Legislature(2003 - 2004)
05/15/2003 08:39 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 106(FIN)
An Act relating to tires; and providing for an
effective date.
LANDA BAILY, SPECIAL ASSISTANT TO THE COMMISSIONER,
DEPARTMENT OF REVENUE, explained the bill. According to a
1996 report by the Department of Transportation & Public
Facilities, the use of studded tires in Alaska causes
approximately $5 million dollars damage to the roads per
year. Most of the damage occurs in the high traffic urban
centers where rutting is often severe and causes unsafe
driving conditions.
The Department of Transportation & Public Facilities repairs
the worst of the damage. Due to limited maintenance
funding, much of it is added to the State's deferred
maintenance backlog. The bill would impose a fee of $10
dollars for each studded tire sold, resulting in $2 million
dollars in increased revenue.
Ms. Baily continued, new tire technology has been developed
in the last ten years to create stud-less winter tires.
Those tires use softer rubber compounds and specific tread
patterns to improve their performance in snow and ice
conditions. The technology has continued to improve and is
widely available as an alternative to studded winter tire.
Representative Berkowitz questioned why a flat rate had been
established rather than a percentage cost. Ms. Bailey
replied that it was easier to access a flat rate for the
retailer than a percentage tire cost.
Co-Chair Harris inquired if the sales tax becomes law, would
the sales tax be charged on the cost of the tire or would
the fee be added to that number. Ms. Bailey did not know
how that would work but offered to find out the answer. She
recommended that the Department be consulted.
Representative Kerttula asked what percentage of the money
raised would actually be used for maintaining the highways.
JOHN MACKINNON, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION & PUBLIC FACILITIES, responded that the
Department currently spends $60 millions dollars a year to
maintain the highways and that studded tires alone cause an
estimated $5 million dollars damage per year.
Representative Stoltze MOVED to ADOPT Amendment #1, 23-
GS1127\WA.1, Crawford/Kurtz, 5/14/03. Co-Chair Williams
OBJECTED.
Representative Stoltze explained that the amendment would
guarantee that the tax was not being taxed.
Ms. Bailey noted that there is no formal opposition to the
amendment. She cautioned that it could cause some confusion
for businesses. Representative Stoltze pointed out that
Subsection © indicates that the fees would be itemized
separately on the sales receipt. He proposed that
Subsection © be removed. Mr. MacKinnon interjected that
sometimes when there are fees, the other fees and sales tax
is not cumulative.
Representative Hawker did not believe that as written, the
current sales tax proposal would be cumulative. He added
that he supported the amendment as a clarification for
anyone reading the bill.
Representative Berkowitz voiced his support of the
amendment, advising that it is not a good public policy when
government "boot straps" a tax on the top of a fee. Co-
Chair Williams agreed. Co-Chair Harris added his support
for the amendment.
A roll call vote was taken on the motion.
IN FAVOR: Whitaker, Chenault, Berkowitz, Foster,
Hawker, Kerttula, Stoltze, Harris, Williams
OPPOSED: none
Vice Chair Meyer and Representative Moses were not present
for the vote.
The MOTION PASSED (9-0).
Representative Kerttula MOVED to ADOPT Amendment #2. Co-
Chair Harris OBJECTED.
Representative Kerttula explained that Amendment #2 would
add a new section to repeal of the prohibition for dedicated
funds and then dedicate these funds for road and highway
maintenance.
Co-Chair Harris spoke to his objection, claiming that it
would eliminate the fee. Representative Kerttula apologized
that she had misstated the information and that it would not
take effect until passage of the dedicated fund.
Ms. Bailey stressed that the proposed legislation was one
element put forward by the Governor to address the current
fiscal problems of the State. If the amendment is adopted,
those elements could "fall out" of the overall plan.
Representative Stoltze pointed out that the amendment fails
to change the title and the effective date.
A roll call vote was taken on the motion.
IN FAVOR: Moses
OPPOSED: Chenault, Berkowitz, Foster, Hawker,
Kerttula, Stoltze, Whitaker, Harris, Williams
Vice Chair Meyer was not present for the vote.
The MOTION FAILED (1-9).
Representative Foster MOVED to report HCS CS SB 106 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note. Representative Berkowitz
OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Foster, Hawker, Meyer, Stoltze, Whitaker,
Chenault, Williams, Harris
OPPOSED: Berkowitz, Kerttula, Moses
The MOTION PASSED (8-3).
HCS CS SB 106 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal note #2 by the
Department of Revenue.
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