Legislature(1995 - 1996)
03/13/1996 01:45 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HOUSE JOINT RESOLUTION 49
Proposing amendments to the Constitution of the State
of Alaska creating a highway fund.
REPRESENTATIVE JEANNETTE JAMES noted that HJR 49 would
propose amendments to the Alaska State Constitution creating
a dedicated transportation fund. The amendments would be
placed before the voters of Alaska at the next general
election.
The bill would not address an amount of motor fuel tax
increase, but merely would provide a mechanism for
allocating the proceeds from collection of fuel taxes.
She added that the resolution has received wide support
relative to the current level of fuel taxes. She thought
that Alaska's citizens would be more willing to accept a
necessary increase in their motor fuel taxes if they knew
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the money would be utilized to address the need for improved
maintenance of the roads and highways.
SAM S. KITO III, LEGISLATIVE LIAISON/SPECIAL ASSISTANT,
OFFICE OF THE COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND
PUBLIC FACILITIES (DOTPF), testified in support of HJR 49.
He pointed out that the resolution contains the marine fuel
tax component. The Department would utilize that revenue to
transfer facilities to local governments.
Mr. Kito pointed out the Department's recommendations to
permit highway expenditures to include construction. He
suggested changing the vote from 3/5 to 3/4 consenting
votes.
BOB BARTHOLOMEW, DEPUTY DIRECTOR, INCOME & EXCISE AUDIT
DIVISION, DEPARTMENT OF REVENUE, advised that the fiscal
note provided by the Department of Revenue would change the
effective date to July 1, 1998. At that point, proceeds for
motor fuel tax would be deposited into a dedicated fund. He
added, the fiscal note only indicates the impact of gasohol
in the Anchorage area. In FY95, gasohol was required use by
the Environmental Protection Agency (EPA) in Anchorage for
duration of a two month period. During that two months, the
State lost $2.4 million dollars in revenue, resulting from
the motor fuel tax exemption. The stipulation in Anchorage
was increased from two to four months required use, as well
as two to four million gallons being sold each month during
the transition. The estimates include FY96 lost revenue in
the amount of $6 million dollars.
Representative Mulder asked if there was any Alaskan grain
used in production of gasohol. If not, he recommended
revising that statute. Representative James agreed,
indicating that there is a bill in another committee which
addresses that tax. There could be some gasohol made in
Alaska, although most of it comes from outside.
Mr. Bartholomew pointed out that DOR's dedicated fund
revenue dollars, includes a tax applied to off highway fuel.
On off highway fuel, an eight cents per gallon tax is
charged, and then a six cent per gallon refund is made. The
resulting net tax amounts to two cents per gallon. The
Department collects $3.2 million dollars per year from that
tax. That revenue is not reflected in the fiscal note.
MR. DILLION, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
testified in support of HJR 49. He requested that intent
language be added in order to tightly control the dedicated
fund, stressing that the fund be used strictly for
maintenance purposes. He recommended that a tool be
implemented to focus behavior in spending fuel tax revenue.
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He stressed that he would be against using the fund for
construction. It must be a maintenance fund, and be used
for highways only. Mr. Dillion noted that his company would
not support the marine portion of the legislation.
In response to Representative Therriault's question, Mr.
Bartholomew noted that a separate account would be
maintained for the marine fuel. Mr. Kito added, DOTPF has
established that there is not enough revenue even with the
proposed tax increases to expand beyond maintenance of the
highway system.
Co-Chair Hanley advised that there is not enough revenue
available without a tax increase to cover the needs. The
public wants to see current roads being maintained rather
than new roads being built with those funds. Co-Chair
Hanley voiced his concern adding "construction" to the use
of the fund.
Representative James noted that Commissioner Perkins had
indicated in a previous committee discussion, that federal
funds to Alaska would be reduced, which would create a
reduction to the federal tax requirement. That action would
provide a need for the State to tax, thus placing more
revenue into that account.
Mr. Kito noted that a general accounting office report had
been released in January, 1996, which indicates how the U.S.
Congress plans on putting together the next funding
authorization for the Federal Highway Trust Fund. In four
of the seven scenarios, Alaska went from receiving $230
million dollars to being allocated approximately $40 million
dollars.
Mr. Dillion questioned how the ferry system would be
integrated as part of the highway system. He understood
that ferries do not pay a fuel tax. Mr. Kito responded that
some activities on the ferry system would be permissible as
an expenditure. The primary focus would be pavement, repair
and maintenance from the dedicated fund. Representative
James agreed that within the legislation, the marine highway
would be an allowable use of fund monies for maintenance
only.
(Tape Change, HFC 96-75, Side 1).
Representative Brown asked how much the State currently
spends on highway maintenance. Mr. Kito replied the best
estimate of the direct and indirect FY95 costs is $75
million dollars. The indirect expenses would include some
administrative costs which helps to keep equipment working.
The Department does not have a clearly defined break-out of
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those costs. Representative Brown asked the current costs
of construction and improvement of harbor facilities. Mr.
Kito replied that FY97 budget requests a $1 million dollar
appropriation for the harbor fund. He added, those costs
have averaged approximately 37% of the amount collected in
fuel tax. The balance would be placed into the general
fund.
Representative Brown pointed out that passage of the
legislation would provide that revenue available to the
general fund be decreased and the amount spent on harbor
construction be increased by $7.6 million dollars. Co-Chair
Hanley suggested that costs could be added to the amount
currently spent. He voiced concern with that portion of the
bill, pointing out that it could increase by six times the
expenditures for ports and harbors. Co-Chair Hanley
recommended separating the issues.
Representative Brown asked how much the State spends on
maintaining local government roads. Mr. Kito replied that
revenue for local government road maintenance passes through
the Department of Community and Regional Affairs (DCRA) in a
revenue sharing request, for a road program component in the
amount of $4.4 million dollars. Representative Brown asked
if local governments would be entitled to some of the
maintenance money. Mr. Kito commented that provision had
been included in order to prevent incentive to take over
roads. Without increasing the tax rate, there would not be
enough revenue for the State to initiate the transfer or
sharing program. Mr. Kito noted that the "airport system"
would not be considered a "highway" within the language of
the legislation.
Mr. Kito spoke to upgrading facilities which belong to a
municipality. The Department currently is negotiating with
the municipalities to determine the level of community
acceptance. He added, the Department is currently
investigating a "tax sharing" mechanism, whereby, a
community that does accept ownership of a facility would
also receive a portion of the tax revenue collected.
Discussion followed among Committee members regarding
inclusion of the marine highway to the resolution.
Representative Brown inquired if the State currently
collects shared taxes on behalf of local governments. Mr.
Bartholomew replied that the State does not collect any
shared highway or marine fuel taxes. A minimum amount has
been collected for aviation air revenue.
Representative Brown argued that if the Constitution is to
be amended, the new language should be clear. She
recommended deletion of Section (b). Co-Chair Hanley
replied that there should exist some statutory mechanism to
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address when the State collects taxes for the
municipalities. He questioned who would pay the
administrative costs.
Co-Chair Hanley interjected that he was not in support of
including the marine fuel tax, suggesting that it be a
separate issue. Discussion followed among Committee members
regarding the marine fuel tax. Representative Brown voiced
opposition to creating a dedicated fund source.
Representative Navarre commented that the State spends far
more than collected on highway maintenance. He suggested
that the amount assessed should be increased, otherwise,
there would be no reason to pass a constitutional amendment.
Representative Navarre suggested the harbor facilities
provision be removed. He added, if a dedicated fund is to
be established, a 3/5ths vote would not provide enough
protection for a dedicated fund, and recommended that a
3/4th or 4/5th majority vote be required. Co-Chair Hanley
agreed. Representative Grussendorf elaborated his support
to include harbor maintenance.
HJR 49 was HELD in Committee for further consideration.
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