database, but it was not allowed to update
incorrect addresses. The bill was an opt-in section that
would allow a person to agree to let DMV update their
address. She moved to the next section:
Section 3: This section is a conforming change to the
repeal of the permanent registration in Section 18 of
this bill.
Section 4: This section removes the vehicle
registration fee exemption for amateur radio
operators.
Ms. Schlingheyde explained that the change in Section 4
came out of LFD's analysis of indirect expenditures and
conversations in the [House] Finance Committee. She
continued with the analysis:
Section 5: This section raises the vehicle
registration fee for municipalities to the standard
$100.
Ms. Schlingheyde detailed that the current vehicle
registration fee for municipalities was $10. The fee had
been set in 1978 and had not been reviewed since; the
change came from LFD's indirect expenditure report. She
advanced to the next section:
Section 6: This section is a conforming change to the
repeal of the permanent registration in Section 18 of
this bill.
Section 7: This section prohibits a municipality from
establishing a tax on vehicles that remain covered
under the permanent registration provision that is
repealed in Section 18 of this bill.
Ms. Schlingheyde added that Section 7 was a conforming
change. She continued with the next section:
Section 8: This section sets the fee for DMV Knowledge
Tests at $5 and raises the fee for DMV Road Tests from
$15 to $25.
Ms. Schlingheyde elaborated that the section would generate
revenue and DMV hoped it would reduce the no-show rate and
failure rates as people used the test as practice rather
than studying in advance.
Section 9: This section raises the threshold for
requiring deposit of security to DMV from $501 to
$2,000 to align with the standard for the Department
of Transportation (DOT).
Ms. Schlingheyde explained that numerous sections included
the change from $501 to $2,000. Currently in the case of an
accident if the cost was less than $500 there were no forms
filled out for DMV. Accidents costing $501 to $2,000
required the completion of a DMV form. Accidents costing
over $2,000 required the completion of a separate
Department of Transportation and Public Facilities (DOT)
form and the DMV form was no longer required. She detailed
the process had created significant confusion - people were
filling out forms inaccurately and did not know when they
needed which form. She relayed that DMV had requested that
only the DOT form be used. The DMV form would be
eliminated, and it would not in any way effect a person's
liability for an accident or the filing of police reports.
The change would eliminate the requirement for police to
send a duplicative report to DMV - the police would still
send a report to their own superiors. She added that the
section would not change insurance requirements. She
continued with the sectional [she did not review Sections
10 and 11 below]:
Section 10: This section raises the threshold for
requiring a peace officer to provide written
notification about the requirements in the Motor
Vehicle Safety Responsibility Act from $501 to $2,000.
Section 11: This section raises the threshold for
accepting release from liability executed by a parent
or legal guardian on behalf of a minor from $501 to
$2,000.
Section 12: This section raises the threshold for
requiring proof of financial responsibility after a
traffic offense from $501 to $2,000.
Section 13: This section raises the threshold for
requiring proof of financial responsibility after an
accident from $501 to $2,000.
Section 14: This section requires proof of financial
responsibility after a license is suspended for
failure to pay a judgement be maintained for three
years, rather than the existing lifetime provision.
The section also changes the requirement to hold
proof of financial responsibility after judgement
satisfaction only if the failure to pay was due
to driving while uninsured.
Ms. Schlingheyde addressed SR-22 insurance, a type of high-
risk insurance. Current statute required SR-22 insurance
for three years for individuals in an accident that caused
significant property damage, death, or serious injury. The
insurance was also required for three years if a person
drove uninsured. The insurance was required for five years
in the case of a DUI and for a lifetime after four DUIs.
The section required SR-22 insurance for a lifetime if a
person failed to pay a judgement within 30 days, which was
disproportionate to the rest of the statute. The bill
changed the SR-22 requirement for failure to pay within 30
days to three years.
Section 15: This section allows for a second payment
plan in installments for people facing license
suspension based on outstanding financial judgements.
Ms. Schlingheyde noted that a court would approve payment
plans of installments for people who could not pay
judgements immediately.
Section 16: This section raises the threshold for
showing proof of motor vehicle liability insurance
from $501 to $2,000.
Section 17: This section removes the requirement to
update DMV with address changes if the person has
given permission for DMV to update addresses from the
USPS database.
Ms. Schlingheyde explained that Section 17 removed the
requirement for a person to update their address with DMV
if they had opted in to allow DMV to update their address
based off the USPS database.
Section 18: This section repeals permanent vehicle
registration for vehicles that are at least eight
years old.
Section 19: This section grandfathers in people who
have already registered their vehicles under the
permanent vehicle registration.
Ms. Schlingheyde elaborated that Section 19 applied to
individuals, not cars. She explained that if a car was
sold, the new owner would not be able to apply and pay for
a permanent vehicle registration.
2:30:30 PM
Senator Olson noted that Representative Kreiss-Tomkins
represented a number of small communities. He asked where
he had come up with Section 5 of the bill, which he
believed had caused most of the consternation for the
communities he had heard from. He noted the section would
increase a fee from $10 to $100. He explained that some
small communities could barely afford a vehicle, let alone
registering it. He wondered what the thinking behind the
substantial increase had been.
Representative Kreiss-Tomkins replied that there were two
ways to look at Section 5. One way to look at the section
was it would increase the vehicle registration fee for
municipalities from $10 to $100. The other way to look at
it was that it would eliminate a $90 deduction that
municipalities had enjoyed, and it would bring the rate to
the same rate everyone else paid. He was not claiming one
way was right and one was wrong, but that there were two
ways to look at the issue. He explained that he had looked
at all indirect expenditures associated with DMV and the
one in Section 5 was substantial. He had been working
closely with the operating budget co-chair in the House
[Representative Paul Seaton] to find ways to eliminate
indirect expenditures. He recognized it was a sensitive
component of the bill and was probably the one section that
had attracted a fair amount of attention. He deferred to
the will of the committee. He believed having uniform
vehicle registration fees had a certain amount of logic,
but he recognized the fiscal constraints facing many
communities. He noted that the state was arguably in a
similar situation.
Senator Olson remarked that in the small town of Golovin
one vehicle acted as the ambulance for the health clinic
and was not owned by the municipality. He asked where it
fell within the registration fee structure.
Representative Kreiss-Tomkins answered that without knowing
the type of entity that owned the vehicle [he did not
know]. He stated if the vehicle was a charitable
organization, a 501(c)(3), would pay $10; however, any
other entity would pay the $100 registration fee that
private citizens would pay.
2:33:59 PM
Vice-Chair Bishop announced that Marla Thompson with DMV
was available for questions.
Senator Stevens pointed to Section 8 of the legislation
that would set the fee for DMV knowledge tests at $5 and
raise the fee for DMV road tests from $15 to $25. He noted
that the sponsor had mentioned people were not showing up
to appointments for the tests. He asked for further detail.
Representative Kreiss-Tomkins answered that the no-show
rate for the driver skills test was currently 20 percent.
The test currently had a $15 fee. He detailed that it was
the agency's perspective that with insufficient skin in the
game for people registering for the driver's tests led to a
high no-show rate and added to congestion in the DMV;
people there to take the test had to wait longer because
every fifth test was a no-show. The agency had recommended
increasing the fee to add incentive to show up for
appointments, which would increase the efficiency of DMV's
operations. He explained that the bill would implement a $5
fee for driver knowledge test; the component had been added
to the bill in consultation with the agency. He detailed
that because there was no fee, people went to DMV to use
the test to practice. There was not currently an
overwhelming passage rate; therefore, DMV believed
implementing a fee would incentivize studying prior to
taking the test. He deferred to DMV for further detail.
2:36:45 PM
Senator Stevens asked for verification that the knowledge
test did not require an appointment.
Representative Kreiss-Tomkins replied that was his
understanding. He deferred to the agency.
Vice-Chair Bishop noted that Section 4 of the bill would
remove the exemption for amateur radio operators. He stated
that those radio operators had been the state's link to the
outside world in the 1964 earthquake when everything else
had been shut down. He felt partiality towards the
operators.
Vice-Chair Bishop OPENED public testimony.
BRYANT HAMMOND, CITY CLERK, CITY OF NOME, NOME (via
teleconference), shared that the City of Nome opposed
Section 5 of the bill. The city believed it passed cost
from the state to the municipalities at a time when revenue
sharing and other sources of revenue for municipalities
were declining and being cut off. The section did not
result in a major cost increase for the City of Nome, but
it did represent a major cost increase to different
municipalities across the state. He believed it was a
chance to pass off costs to municipalities when the state
should be thinking of a broader fiscal plan to address the
current crisis. He asked for the removal of Section 5.
2:39:33 PM
Senator Stevens asked how many vehicles the City of Nome
had. Mr. Hammond replied that there were approximately 30.
2:39:56 PM
KATHY WASSERMAN, ALASKA MUNICIPAL LEAGUE, ANCHORAGE (via
teleconference), spoke against Section 5 of the bill and
felt that increasing costs ten-fold was "out of line." She
recalled DMV legislation introduced in the past where there
had been much discussion that DMV had a surplus. She stated
that the issue had bothered numerous Senate committee
members. She observed the money brought in by Section 5
would go to the General Fund. She believed it seemed like
nothing more than a money grab. She reminded the committee
that many of the vehicles that would pay $100 were
providing maintenance on state roads. She believed raising
the costs, when communities were already picking up some of
the state maintenance, was wrong. She did not believe the
increase appeared to be streamlining.
2:41:30 PM
LISA PARKER, SOLDOTNA CITY COUNCIL, CITY OF SOLDOTNA,
ANCHORAGE (via teleconference), spoke against the bill. She
stated that the bill would increase the city's annual fees
from $700 to $7,000. She noted that the state had been
increasing fees on the city and over the past two years it
had raised the seasonal oversize permit fees twice. She
explained the fees had previously been $300 for summer
permits and $300 for winter permits, which covered the
city's entire fleet of oversized equipment. She stressed
that two years back the state had raised the fee to $300
per oversized piece of equipment and again to $330 in 2017.
The city had gone from a cost of $600 for the entire fleet
to almost $5,300. She reported that the person who had
given her the information the previous day had been outside
clearing sand from the state's sidewalks as he looked at
the cost increase from the state. She reiterated the city's
opposition to the bill.
2:43:23 PM
KARL KASSEL, MAYOR, FAIRBANKS NORTH STAR BOROUGH, ANCHORAGE
(via teleconference), spoke against Section 5 of the bill
and a ten-fold increase for the borough. He understood the
increase could help with the state's fiscal issues, but he
underscored the importance of a broad fiscal plan. He
stressed that shifting costs to municipalities did not
constitute a fiscal plan. The borough was struggling in
several ways and was picking up slack due to reduced
funding in a variety of areas. The burden would be
significant for the borough - about 250 vehicles would be
impacted (the number did not include the school district,
which he estimated would be similar). The increase was a
smaller lift for smaller communities; however, smaller
communities had smaller financial resources. He requested
the elimination of cost shifting to municipalities and the
creation of a broader fiscal plan.
2:45:05 PM
STU GRAHAM, DEPUTY MAYOR, CITY OF WASILLA, ANCHORAGE (via
teleconference), spoke against Section 5. He stated that
the legislation was not trying to cut costs for DMV or
cover costs for DMV. He remarked that DMV operated at a
surplus and the bill would raise additional funds by
increasing fees for municipalities. He did not believe the
bill shifted costs but raised money from municipalities.
Raising money from municipalities meant that municipalities
had to raise money from their citizens. He believed it was
a poor precedent to set. He believed an amendment made to
the legislation that would eliminate an increase for fees
to charitable organizations. He thought originally the
increase would go from $10 to $50, but an amendment had
been made to bring the fee down. He assumed the amendment
had been made because of the good that charitable
organizations do for municipalities and the state. He
considered that municipalities also did substantial good
for citizens. He believed municipalities and boroughs
should be exempt from any raise, particularly a ten-fold
raise to generate revenue.
2:47:51 PM
Vice-Chair Bishop called on Mr. Navarre from the City of
Kenai. Ms. Wasserman replied that Mr. Navarre was no longer
available. She stated that Mr. Navarre opposed Section 5 of
the bill.
2:48:19 PM
PAT BRANSON, MAYOR, CITY OF KODIAK, ANCHORAGE (via
teleconference), spoke against Section 5 due to the city's
large number of vehicles it used to provide public service.
She had difficulty understanding the philosophy behind the
bill. Until the bill was flushed out, she recommended
tabling it for further study and review.
2:48:47 PM
LYN CARDEN, DEPUTY ADMINISTRATOR, CITY OF WASILLA, WASILLA
(via teleconference), spoke against Section 5 of the bill.
She shared that the city had 87 registered vehicles. The
fee would increase from $1,030 to $9,270, a 900 percent
increase. She stated that arbitrarily raising prices for
Alaska's municipalities on chosen services when the service
had not been operating at a loss, should not be used as a
solution to help balance the state's budget.
2:49:49 PM
BOB BARTHOLOMEW, FINANCE MANAGER, CITY AND BOROUGH OF
JUNEAU, spoke against Section 5 of the bill. He reported
the section would cause a significant cost increase for the
city's 450 registered pieces of equipment. He reasoned the
lower fee for local governments was due to the working
relationship that the state and local governments provide.
He believed the discount was to recognize financial
compensation for the partnership. For example, the city had
seven boat launch ramps and it charged local citizens and
other users $90 per year to use the ramps. He explained
that the city did not charge the Alaska State Troopers or
the Department of Fish and Game because they had a good
working relationship. He believed it was a benefit to all
the city's citizens. He stressed the provision headed
towards damaging a working relationship that had been in
place for many decades in Alaska. Additionally, he pointed
out that subdivisions of the state did not have to pay the
fee (e.g. the Alaska Gasline Development Corporation or the
Alaska Housing Finance Corporation). The city believed
local governments were a subdivision of government and
should be granted the same exemption.
2:51:49 PM
CAROLINE VENUTI, SELF and HOMER CITY COUNCIL, HOMER (via
teleconference), spoke against Section 5 of the
legislation. The city council viewed Section 5 as a way to
raise money from citizens. The city had an agreement with
state troopers and ambulance vehicles where it allowed use
of the boat harbor for free. She believed the provision in
the bill would probably put a burden on the relationship.
She reasoned the bill section seemed to put the state's
revenue problem on the backs of citizens. She considered
people working on the North Slope as taxpayers. She asked
the legislature to put forth the idea of a state income
tax, which would include North Slope workers. She stated it
was a way to raise some funds without looking to
municipalities. She explained the City of Homer was trying
to raise money for a police station - it would have to go
to voters for approval. She believed the city would not
receive a positive reaction if it also had to raise fees
because the state had raised its fees. She stressed that
the bill pertained to police stations, fire halls, and
ambulances. She thanked the committee for serving as the
voice of the state's communities.
2:53:56 PM
Vice-Chair Bishop CLOSED public testimony.
Vice-Chair Bishop announced that the DMV operating budget
was $16,700,000 in 2017 and revenue generated by the agency
was $56,800,000.
Senator Micciche discussed the fiscal note from the
Department of Administration, DMV. The cost was zero and
revenue was $762,200 annually. He noted the bill made
several statutory changes that would have a fiscal impact
to the division. He read changes the bill would have on
page 2 of the fiscal note:
• changes the age a person may receive a free state
identification card from 60 to 65 years of age or
older;
• requires amateur radio operators to pay full
registration fees for their vehicle;
• increases registration fees from $10 to $50 for
vehicles owned by a charitable organization;
• increases registration fees from $10 to $100 for
vehicles owned by a municipality;
• adds a $5 fee for the driver knowledge test and
increases the fee for the driver skill test to $25
In FY2017 DMV administered 81,000 driver knowledge tests
and 5,500 driver skill tests. DMV anticipates similar
numbers for future fiscal years:
Knowledge tests: 81,000 x $5 = $405,000
Driver skill test: 5,500 x $10 = $55,000
DMV data shows that 5,738 people in age range 56-59 have
a state identification (ID) card. DMV has no way to
determine if additional people within this age group with
decide to obtain an ID card; current ID card holders will
continue to pay fees for one additional renewal period
before they are eligible for free ID cards. This will
generate $86,070 in revenue, with an average yearly
earned revenue over the next four years of $21,518. This
group will reach 65 after the 1st renewal period and will
receive the next ID for free.
There are 6,188 vehicles registered to municipalities
that pay $10 to register their vehicles. The new $100 fee
will generate an additional $556,920. ($618,800 - $61,880
/current revenue = $556,920). Due to the 2-year
registration cycle the additional yearly revenue for
FY2019 and FY2020 will be $278,460.
DMV currently has 44 amateur radio operators in our
registration files. Under AS 28.10.421(d)(8) they will
now be required to pay full registration fees on their
vehicles. $100 x 44 = $4,400. Due to the 2-year
registration period this will result in yearly revenue in
the amount of $2,200.
2:57:27 PM
Vice-Chair Bishop announced that concerns and amendments
were due the following day.
CSHB 409(FIN)am was HEARD and HELD in committee for further
consideration.