02/20/2014 09:00 AM Senate STATE AFFAIRS

               SB 127-VEHICLE TRANSACTION AGENTS                                                                            
                                                                                                                                
9:50:20 AM                                                                                                                    
CHAIR  DYSON called  the committee  back to  order. He  announced                                                               
that SB 127 will be the next  order of business. He noted that SB
 was previously heard.                                                                                                       
                                                                                                                                
9:50:24 AM                                                                                                                    
FORREST WOLFE, Staff, Senator  Giessel, Alaska State Legislature,                                                               
Juneau, Alaska,  said at  the previous hearing  it may  have come                                                               
across  that  the Division  of  Motor  Vehicles (DMV)  was  being                                                               
unfairly  criticized.  He  set  forth  that  the  intent  was  to                                                               
demonstrate  the volume  of  work  that is  done  by the  private                                                               
sector  though its  partnership with  DMV. He  said DMV  has made                                                               
great strides in the past  two years to increase their efficiency                                                               
through  former   Director  Duane  Bannock's   advanced  business                                                               
partnership program  and current Director Amy  Erickson. He noted                                                               
DMV's use of webcams for viewing  waiting lines as well as a more                                                               
efficient ticket system.                                                                                                        
                                                                                                                                
He called  attention to a  criticism that businesses  are already                                                               
receiving income  from the  state and  why should  the businesses                                                               
receive even more  income from the state in  addition to charging                                                               
fees above  and beyond  what the state  is charging.  He asserted                                                               
that  the issue  is  not  how much  businesses  are charging  for                                                               
transactions and added that fees  charged by businesses should be                                                               
dictated by the  free market. He said the issue  is that there is                                                               
a large volume  of work being done by the  private sector for the                                                               
state  for which  they  are receiving  no  compensation from  the                                                               
state at  this time. He set  forth that SB 127  is about fairness                                                               
and noted similar  programs in other departments  where the state                                                               
directly  compensates  businesses.  He   said  SB  127  addresses                                                               
fairness due to  the work volume done by  businesses that partner                                                               
with DMV.                                                                                                                       
                                                                                                                                
CHAIR DYSON  stated that what Mr.  Wolfe said did not  make sense                                                               
to him. He asked if Mr.  Wolfe meant the business surcharge being                                                               
placed on the delivery of service.                                                                                              
                                                                                                                                
MR.  WOLFE   replied  that  businesses  are   not  receiving  any                                                               
compensation from the state.                                                                                                    
                                                                                                                                
CHAIR  DYSON   asked  to  verify  that   businesses  receive  the                                                               
surcharge that they place on delivery of service.                                                                               
                                                                                                                                
MR. WOLFE answered correct.                                                                                                     
                                                                                                                                
9:53:22 AM                                                                                                                    
AMY ERICKSON, Director, Division  of Motor Vehicles (DMV), Alaska                                                               
Department of  Administration, Anchorage, Alaska, set  forth that                                                               
DMV  supports making  official its  practices of  partnering with                                                               
private businesses  to conduct  title and  registration services.                                                               
She continued to read the following statement:                                                                                  
                                                                                                                                
     DMV  provides the  business partners  with  all of  the                                                                    
     supplies  needed  to  conduct  title  and  registration                                                                    
     services  including:  license  plates, month  and  year                                                                    
     tabs, forms,  driver manuals, and  handicapped placards                                                                    
     all  free  of  charge.   The  DMV  also  provides  free                                                                    
     training  to process  transactions and  free access  to                                                                    
     all  of the  agents to  access the  DMV data  base. The                                                                    
     business partners  charge a fee  to customers  that are                                                                    
     not regulated  or even disclosed  to DMV and  some even                                                                    
     benefit  from  the supplies  that  are  free at  a  DMV                                                                    
     office,   including  handicap   placards  and   driving                                                                    
     manuals.   While   the   business  partners   make   up                                                                    
     approximately  26   percent  of  DMV   revenues,  these                                                                    
     businesses  do  not  function autonomously.  DMV  staff                                                                    
     touches  each  and  every transaction  conducted  by  a                                                                    
     business  partner  and we  have  a  staff of  seven  to                                                                    
     oversee  and support  their  everyday operations.  Even                                                                    
     with DMV  support, they too  make errors that  DMV must                                                                    
     resolve  and  they  are  still  paid  by  the  customer                                                                    
     regardless  of the  mistake or  the  accuracy of  their                                                                    
     transactions. We serve  as a de facto  helpdesk for the                                                                    
     business partners  and spend hours  reviewing documents                                                                    
     and  correcting documents.  Some of  the errors  can be                                                                    
     serious  and time  consuming to  correct.  Some of  the                                                                    
     business partners have even registered  a golf cart and                                                                    
       a dune buggy for highway use which has resulted in                                                                       
     litigation for the DMV.                                                                                                    
                                                                                                                                
MS.  ERICKSON said  her previous  statement is  not meant  to say                                                               
that DMV  does not  also make mistakes.  She summarized  that DMV                                                               
supports  the  business  partners  in many  ways.  She  said  the                                                               
business partnerships  are comprised of storefronts  that provide                                                               
the   services,   car    dealerships,   financial   institutions,                                                               
commissioned agents  that serve the smaller  communities, driving                                                               
school  bus  contractors,  tour companies  that  administer  road                                                               
tests,  and  medical  facilities   that  issue  disabled  parking                                                               
permits. She said DMV's original  fiscal note only addressed for-                                                               
profit determined store fronts, but  noted a letter from the auto                                                               
dealers  that the  bill may  also  apply to  car dealerships  and                                                               
financial institutions  that conducts the same  transactions. She                                                               
stated  that the  clarification  would affect  the bill's  fiscal                                                               
note and  DMV will be  submitting a new  fiscal note at  the next                                                               
committee meeting if the bill's implication is clarified.                                                                       
                                                                                                                                
9:56:23 AM                                                                                                                    
CHAIR DYSON asked Ms. Erickson to repeat her last sentence.                                                                     
                                                                                                                                
MS.  ERICKSON responded  that  DMV  would need  to  submit a  new                                                               
fiscal note  if SB  127 really does  include the  car dealerships                                                               
that  do  their  own  title   and  registration  transactions  in                                                               
addition to  financial institutions.  She explained that  DMV did                                                               
not include  car dealerships and financial  institutions in their                                                               
original fiscal note.  She said the business  partners would also                                                               
benefit  from the  added 15  percent  from proceeds  if they  are                                                               
included in SB 127. She noted that auto dealers support SB 127.                                                                 
                                                                                                                                
CHAIR DYSON asked  at what point DMV realizes  labor savings when                                                               
business partners perform part of the division's work.                                                                          
                                                                                                                                
MS. ERICKSON answered that she did  not know and would attempt to                                                               
find out.                                                                                                                       
                                                                                                                                
CHAIR  DYSON  suggested  basing  the cost  savings  on  how  many                                                               
transactions a DMV employee does in  a day and compare the amount                                                               
of transactions  done by the  business partners to  calculate the                                                               
amount of hours and benefits saved by DMV.                                                                                      
                                                                                                                                
MS. ERICKSON replied that she would  get back to Chair Dyson with                                                               
the information.                                                                                                                
                                                                                                                                
CHAIR DYSON  noted that a fiscal  note ought to reflect  both the                                                               
revenue DMV  does not  leave and perhaps  at some  point expenses                                                               
that DMV  does not  have to  incur. He asked  if DMV  supports SB
.                                                                                                                            
                                                                                                                                
MS. ERICKSON  answered that DMV  absolutely supports the  idea of                                                               
putting into  statute the business  contracts. She said  the fees                                                               
the state  pays is really a  policy call that she  cannot comment                                                               
on.                                                                                                                             
                                                                                                                                
9:59:12 AM                                                                                                                    
SENATOR  GIESSEL  noted that  the  Department  of Fish  and  Game                                                               
contracts   with  businesses.   She   addressed  DMV's   business                                                               
partnership as a larger reach  with auto dealerships. She pointed                                                               
out that  auto dealerships are considering  dropping extended DMV                                                               
services  due to  their  added personnel  costs.  She noted  that                                                               
personnel  costs are  a  private  business's highest  operational                                                               
liability. She pointed out AS  28.10.431(e) allows DMV to collect                                                               
local  government taxes  for license  plate renewal.  She pointed                                                               
out that the statute allows DMV  to retain 8 percent of the local                                                               
tax fees  as administrative  costs for  tax collection.  She said                                                               
while  DMV  may  be  saying   it  is  inappropriate  for  private                                                               
businesses to  be retaining some  of the motor vehicle  fees, DMV                                                               
is   retaining  money   for  collecting   tax   fees  for   local                                                               
governments.                                                                                                                    
                                                                                                                                
CHAIR DYSON noted that the  bill's sponsor has expressed approval                                                               
for  the   committee's  recommendation   for  a   Senate  Finance                                                               
Committee referral.  He remarked  that the Finance  Committee may                                                               
want  the  very kind  of  information  that the  committee  asked                                                               
about.                                                                                                                          
                                                                                                                                
10:01:53 AM                                                                                                                   
DUANE  BANNOCK, representing  himself,  Kenai, Alaska,  announced                                                               
being available to answer questions.                                                                                            
                                                                                                                                
CHAIR DYSON asked  if anyone would like to speak  to the bill. He                                                               
stated  that  seeing  and  hearing  none,  [public  testimony  is                                                               
closed.]                                                                                                                        
                                                                                                                                
10:02:12 AM                                                                                                                   
CHAIR DYSON moved SB 127  [labeled 28-LS1263\A] from Senate State                                                               
Affairs  with  individual  recommendations with  attached  fiscal                                                               
note/s. Seeing no objection, [SB 127] moved out of committee.