Legislature(2015 - 2016)SENATE FINANCE 532
04/06/2015 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB26 | |
| Public Testimony: Anchorage | |
| Public Testimony: Kenai, Seward, Homer | |
| Public Testimony: Mat-su, Glennallen, Delta Junction | |
| SB86 | |
| Public Testimony: Mat-su | |
| Public Testimony: Barrow, Ketchikan, Wrangell, Petersburg | |
| Public Testimony: Sitka, Cordova, Valdez | |
| Public Testimony: Juneau | |
| Public Testimony: Fairbanks, Tok | |
| Public Testimony: Bethel, Nome, Kotzebue, Unalaska | |
| Public Testimony: Kodiak, Dillingham | |
| Public Testimony: Statewide Teleconference - Offnet Sites | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 26 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 86 | ||
| + | TELECONFERENCED | ||
SENATE BILL NO. 86
"An Act relating to a refined fuel surcharge; relating
to the motor fuel tax; relating to a qualified dealer
license; and providing for an effective date."
11:32:54 AM
Co-Chair MacKinnon relayed that public testimony had
previously been heard on the legislation.
Vice-Chair Micciche relayed that the legislation would
supplement the Spill Prevention and Response (SPAR) fund
[under the Department of Environmental Conservation]. There
was currently an inadequate amount of funding coming from
the production of oil and gas. The legislation was a "user
pays or spiller pays" bill that would take $.0095 per
gallon at the distribution level and provided adequate
funding for the response fund. He detailed that the state
had primacy for spill prevention and response and the bill
would enable the state to continue with the level of
service it had been delivering for many years.
11:34:13 AM
Co-Chair MacKinnon asked for verification that the cost was
under one penny. Vice-Chair Micciche replied in the
affirmative.
Senator Dunleavy asked for verification that the cost would
be one penny per gallon. Vice-Chair Micciche clarified that
it would be less than one penny per gallon.
Senator Dunleavy asked what the average cost would be for
individuals using fuel oil to heat their homes.
Vice-Chair Micciche answered that the cost would equal
approximately $4.00 per year for the average Alaskan;
however, the larger users such as mines and businesses
would pick up the majority of the load. For example, if 500
gallons of oil was used per year, the cost would be under
$5.00.
Senator Dunleavy surmised that the surcharge would apply to
everyone, including nonprofits such as schools. Vice-Chair
Micciche replied that there were some exemptions in the
bill, but the surcharge would apply to everyone other than
the state.
11:35:47 AM
AT EASE
11:36:02 AM
RECONVENED
Vice-Chair Micciche relayed that the hope was that the cost
would not be passed down, but it was not possible to
guarantee that the surcharge would go to the distributors.
However, there were five exemptions in the legislation
including fuel sold to a federal or state government agency
for official use, fuel refined and used outside of the
United States, liquefied petroleum gas (propane and
aviation fuel), and fuel sold or transferred between
qualified dealers.
Senator Dunleavy wondered if school districts fell under
the state agency category. Vice-Chair Micciche did not know
[Note: answer was provided after the following "at ease"].
11:36:51 AM
AT EASE
11:40:03 AM
RECONVENED
Vice-Chair Micciche, in response to a question from Senator
Dunleavy, stated that the surcharge went to the dealer
level; however, fuel sold to a federal or state government
did not include local governments as an exemption.
Co-Chair MacKinnon asked for detail on the bill's fiscal
notes.
Vice-Chair Micciche spoke to the bill's fiscal notes,
beginning with a zero fiscal note from the Department of
Environmental Conservation (FY 16 through FY 21). He
relayed that there would be no fiscal impact to the
Division of Spill Prevention and Response for
implementation of the legislation.
Senator Bishop communicated that the legislation would
alleviate the projected revenue shortfall for FY 16 at
approximately $7 million.
Vice-Chair Micciche addressed a zero fiscal note from the
Department of Revenue (DOR)(FY 16 through FY 21). There
would be a change in revenue, at an expected $.0095; the
change would bring in $7,600,000 million in FY 16 with a 2
percent increase across FY 17 through FY 21 ($7,750,000,
$7,900,000, $8,050,000, $8,200,000, and $8,350,000
respectively). The estimated supplemental in FY 15 was
$50,000; there was no estimated capital in FY 16. He
relayed that the $50,000 would cover the costs of updating
systems, form, and draft regulations for the new surcharge.
11:43:24 AM
Co-Chair MacKinnon asked if DOR had anything to add to the
fiscal analysis of the bill.
KEN ALPER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE,
confirmed that there were no continuing costs; any changes
would be absorbed within the department's operations and
excise tax group under the Tax Division. There was a
relatively small startup cost to adapt some of the
documents and systems to the new surcharge.
Co-Chair MacKinnon wondered if the projected revenue would
be recurring into the future. She asked for verification
that the bill did not include a sunset clause. Mr. Alper
replied in the affirmative. He explained the expectation
that as long as fuel was consumed in Alaska it would be
subject to the surcharge.
Co-Chair MacKinnon asked if the fund was currently solvent.
Mr. Alper replied that the SPAR fund was anticipated to
have shortfalls in the current fiscal year. He added that
under the legislation the money would be deposited into the
general fund and subject to appropriation it would be
transferred into the SPAR fund. He remarked that a fiscal
note from the Legislative Finance Division described some
of the mechanisms; the issue was outside the scope of the
Tax Division.
11:45:40 AM
Vice-Chair Micciche relayed that the fund was $800,000
short in the current fiscal year and the shortfall became
substantial in following years. He did not believe the
state should pay for the solvency of the fund.
Vice-Chair Micciche stated that the last fiscal note was
from the Legislative Finance Division for the Senate
Finance Committee. The note addressed the need for a
supplemental appropriation and appropriated the revenue
generated in FY 16 to the ONH fund, resulting in a net zero
impact on the fiscal gap. He commented that currently the
note included a .8 percent surcharge, which had been
changed to .95 percent to factor in exemptions provided for
aviation fuels. He noted that currently the DOR numbers
were more accurate. He detailed that FY 16 through FY 21
showed $7.5 million, which would be the amount for the fund
to remain solvent. The change in revenues showed $7.5
million per year with a 2 percent increase through FY 21.
Co-Chair MacKinnon asked what would happen if the fund was
over funded. She understood there were outstanding
settlements the fund was waiting to receive. Vice-Chair
Micciche responded that all of the money would be deposited
into the prevention account, which funded all of the
smaller spills. He referenced dry cleaning fluid spills and
old gas stations that were no longer in operation and had
no one to pay for the cleanup. The surcharge had been kept
at a lower level to avoid funding more than required.
11:49:08 AM
AT EASE
11:49:43 AM
RECONVENED
Vice-Chair Micciche relayed that all funds were subject to
appropriation. He stated that in the event the SPAR fund
was over funded the goal was to provide only the amount
needed to adequately fund the agency.
Vice-Chair Micciche MOVED to REPORT CSSB 86(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSSB 86(FIN) was REPORTED out of committee with a "do pass"
recommendation and with one previously published zero
fiscal note: FN 1(REV); one new fiscal impact note from the
Senate Finance Committee for the Department of
Environmental Conservation; and one new fiscal impact note
from the Department of Environmental Conservation.
11:50:44 AM
AT EASE
11:51:51 AM
RECONVENED