Legislature(2013 - 2014)SENATE FINANCE 532
03/03/2014 05:00 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SJR21 | |
| SB127 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SJR 21 | TELECONFERENCED | |
| + | SB 127 | TELECONFERENCED | |
| + | SB 169 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 127
"An Act authorizing the commissioner of administration
to enter into agreements with agents to perform for
compensation certain transactions related to vehicles;
relating to the duties of those agents; and providing
for an effective date."
6:06:46 PM
SENATOR CATHY GIESSEL, introduced the bill. She stated that
the bill was simple. She explained that the bill was
modeled after a business partnership in Alaska. She
mentioned the business arrangement involved in selling
hunting and fishing licenses in retail stores through the
Department of Fish and Game, which she compared to the
proposal in SB 127. The businesses retained 15 percent of
the fee paid for the license. The business partners sold a
vast majority of licenses saving the state in personnel
costs. She stated that SB 127 applied the same business
model to the Division of Motor Vehicles.
Senator Hoffman believed that the Department of Fish and
Game agents received a 5 percent fee.
Senator Giessel appreciated the correction.
Senator Hoffman asked why the Department of Fish and Game
and the Division of Motor Vehicles (DMV) would receive
different percentages of the fees.
Senator Giessel replied that she would have her staff
provide the legislation's details.
6:10:31 PM
FORREST WOLFE, STAFF, SENATOR GIESSEL, stressed that visits
to the DMV were often unpalatable as they required a
sacrifice of time from a person's work day. In the interest
of reducing public cost in lost time and wages, the bill
was introduced. Advanced Business Partnerships (ABP) were
created and contracted to perform certain transactions
statutorily mandated to DMV, outsourcing certain services
to the private sector. The business offered citizens more
locations to receive DMV services and expanded business
hours so that citizens would not be required to sacrifice
their work day for a visit to the DMV. He stated that
businesses offering the services received no compensation
from the state, while incurring costs associated with the
transactions, including credit card fees and purchasing of
equipment and supplies.
Mr. Wolfe explained that SB 127 allowed businesses to
retain 15 percent of the fees to cover administrative costs
for the transactions conducted. The concept was used by the
Department of Fish and Game to allow private businesses to
sell and issue hunting and fishing licenses while retaining
a percentage of the proceeds. In 2013, the private sector
sold approximately five times the number of hunting and
fishing licenses as the Department of Fish and Game. The
bill would result in a reduction in the size of state
government. The 15 percent retained by the business
partners was actually reinvested in the economy and the
private sector that brought in 26 percent of DMV's current
revenue.
Mr. Wolfe informed the committee that allowing businesses
to retain the percentage to offset costs provided an
incentive for businesses to offer additional services. In
the interest of reducing the size of government and
increasing efficiency, strategies like SB 127 would provide
an effective way to reduce government through an innovative
use of the private sector. The Department of Fish and Game
found the process of working with the private sector
effective for the sales of licenses and tags. He responded
to Senator Hoffman's question by stating that 15 percent
was more appropriate than 5 due to the higher cost of
equipment and supplies required for provision of the DMV
services.
6:14:18 PM
Co-Chair Meyer stated that the he had used the satellite
offices discussed in the testimony and found them to
increase convenience. He noted that the cost would increase
by 25 percent for the department without the option of the
satellite offices.
Mr. Wolfe replied that the transactions in the private
sector represented the work of approximately 32 DMV
employees. He stated that more incentive allowed by a
greater retention of fees could increase the amount of
business conducted in the private sector.
6:15:53 PM
Vice-Chair Fairclough asked if the bill allowed a fee in
addition to what the state would pay for the individual
organization.
Senator Giessel replied no, the bill had no mandate or
comment related to a fee. She stated that the public would
be more inclined to choose the service if a fee was not
incurred. A fee for administrative costs was currently
charged. She was unsure about the charge of the additional
fee; the question would be answered by the private sector.
She imagined that fees would decrease if the private sector
was able to retain 15 percent to cover overhead.
6:17:00 PM
Vice-Chair Fairclough wished to ensure that the consumers
benefited from the credit offered by the state. She
supported the bill and its concept. She asked about the
fees collected from municipalities for administrative
overhead.
Mr. Wolfe replied 8 percent was collected as a municipal
tax.
Senator Giessel clarified that DMV collected municipal
taxes and retained 8 percent. A similar situation was
proposed in the legislation via the business partners and
DMV.
Vice-Chair Fairclough wondered about the 15 percent cost
recovery plus the fee to consumers. She mentioned the
fiscal note and the cost of approximately $2 million. She
wished to understand the investment in the private sector.
She pointed out that the businesses received additional
benefit from providing the service in the convenience
offered to their customers.
Senator Giessel discussed that private business partners
utilized the license tag, collected the municipal tax and
presented the money to DMV. The division then retained 8
percent of the municipal tax forwarded on. She stated that
DMV did not sell the tag, yet retained the 8 percent as a
middle-man.
6:20:07 PM
AMY ERICKSON, DIRECTOR, DIVISION OF MOTOR VEHICLES,
DEPARTMENT OF ADMINISTRATION (via teleconference),
discussed the business partnerships related to license and
title registration transactions since the early 2000s. The
partnerships were comprised of DMV services storefronts,
car and snow machine dealerships, credit unions and banks;
all of which were eligible to collect up to 15 percent of
DMV proceeds if the legislation was enacted. She stated
that DMV provided the supplies needed to conduct title and
registration transactions including license plates, month
and year tabs, forms, commercial, noncommercial, motorcycle
driver manuals and handicap placards, all free of charge.
Ms. Erickson mentioned that the DMV also provided free
training and free access to its database. The business
partners charged fees for services that were not regulated
or disclosed to the division. She stated that the business
partners comprised approximately 26 percent of DMV's
revenues; the businesses did not function autonomously.
Each DMV had three separate components for completion prior
to close-out. The initial transaction included the
collection of fees; the second included an audit to verify
receipt of all required information. The third transaction
included the reconciliation process, which verified that
all monies were received and placed into fee codes.
Ms. Erickson explained that DMV had a seven-person staff
dedicated to supporting the everyday operations of the
business partners. The staff spent hours reviewing,
approving and correcting documents. When errors were found,
the division used its resources to resolve them. The
business partners were paid regardless of the accuracy of
their transactions.
Ms. Ericson pointed to the fiscal note. She stated that the
division presented a less expensive note in the Senate
State Affairs Committee. Initially it was believed that the
bill applied to the eleven business partners serving as
storefronts for the services, but the legislation indeed
extended to the auto dealerships and financial institutions
leading to the revenue loss shown in the fiscal note. She
mentioned the idea of modeling the fish and game fees who
was prohibited from adding a service fee. The fees obtained
by the Department of Fish and Game were from the state
alone, which was 5 percent for the fee or 25 cents for the
license, whichever were greater. The department also
received compensation of $50 per year or $1 per license,
whichever was greater.
6:22:55 PM
Co-Chair Meyer asked if the division supported the bill.
Ms. Erickson replied that the administration had no
position on the bill. She expressed her availability to
answer questions.
Co-Chair Meyer asked if the satellite offices were an asset
or a hindrance.
Ms. Erickson replied the satellite offices were mostly an
asset. She highlighted the convenience provided to Alaskans
related to location and volume. She noted that lines at the
DMV offices would be longer without the satellite
operations.
Co-Chair Meyer clarified that the satellite offices saved
the division money, time and staff while providing a
convenience to Alaskans.
Ms. Erickson agreed.
Co-Chair Meyer appreciated that one DMV office remained
open until six o'clock in Anchorage.
Ms. Erickson stated that two additional DMV offices in the
Anchorage area were also open until six o'clock.
6:24:38 PM
Vice-Chair Fairclough understood that no incentive existed
for accuracy on the part of the businesses.
Ms. Erickson replied that more frequent errors were made by
the businesses partners than by the DMV employees.
Vice-Chair Fairclough asked if the partners were
cooperative with the division.
Ms. Erickson replied that the division had the obligation
to fix the errors. She mentioned one problematic error made
by a satellite business that landed in the Alaska Supreme
Court.
6:25:42 PM
Senator Bishop requested a written copy of her testimony.
He asked if any of the satellite providers were located in
rural Alaska.
Ms. Erickson replied that Kenai and North Pole were the
most rural locations.
Senator Bishop pointed out that the Tok DMV office remained
open until 9:00 pm in the summer.
6:26:30 PM
Co-Chair Meyer asked if Ms. Erickson would provide written
testimony to Senator Bishop.
Ms. Erickson agreed.
6:26:50 PM
TIM TOTH, VICE PRESIDENT, ALASKA AUTO DEALERS ASSOCIATION,
ANCHORAGE (via teleconference) testified about the auto
industry's part in the proposed legislation. He discussed
the expense of the bill. He noted that the larger
dealerships required additional employees for full-time
efforts related to DMV services. He was unaware of a
franchised dealer charging extra fees to the customer. The
dealer absorbed all labor costs associated with the
service. He noted that DMV provided one week of free
training for the dealerships. He noted the difficulty
filling the positions in his office. Some dealers were
unable to handle the volume in their offices and were
forced to hire storefront DMV units for an additional
charge. Some dealerships processed 3000 to 6000 DMV
transactions per year at an annual cost of approximately
$75,000.
6:30:29 PM
Vice-Chair Fairclough asked if Mr. Toth had access to DMV
records.
Mr. Toth replied that he logged into the DMV website to
access their records. He stated that the employee training
was offered at a DMV office.
6:31:06 PM
TROY JARVIS, ALASKA AUTO DEALERS ASSOCIATION, ANCHORAGE
(via teleconference) testified that the service at DMV
offices was poor 12 years ago when the division proposed
the idea of partnerships with the dealers. He stated that
his business agreed to partner with the division to
increase customer service for both the dealer customers and
the retail customers. He stated that the process worked
well for 10 years at no expense to the state. Dealer
expenses had risen while margins decreased over the last
five years. He suggested that the state had responsibility
to help the businesses offset expenses. He provided an
example of a business's payroll expenses related to DMV
services.
6:34:09 PM
MELISSA CUCULLU, ALASKA TAGS AND TITLES, WASILLA (via
teleconference), testified that 11 privately owned business
partners in Alaska during the 2012-2013 fiscal year
processed an excess of 193,000 transactions on behalf of
the DMV. She stated that the private sector provided the
staffing, facilities, required technology and office
supplies to process the transactions that generated
millions of dollars in revenue for the state. She stated
that the legislation would allow Alaskan-owned businesses
to hire additional employees and provide extended hours for
the creation of greater options for Alaskan residents. She
stressed that SB 127 addressed the issue of fairness for
Alaskan residents, the private sector and state government.
6:35:33 PM
AVES THOMPSON, ALASKA TRUCKING ASSOCIATION, ANCHORAGE (via
teleconference), testified in support of the legislation.
He stated that his association was a statewide organization
representing the interests of approximately 200 member
companies from Barrow to Ketchikan. The association
operated as a DMV business partner issuing titles and
registrations along with additional DMV services. He noted
that his association provided the services to their members
and to members of the general public. The association
members benefitted from the partnership in time and savings
and convenience. The general public shared similar
benefits. He noted that the association charged a service
fee for each transaction. He pointed out that the business
partners were contractually obligated to post their service
fees for customer awareness. He stated that the fees were
also disclosed to DMV and had been requested recently by
the division.
Mr. Thompson discussed the expenses incurred when
conducting DMV business including bank and credit card
fees. Compensation for services became an issue for the
association as business increased. He noted that the costs
increased and the association processed more than 11,000
transactions in 2013 generating revenue of $1.6 million for
the state. He noted that local taxes were passed through to
DMV; the association therefore generated revenue for both
the state and municipalities. He calculated that the
association generated approximately $1.1 million in in fee
revenue for DMV. He stated that Alaskans would benefit from
the proposed legislation. He believed that the amount
proposed in the fiscal note would not cover the cost of DMV
operations in the absence of the business partnerships.
6:39:23 PM
Co-Chair Meyer asked about the higher rate of errors in the
satellite offices.
Mr. Thompson replied that a few errors were committed by
the association, but he felt that the error rate was within
acceptable limits. He mentioned a couple of incidents of
more serious errors, but the contractual obligation to
cooperate with DMV regarding the errors allowed the
association to take responsibility.
Co-Chair Meyer CLOSED public testimony.
6:41:03 PM
Senator Bishop referred to the sponsor statement. He noted
personal use of a satellite office for DMV services, but he
wondered if a driver's license could be obtained through
the business partnership.
Mr. Wolfe replied no.
Senator Bishop asked if the statement referred to license
plates.
Mr. Wolfe answered in the affirmative.
6:42:06 PM
Co-Chair Meyer understood that the satellite offices were
an asset to the division. He asked if the error rate was
within acceptable limits.
Ms. Erickson responded that the division worked directly
with those businesses operating outside of the acceptable
error limit. She stated that the case of the Alaska
Trucking Association led to a voluntary discontinuation of
some of the services offered by the business for DMV. Those
transactions were often prone to errors. She credited the
association for making the wise decision. She noted that
the quicker transactions involved vehicle renewals and
straight title transactions. Complex transactions were best
left to the experts at DMV offices.
Co-Chair Meyer asked about the fiscal note.
Ms. Erickson had no further comments related to the fiscal
note.
Co-Chair Meyer asked if the new amount was the $1.979
million.
Ms. Erickson spoke to the motor vehicle registration tax
collected by the division. She stated that the division
allowed for the collection of the municipal tax. When the
registration renewal notices were sent to Alaskans, they
came in to renew registration and the collection was
provided to the municipality. She did not agree with the
proposal that the business partners would retain 8 percent
because they would not distribute the tax, the division
would.
6:44:39 PM
Senator Giessel agreed that the 8 percent was collected and
passed to the municipality; the business partners would not
retain the money. She appreciated the gravity of the fiscal
note. She stated that 32 employees would be necessary to
replace the private business partnership efforts in the
division, which was calculated at approximately $1.976
million annually. She mentioned that she interacted with a
constituent in Cooper Landing related to a misspelled name.
Co-Chair Meyer agreed that the bill could be classified as
cost-neutral.
Vice-Chair Fairclough MOVED to REPORT SB 127 out of
committee with individual recommendations and the
accompanying fiscal note.
SB 127 was REPORTED out of committee with a "do pass"
recommendation and with one new fiscal note from Department
of Administration.
SB 169 was SCHEDULED but not HEARD.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Historical Roster of AJC members.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 - Judicial Merit Selection Charts.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 - Judicial Selection Map.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 - Kathleen Miller's Letter to Legislature re AJC 2-20-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 AJC. BYLAWS.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 ARTICLE.IV.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 Sponsor Statement.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SB 127 Explanation of Changes.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 127 |
| SB 127 Sponsor Statement.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 127 |
| CSSB 169HSS Sectional Analysis.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB 169 changes vsn O to Y.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB 169 Historic vaccine photo.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB 169 Support all.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169 FAQ.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169 Sponsor Statement FIN.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169 Vaccines In AK short vsn (2).pptx |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SJR 21 - Summary of Changes.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 TESTIMONY OF DAVID JENSEN.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SB 169 Historic vaccine photo.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169CS(HSS)-DHSS-EPI-02-27-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169CS(HSS)-DHSS-HCMS-02-27-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169CS(HSS)-DHSS-VAA-02-27-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SJR 21 Kreitzer support .docx |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR21 AK Judicial Council Members-voting info.- duties.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SB127-DOA-DMV-02-18-2014.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 127 |
| SJR21 AFN Resolution.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR21 AK Judicial Council Voting Stats..pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SB 169 Support Cmmsn Aging.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169 AK_BIO PhRMA Testimony SB 169 Mar2014 v2.docx |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SJR021CS(JUD)-AJC-2-28-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 opposition - Bundy.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |