03/12/2024 01:30 PM Senate FINANCE

SENATE BILL NO. 127                                                                                                           
                                                                                                                                
     "An Act relating to vehicle rental taxes; relating to                                                                      
     the issuance of subpoenas related to tax records; and                                                                      
     providing for an effective date."                                                                                          
                                                                                                                                
1:36:06 PM                                                                                                                    
                                                                                                                                
Co-Chair Stedman MOVED to ADOPT Conceptual Amendment 1.                                                                         
                                                                                                                                
Co-Chair Olson OBJECTED for discussion.                                                                                         
                                                                                                                                
1:36:44 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:37:06 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair  Stedman explained  the amendment.  He stated  that                                                                    
the vehicle rental tax would  be suspended from October 1 to                                                                    
March 31 each year.                                                                                                             
                                                                                                                                
Co-Chair  Olson  queried the  impact  the  amendment to  the                                                                    
state's revenue.                                                                                                                
                                                                                                                                
1:37:46 PM                                                                                                                    
                                                                                                                                
FADIL  LIMANI, DEPUTY  COMMISSIONER, DEPARTMENT  OF REVENUE,                                                                    
(DOR)  explained  that there  was  analysis  of the  revenue                                                                    
impact, and based  on the ten-year trajectory,  there was an                                                                    
estimate  of  a $15.1  million  total  revenue assuming  the                                                                    
existing law.                                                                                                                   
                                                                                                                                
Senator Bishop  wondered whether a refund  would work within                                                                    
the time frame.                                                                                                                 
                                                                                                                                
Mr. Liman deferred to Mr. Spanos.                                                                                               
                                                                                                                                
1:39:52 PM                                                                                                                    
                                                                                                                                
BRANDON SPANOS, ACTING TAX  DIRECTOR, DEPARTMENT OF REVENUE,                                                                    
replied that  there would  need to  be regulations  to allow                                                                    
for the vehicle  renter to assess the tax only  for the time                                                                    
that the tax was due.                                                                                                           
                                                                                                                                
Senator Bishop  surmised that there  was no fiscal  note yet                                                                    
for the amendment.                                                                                                              
                                                                                                                                
Mr. Spanos agreed.                                                                                                              
                                                                                                                                
Senator Bishop wondered whether it  would cost $6 million to                                                                    
upgrade the system to apply the amendment.                                                                                      
                                                                                                                                
Mr.  Spanos replied  in the  negative, and  stated that  the                                                                    
department  would  absorb  the  costs  associated  with  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
1:40:54 PM                                                                                                                    
                                                                                                                                
Senator  Kiehl asked  about the  impact on  residents versus                                                                    
nonresidents.                                                                                                                   
                                                                                                                                
Mr. Spanos replied that he did  not have that insight on the                                                                    
breakdown of that  issue, but believed that  the majority of                                                                    
the revenue would be from the tourism industry.                                                                                 
                                                                                                                                
1:41:45 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:42:43 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
1:42:50 PM                                                                                                                    
                                                                                                                                
SENATOR MATT CLAMAN, SPONSOR, replied  that replied that the                                                                    
summer season had about 30  percent instate rentals, and the                                                                    
winter season  saw about 45 percent instate rentals.                                                                            
                                                                                                                                
1:43:26 PM                                                                                                                    
                                                                                                                                
CARRIGAN GRIGSBY, DEPUTY  DIRECTOR, TAX DIVISION, DEPARTMENT                                                                    
OF  REVENUE (via  teleconference),  stated  that the  fiscal                                                                    
note for the bill was  previously indeterminate, and did not                                                                    
have  the  data   to  apply  revenue  for   the  rental  car                                                                    
platforms.                                                                                                                      
                                                                                                                                
Co-Chair Olson queried the exact result of the amendment.                                                                       
                                                                                                                                
Mr. Limani replied that there  was not enough information to                                                                    
incorporate the  committee substitute, but believed  that it                                                                    
would be a net revenue positive.                                                                                                
                                                                                                                                
Co-Chair  Stedman surmised  that it  was possible  of having                                                                    
more revenue than FY 23.                                                                                                        
                                                                                                                                
Mr. Limani replied  that he could not  reply with provision,                                                                    
but felt that the revenue would still be in the negative.                                                                       
                                                                                                                                
Mr. Spanos deferred to Mr. Limani.                                                                                              
                                                                                                                                
1:47:50 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:48:53 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
1:48:59 PM                                                                                                                    
                                                                                                                                
Senator Merrick felt that the  amendment was contrary to the                                                                    
spirit of  the bill,  and felt that  the vehicle  rental tax                                                                    
would not be replaced with other state funds.                                                                                   
                                                                                                                                
1:50:10 PM                                                                                                                    
                                                                                                                                
ROB  CARPENTER,   ANALYST,  LEGISLATIVE   FINANCE  DIVISION,                                                                    
(LFD), replied  that the receipts  would be related  to road                                                                    
maintenance.                                                                                                                    
                                                                                                                                
1:50:55 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:51:50 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Olson  asked about the  impact of the  amendment to                                                                    
the legislation.                                                                                                                
                                                                                                                                
Mr. Carpenter  responded that the amendment  would delay tax                                                                    
collection from October through March,  or 25 percent of the                                                                    
annual collections.                                                                                                             
                                                                                                                                
1:53:06 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:56:52 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
1:56:56 PM                                                                                                                    
                                                                                                                                
Senator Bishop  spoke to  safety of the  public. He  did not                                                                    
support the amendment.                                                                                                          
                                                                                                                                
Senator Bishop MOVED to REPORT  SB 127 out of committee with                                                                    
individual recommendations and attached fiscal note.                                                                            
                                                                                                                                
Senator Kiehl                                                                                                                   
                                                                                                                                
There being NO further OBJECTION it was so ordered.                                                                             
                                                                                                                                
2:04:05 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:06:39 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
SB  127  was  REPORTED  OUT   of  committee  with  four  "no                                                                    
recommendations", one "amend"  recommendation, one "do pass"                                                                    
recommendation", and with one  new indeterminate fiscal note                                                                    
from the Department of Revenue.