Legislature(2019 - 2020)ADAMS 519
03/22/2020 11:00 AM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB115 | |
| SB155 | |
| SB134 | |
| SB172 | |
| SB55 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 155 | TELECONFERENCED | |
| + | SB 55 | TELECONFERENCED | |
| + | SB 134 | TELECONFERENCED | |
| + | SB 172 | TELECONFERENCED | |
| += | SB 115 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR SENATE BILL NO. 115(FIN)(efd fld)
"An Act relating to vehicle registration fees; and
relating to the motor fuel tax."
11:35:09 AM
Co-Chair Johnston indicated the committee would be hearing
SB 115 first.
Co-Chair Johnston OPENED Public Testimony.
Co-Chair Johnston CLOSED Public Testimony.
DARWIN PETERSON, STAFF, CLICK BISHOP, provided a brief
review of the legislation. SB 115 proposed to increase the
highway motor fuel tax from $.08 cents to $.16 cents. The
original legislation proposed to increase the marine fuel
tax from $.05 cents to $.10 cents. The amendment that was
added to the bill in the House Transportation Committee
provided a refund for commercial fishermen. In order to
receive a refund of $.05 cents per gallon, fishermen would
be required to send in their fuel receipts at the end of
the year.
Mr. Peterson reported that the bill did not propose a
change for aviation or jet fuel. He spoke about the off-
road refund. In current statutes if a person purchased
highway gasoline for off-road vehicles such as snow
machines and 4-wheelers, they could send in their receipts
for a refund of $.06 per gallon. The legislation proposed
to increase the refund amount for off-road vehicle fuel
from $.06 cents to $.12 cents. He was directed by the
sponsor to request that the committee consider amending the
bills effective date. Currently, the legislation reflected
an effective date of July 1, 2020. Due to the current
COVID-19 disaster, he respectfully requested the committee
consider extending the effective date to January 1, 2021.
Co-Chair Johnston replied that the committee would be
taking up amendments. She reported there were 4 amendments
submitted for consideration.
11:38:32 AM
Vice-Chair Ortiz MOVED to ADOPT Amendment 1, 3l-LS0895\E. l
Nauman 3/17/20 (copy on file):
Page 2, following line 22:
Insert a new bill section to read:
* Sec. 3. AS 43.40.00S(a) is amended to read:
(a) Every dealer or user of refined fuels shall pay a
surcharge of $.015 [$.0095] a gallon on refined fuel
sold, transferred, or used in the state."
Renumber the following bill sections accordingly.
Co-Chair Johnston OBJECTED for discussion.
Representative Josephson explained the amendment added a
tax of 55/100 cents per gallon to the purchase of refined
fuel. The funds would be used for making the prevention
account whole in the out years from the Spill Prevention
and Response Division. He borrowed the concept from a bill
offered in 2015 by Senator Micciche. The Senator had
increased the tax by $.0095 cents to support the division
which received a significant amount of its revenue from the
funding. The revenue had declined because cars were more
efficient and because throughput had declined, which was
another source of revenue for the department. He called it
the "one latte" tax because it would cost about $5.00 per
year for the average driver. He was told by the sponsor and
the administration that they were not opposed to the
amendment.
Representative Carpenter asked how much revenue a tax of
$5.00 per year per person would generate each year.
Representative Josephson responded that it would generate
additional revenue of $3.8 million.
Representative Knopp asked if the funding would go to the
Department of Environmental Conservation (DEC) for spill
response. Representative Josephson responded affirmatively.
He noted that the concept had already been applied in the
2015 legislation he mentioned. If the amendment passed, the
state would spend less to regulate and prevent spills.
Otherwise, the money would have to come out of the states
treasury. Currently, the fund could not sustain the
division past 2024. The fund would simply be depleted. He
cited the example of class 2 tank farms. The administration
wanted to terminate 7 positions, reduce training for
responders and staff, and reduce its regulation of long-
term soil and water contamination among other things. The
effect was already being felt.
Representative Knopp asked why the fund was in decline.
Representative Josephson replied that it had to do with
people purchasing hybrid cars and because of throughput
declining from 550,000 to 480,000 barrels per day and
falling.
11:43:54 AM
Vice-Chair Ortiz added that, with the gradual erosion of
revenue, it had been projected that the spill response fund
would be at zero by 2024.
Representative Knopp did not understand the correlation
with throughput because it was not a refined product.
Representative Josephson understood that, starting in 1986
and adjusted after the oil spill in 1989, there was a $.05
cent surcharge on throughput. One cent per barrel went into
the spill response fund which was designed to be used for a
massive Exxon-Valdez type of problem. The remaining $.04
cents went into the spill prevention account. The amendment
would supplement the prevention side.
Representative Wool wanted to make sure he understood the
amendment and provided what he thought were the terms. He
wondered about the total amount of refined fuel.
Representative Josephson thought Mr. Peterson could
respond. Mr. Peterson asked Representative Wool to repeat
his question. Representative Wool restated his question.
Mr. Peterson indicated that the additional increase of $.08
cents per gallon plus $.05 cents for marine fuel would
bring in an estimated amount of $34 million. He though a
half-cent would bring in about $3 million to $4 million.
Heating fuel was exempt from the tax. He indicated that
there were additional exemptions as well.
Representative Wool thought the total revenue from the tax
would be about $2 million. Representative Josephson
responded that it was $3.8 million and the total gallons
taxed was roughly 695 million gallons in Alaska.
Co-Chair Johnston WITHDREW her OBJECTION.
Representative Carpenter OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Josephson, Knopp, LeBon, Ortiz, Wool, Johnston,
Foster
OPPOSED: Merrick, Sullivan-Leonard, Tilton, Carpenter
The MOTION to ADOPT Amendment 1 PASSED (7/4).
11:50:32 AM
Representative LeBon MOVED to ADOPT Amendment 2
31-LS0895\E.3 Nauman 3/20/20 (copy on file):
Page 1, line l, following "registration":
Insert "and registration"
Page 1, following line 2:
Insert new bill sections to read:
"* Section 1. AS 28.10.155(a) is amended to read:
(a) Except as provided in {c) of this section, the
[THE] owner of a motor vehicle [, OTHER THAN A
COMMERCIAL MOTOR VEHICLE,] that is required to be
registered under this chapter may elect to register
the motor vehicle permanently in lieu of registration
under AS 28.10.108 if the vehicle is at least eight
years old and the owner resides in the unorganized
borough or in a municipality that elects, by passage
of an appropriate ordinance, to allow the permanent
registration of motor vehicles. The permanent
registration expires when the owner transfers or
assigns the owner's title or interest in the vehicle.
A permanent registration may not be renewed. On
receiving the proper application and fees, the
department shall issue to the registered owner
registration plates, tabs, and a permanent
registration form.
* Sec. 2. AS 28.10.155 is amended by adding new
subsections to read:
(c) The following vehicles are not eligible for
permanent registration under (a) of this section:
(1) commercial motor vehicles;
(2) electric vehicles;
(3) plug-in hybrid vehicles;
(4) vehicles powered by an alternative fuel and
manufactured primarily for use on public roads.
(d) In this section,
(1) "alternative fuel" includes hydrogen and natural
gas;
(2) "electric vehicle" and "plug-in hybrid vehicle"
have the meanings given in AS 28.10.42l(k)."
Page 1, line 3:
Delete "Section 1"
Insert "Sec. 3"
Renumber the following bill sections accordingly.
Co-Chair Johnston OBJECTED for discussion.
Representative LeBon explained the amendment would exclude
electric vehicles, plug-in hybrid vehicles, and
alternatively fueled vehicles from being eligible for
permanent registration, known as a Z-tag. The issue was
brought to his attention by the American Automobile
Association (AAA) who noted the disparity between vehicles
powered by traditional motor fuel, such as gasoline and
diesel, versus electric and hybrid vehicles. He continued
that when contributing to the highway maintenance fund,
since electric and hybrid vehicles would be purchasing less
motor fuel at the pump the bill raised the bi-annual
registration costs for the vehicles to ensure they were
contributing to the highway maintenance as users of public
roads. However, current law allowed a person to buy an
electric vehicle that was more than 8 years old, purchase a
permanent registration which would be $200 for an electric
or hybrid vehicle, plus a $25 permit registration fee never
again having to contribute towards highway maintenance. He
argued that by excluding electric, hybrid, and alternative
vehicles from permanent registration fees, highway
maintenance costs could be recuperated. Prior testimony
revealed that the life span of a battery in an electric
vehicle was about 8 years. However, technology was
anticipated to improve.
Representative Josephson relayed that the bill already
treated hybrid and electric cars differently. He thought
the bill was potentially double-dipping by treating them
differently than other regular cars over 8 years old. He
asked if he was accurate.
Representative LeBon was looking to not exempt a hybrid or
electric vehicle just because it reached a certain age, if
it was still on the road. The goal was to continue to
collect a fee towards road maintenance even if a vehicle
reached a certain age. He argued that an electric or hybrid
vehicle should continue to contribute to road maintenance
as long as they were on the road.
Representative Wool provided clarity regarding the
amendment. He suggested that the basic average increase
would be $50 for a gasoline-powered car. The difference in
the registration fee for a hybrid or electric car would be
about $50. He thought the bill addressed the inequity and
leveled the playing field.
Co-Chair Johnston WITHDREW her OBJECTION.
Representative Carpenter OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Knopp, LeBon, Ortiz, Sullivan-Leonard, Tilton,
Wool, Carpenter, Josephson, Foster, Johnston
OPPOSED: Merrick
The MOTION to ADOPT Amendment 2 PASSED (10/1).
11:56:18 AM
Representative LeBon MOVED to ADOPT Amendment 3,
31-LS0895\E.4 Nauman 3/20/20 (copy on file):
Page 3, line 25:
Delete "1"
Page 3, line 27:
Delete "(A)[(1)]"
Insert "(1)"
Page 3, line 28:
Delete "(B)[(2)]"
Insert "(2)"
Page 3, line 30:
Delete "(C)[(3)]"
Insert "(3)"
Page 3, line 31:
Delete ";or"
Insert "."
Page 4, lines 1 - 3:
Delete all material.
Co-Chair Johnston OBJECTED for discussion.
Representative LeBon explained that Amendment 3 would
remove the language inserted by the House Transportation
Committee creating a $.05 cent per gallon refund for marine
fuel tax paid by licensed commercial fishing vessels. The
bill raised tax on marine fuel from $.05 cents to $.10
cents per gallon. The refund would essentially exclude an
entire industry from paying the increase in the tax which
went to state and municipal port and harbor maintenance and
upgrades which would directly benefit the fishing industry.
He understood that the commercial fishing industry had
experienced many economic challenges even before the
states current array of economic challenges. He continued
that the increase from other fees was certainly part of the
industry. However, he saw the amendment being about equity.
He could see the argument for reducing the amount of the
increase but not for excluding an entire industry from the
increase in which it would be a direct beneficiary. He
spoke with the sponsors office and the sponsor was okay
with the proposed change.
Representative Knopp asked for clarity on the amendment. He
noted on page 4 that there was an exemption for the
commercial fishing fleet. He asked about the items on
page 3, lines 25, 27, and 28 regarding off-road users.
11:59:01 AM
Representative LeBon responded that the intent of his
amendment was to address the favorable treatment that
commercial fishermen would receive from the $.05 cents per
gallon exemption under the amendment passed by the House
Transportation Committee. His understanding was that other
users of marine fuel such as charter fishing operators,
tourism operators, boating operators, barge operators, and
ferry operators would pay the $.05 cents per gallon
surcharge. Commercial fishermen would enjoy the ability to
apply for a refund by sending in their receipts. He posed
the question whether commercial fishermen were receiving a
benefit. Currently, the way the bill was structured,
commercial fishermen would receive a refund of the
additional $.05 cents per gallon. If the commercial
fishermen were not going to receive a benefit, he wondered
if other users such as charter boat operators, tourism
operators would receive a benefit. He thought the
commercial fishermen would benefit in some way and should
pay the tax.
Vice-Chair Ortiz spoke against the amendment. The
commercial fishing industry, under the current scenario
with COVID-19, was facing a huge loss in profits. When
considering a $.05 cents exemption. However, getting out to
the fishing grounds was costly in fuel. He did not agree
with the amendment.
12:02:11 PM
Representative Knopp opposed the amendment. He reported
that everything on page 3 reflected existing language
applicable to off-road equipment including loaders,
graders, and excavators used for road maintenance or at
mining sites. He read from a portion of the bill staring on
page 3, line 23. He concluded that the purpose of the motor
fuel tax was to fund highway maintenance. The vehicles he
was referring to were not used on highways. He also
referred to the new language on page 4. There were many
additional costs on the commercial fleet. He thought
anything that could alleviate the pain would be desirable.
Mr. Peterson replied that in his view the amendment was
deleting the sub numbers that were inserted because of the
new language on page 4, lines 1-3 creating the refund for
commercial fishermen. If the amendment sponsored by
Representative LeBon were to pass, the refund for $.12
cents per gallon for off-road use would still apply. The
refund would apply for anyone who purchased fuel for
vehicles used off-road. The amendment would delete the new
language inserted by the House Transportation Committee on
page 4, lines 1-3. If the amendment were to pass the
commercial fishing industry would no longer have the option
to apply for a refund for the additional $.05 cents.
However, the $.12 cent per gallon off-road rebate would
remain in the bill.
12:06:12 PM
AT EASE
12:07:31 PM
RECONVENED
Representative Knopp had not interpreted the amendment
correctly. Although he had received clarification, he
argued that some sectors of the commercial fishing industry
needed some relief. He continued to oppose the amendment.
Representative Wool asked how many other states provided a
different tax rate for marine versus highway fuel. Mr.
Peterson responded that most all other states charged the
same excise tax for marine fuel as they did for highway
fuel. Alaska was unique in having two different tax rates.
Representative Wool asked if different rates had applied in
Alaska for a significant period. Mr. Peterson responded
that the last time the marine fuel tax was changed was in
1994. The highway fuel tax was changed last in 1970. In
1945, when Alaska was still a territory and the tax was
created, he believed it was $.01 cent for both fuel
categories. He was unsure when the legislature separated
highway fuel tax from marine fuel tax charging different
rates. He suspected it was when the commercial fishing
industry came into existence. He would have to research
when the two taxes were separated.
Representative Wool understood the effects of the COVID-19
virus on several different industries. The sponsor of the
amendment mentioned other industries that would not be
exempt. He asked if a state aid package was in the works
for the fishing industry. Co-Chair Johnston thought several
relief avenues would be accessible in the near future.
12:11:17 PM
Mr. Peterson reported speaking with Jim Anderson, the
operations manager for investments at the Department of
Community and Economic Development (DCCED). Current statute
provides the department the ability to defer loan payments
and withhold penalties for the commercial fishing fleet
through loans provided by DCCED. He also understood that
the Alaska Commercial Fishing and Agriculture Bank (CFAB)
had the statutory authority to do so as well. Interest
would continue to accrue, but for the duration of the
current disaster, the commercial fishing fleet could defer
payments, particularly if the commercial fishing fleet was
not able to operate in the coming summer due to the
canneries not opening. He noted that permits would not be
seized as well.
Representative Wool asked about processors. He asked if the
reduction would apply. Mr. Peterson asked if Representative
Wool was talking about the amendment from the House
Transportation Committee. Representative Wool responded
affirmatively. Mr. Peterson responded in the negative. [Mr.
Peterson was interrupted with an additional question from
Representative Wool].
Representative Wool asked if the exemption would apply to
ancillary vessels such as a tender or a floating processor.
Mr. Peterson replied that the only people that could apply
for the refund were licensed commercial fishermen who had a
Commercial Fisheries Entry Commission (CFEC) license. He
did not believe it would apply to processors.
Representative Wool asked if most CFEC licenses were issued
to Alaska Residents. He wondered about the percentage of
licenses issued to residents versus non-residents. Mr.
Peterson confirmed there were non-residents who fished
commercially in Alaska but did not know the percentage.
Co-Chair Johnston WITHDREW her OBJECTION.
Vice-Chair Ortiz OBJECTED.
Representative LeBon provided closing remarks on
Amendment 3. He thought it was necessary to know how the
$.05 cent per gallon would benefit all payers or whether
anyone was excluded. He suggested it was easy to connect
the dots on the highway fuel tax improving highway
maintenance such as timely snow removal and roads remaining
open 24/7. He mentioned a Fairbanks family-owned trucking
business that was not opposed to the additional tax. The
company wanted the roads to be managed. He wondered if all
parties were being treated fairly.
Vice-Chair Ortiz remarked that the captain of the fishing
vessel had to fill out and submit the proper paperwork in
order to receive a refund. He was unsure how many fishermen
would actually submit the proper documentation. The amount
of money the state would lose was not calculable. However,
he felt granting the exemption was a statement about how
much the industry contributed to Alaskas economy.
12:16:58 PM
AT EASE
12:24:10 PM
RECONVENED
Representative Tilton had not seen the amendments prior to
the meeting. She appreciated the time to consult with other
members.
A roll call vote was taken on the motion.
IN FAVOR: LeBon, Wool, Johnston
OPPOSED: Merrick, Ortiz, Sullivan-Leonard, Tilton,
Carpenter, Josephson, Knopp, Foster
The MOTION to ADOPT Amendment 3 FAILED (3/8).
12:25:54 PM
Co-Chair Johnston MOVED to ADOPT Amendment 4, 31-LS0895\E.5
Nauman 3/20/20 (copy on file):
Page 1, line 5, following "$100,":
Insert "the owner of a vehicle powered by alternative
fuel shall pay a special biennial registration fee of
$100,"
Page 1, following line 8:
Insert a new paragraph to read:
"(1) "alternative fuel" includes hydrogen and natural
gas;"
Renumber the following paragraphs accordingly.
Representative Sullivan-Leonard OBJECTED for discussion.
Co-Chair Johnston reviewed the amendment. She noted there
were other alternative fueled vehicles being introduced
into the market. She indicated natural gas had been around
for a significant amount of time and felt it should be
included in the alternative fuel special biannual fee of
$100.
Representative Sullivan-Leonard asked if Representative
Johnston had a figure of how much the amendment would
generate in revenue. Co-Chair Johnston responded in the
negative. She explained that hydrogen-fueled vehicles were
just reaching the market presently. They would be limited
to markets in San Francisco and Vancouver. However, they
would be coming. She continued that natural gas-fueled
vehicles had come and gone. She wanted to ensure that both
types of alternative fueled vehicles were included.
Representative Wool replied that since the legislature did
not know what the tax structure was, he would be hard-
pressed to increase it for a new type of technology not
presently in existence. He asked if there was currently a
natural gas tax refund related to gas at a residence.
Co-Chair Johnston replied that in Anchorage there was
natural gas and there had been vehicles fueled by natural
gas including part of the municipalitys fleet. One of the
challenges with natural gas was the length of time it took
to fill up a car. The municipality converted to natural gas
then converted back. She did not think there was a natural
gas tax beyond what was currently in place to heat
residences and barbeques. She added that she did not
believe there was a natural gas motor fuel tax.
Representative Knopp supported the amendment. He thought
the sponsor had estimated about 600 alternative fueled
vehicles on the road. He thought the fee was very
appropriate and would help to pay for some of the states
road maintenance.
Representative Sullivan-Leonard MAINTAINED her OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Josephson, Knopp, LeBon, Ortiz, Foster, Johnston
OPPOSED: Merrick, Sullivan-Leonard, Tilton, Wool,
Carpenter
The MOTION to ADOPT Amendment 4 PASSED (6/5).
12:31:22 PM
Co-Chair Johnston MOVED to ADOPT a Conceptual Amendment to
include an effective date of January 1, 2021 and to direct
Legislative Legal Services to make any necessary technical
and conforming changes.
Vice-Chair Ortiz OBJECTED for discussion.
Co-Chair Johnston explained that with current economic
uncertainties, she did not think the bill should take
effect in the current year. She also thought carve-outs
should be avoided, as it was unclear which industries would
be affected most.
12:32:17 PM
AT EASE
12:32:41 PM
RECONVENED
Co-Chair Johnston WITHDREW her motion.
Co-Chair Johnston restated her motion. She MOVED to ADOPT a
conceptual amendment that would include an effective date
of January 1, 2021 and to direct Legislative Legal Services
to make any technical or conforming changes.
Representative Tilton OBJECTED.
Representative Tilton wanted clarification that without the
amendment to change the effective date to January 1, 2021,
the bill would take effect 90 days after the governor
signed the bill if he chose to do so. She asked if she was
accurate. Co-Chair Johnston replied, "Thants correct."
Representative Tilton WITHDREW her OBJECTION.
Vice-Chair Ortiz OBJECTED for further discussion.
Vice-Chair Ortiz asked that if the amendment were to be
adopted, he wondered how much revenue would be lost. He
invited members to keep in mind the states infrastructure
and deferred maintenance costs.
Mr. Peterson responded that the effective date on the
Senate side was July 1, 2020 but failed on the Senate
floor. Currently, the bill would go into effect 90 days
after the governor signed the bill or allowed it to become
law without signature. It was difficult to know when the
bill would go into effect, as it was up to the Senate
President, once the bill passed in the Senate, when it
would be transmitted to the governor. If the bill was
transferred to the governor while the legislature was in
session, he would have 15 days, excluding Sundays to decide
what to do with the bill. Should the governor sign it or
allow it to become law without signature, it would be 90
days after that. The effective date of the bill without an
effective date would be sometime in the summer rather than
July 1, 2020. He anticipated that about $16 million would
be lost with a delayed effective date of January 1, 2021.
Vice-Chair Ortiz asked if Mr. Peterson thought the bill
sponsor would be open to the amendment. Co-Chair Johnston
interjected that she had spoken with the bill sponsor
earlier in the day and he was open to the amendment. Mr.
Peterson responded, "That's correct."
Representative Knopp asked that if the bill went into
effect July 1, 2020 there would be more revenue lost
because of activity in the summer. He believed Mr. Peterson
was assuming that revenues would be equal throughout the
year. He suspected that the summer months would generate
more revenue than in the winter months. He asked if it was
reasonable to think the state would be losing more than $16
million in revenue by deferring the effective date.
Mr. Peterson responded that it was certainly possible. He
assumed more revenue would be generated in the summer
months with the increase in tourism and rental car
business. He was providing a rough estimate of $16 million
to $17 million by taking half of what the bill would
generate in a year.
12:37:32 PM
Representative Wool thought any guess about fuel purchases
in the following months would be just a guess. He wondered
about the railroad. He commented that the Alaska Railroad
bought a significant amount of diesel. Mr. Peterson guessed
that the railroad would be exempt as a government entity
similar to the ferry system.
Representative Carpenter was uncertain of revenue loss.
However, it was also additional cash being taken from the
economy. Cash was the most important thing to get people
through the current situation.
Vice-Chair Ortiz WITHDREW his OBJECTION.
There being NO further OBJECTION, it was so ordered. The
conceptual amendment was ADOPTED.
12:40:07 PM
AT EASE
12:41:35 PM
RECONVENED