04/10/2025 01:30 PM Senate TRANSPORTATION

          SB 138-TAXATION: VEHICLE RENTALS, SUBPOENAS                                                                       
                                                                                                                                
1:42:52 PM                                                                                                                    
CHAIR  BJORKMAN announced  the consideration  of SENATE  BILL NO.                                                               
138 "An  Act relating  to vehicle rental  taxes; relating  to the                                                               
issuance of subpoenas  related to tax records;  and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
1:43:01 PM                                                                                                                    
CHAIR BJORKMAN solicited a motion.                                                                                              
                                                                                                                                
1:43:03 PM                                                                                                                    
SENATOR TOBIN  moved to adopt  the committee substitute  (CS) for                                                               
SB 138, work order 34-LS0749\N, as the working document.                                                                        
                                                                                                                                
1:43:17 PM                                                                                                                    
CHAIR BJORKMAN objected for purposes of discussion.                                                                             
                                                                                                                                
1:43:40 PM                                                                                                                    
CARLY   DENNIS,  Staff,   Senator  Matt   Claman,  Alaska   State                                                               
Legislature,  Juneau,   Alaska,  presented  the   explanation  of                                                               
changes from version A to N of SB 138:                                                                                          
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
                        Senate Bill 138                                                                                       
                     Explanation of Changes                                                                                   
                     Version A to Version N                                                                                   
                                                                                                                                
     Section 2, AS 43.52.20                                                                                                   
     Page 1, Lines 12-14 and Page 2, Line 1                                                                                     
        • Amends the vehicle rental tax from 10 percent to                                                                      
          9 percent for all  vehicle rentals. Eliminates the                                                                    
          proposed  tiered tax  structure of  8 percent  for                                                                    
          vehicle  rental  platforms   and  10  percent  for                                                                    
          traditional rentals.                                                                                                  
                                                                                                                                
1:44:22 PM                                                                                                                    
CHAIR  BJORKMAN  removed  his  objection.  He  found  no  further                                                               
objection and  CSSB 138, work  order 34-LS0749\N, was  adopted as                                                               
the working document.                                                                                                           
                                                                                                                                
1:44:39 PM                                                                                                                    
CHAIR BJORKMAN thanked the sponsor and invited final comments.                                                                  
                                                                                                                                
1:44:44 PM                                                                                                                    
SENATOR CLAMAN thanked the committee for hearing SB 138.                                                                        
                                                                                                                                
1:45:09 PM                                                                                                                    
CHAIR BJORKMAN announced invited testimony on SB 138.                                                                           
                                                                                                                                
1:45:23 PM                                                                                                                    
NICOLE STEWART,  representing self, Fairbanks,  Alaska, expressed                                                               
disappointment that  this issue was back  before the legislature.                                                               
She  noted that  SB 138  is nearly  identical to  the legislation                                                               
that received legislative  approval in 2024 and  was supported by                                                               
stakeholders  (including  Turo).  She questioned  the  governor's                                                               
reason for vetoing that legislation.  She stated that there is no                                                               
discernable difference  between the  rental car  service provided                                                               
by  Turo  and  that  of  large  national  rental  companies.  She                                                               
asserted that  taxes should  be the same  for all  operators. She                                                               
expressed   appreciation  that   SB  138   does  not   allow  for                                                               
retroactive tax  collection, which protects small  operators. She                                                               
shared her  understanding that,  without passage  of SB  138, the                                                               
state could require  operators to pay back  taxes. She encouraged                                                               
support of this  legislation, as it would even  the playing field                                                               
for all rental car operators and protect small business owners.                                                                 
                                                                                                                                
1:47:28 PM                                                                                                                    
HALEY  JOHNSTON, Executive  Director,  Alaska Trails,  Anchorage,                                                               
Alaska,  briefly described  the work  done by  Alaska Trails  and                                                               
noted that  much of that work  is done in state  parks. She noted                                                               
that  Alaska's state  parks  receive  many out-of-state  visitors                                                               
each year. She surmised that  many of those visitors drive rental                                                               
cars. Traditional  rentals pay a  rental car tax,  while platform                                                               
rentals  (e.g.  Turo) do  not.  She  explained that  the  vehicle                                                               
rental  tax is  split  between Department  of Transportation  and                                                               
Public Facilities  (DOTPF) and State  Parks. This tax makes  up a                                                               
large  portion of  the State  Parks budget.  She emphasized  that                                                               
out-of-state visitors  who utilize  public lands  - and  who rent                                                               
their vehicles on  platforms like Turo - are not  paying a rental                                                               
car  tax (and  therefore  are  not paying  into  the State  Parks                                                               
budget). She  expressed support for  the single tax rate  for all                                                               
rental companies.  She opined that disallowing  the collection of                                                               
back  taxes protects  small business  owners and  is good  common                                                               
sense. She  reiterated support for  SB 138, which she  said would                                                               
allow  Alaska  Trails  to continue  elevating  the  condition  of                                                               
trails and access to state lands.                                                                                               
                                                                                                                                
1:49:20 PM                                                                                                                    
SENATOR SHOWER joined the meeting.                                                                                              
                                                                                                                                
1:50:07 PM                                                                                                                    
CHAIR BJORKMAN concluded invited testimony.                                                                                     
                                                                                                                                
1:50:15 PM                                                                                                                    
CHAIR BJORKMAN opened public testimony on CSSB 138.                                                                             
                                                                                                                                
1:50:47 PM                                                                                                                    
TYNDALL  ELLIS, representing  self, Anchorage,  Alaska, testified                                                               
in support of  SB 138. He said it is  important to collect rental                                                               
car taxes, as this benefits  Alaska's state parks. He stated that                                                               
within the  state parks budget,  funds from rental car  taxes are                                                               
allocated to deferred maintenance  and operations. He stated that                                                               
the deferred  maintenance budget is  over $90 million,  and every                                                               
little bit helps to keep this under control.                                                                                    
                                                                                                                                
1:52:12 PM                                                                                                                    
CHAIR BJORKMAN closed public testimony on SB 138.                                                                               
                                                                                                                                
1:52:24 PM                                                                                                                    
SENATOR SHOWER  asked for confirmation of  his understanding that                                                               
the revenue  from SB 138  is not  designated for State  Parks and                                                               
would go into the unrestricted general fund (UGF).                                                                              
                                                                                                                                
1:53:27 PM                                                                                                                    
SENATOR CLAMAN clarified that, according  to AS 43.52.080(b), the                                                               
funds collected would be deposited  into a special vehicle rental                                                               
tax account  within the  general fund. This  is not  a designated                                                               
fund; however, it is identified in the general fund.                                                                            
                                                                                                                                
1:53:58 PM                                                                                                                    
SENATOR SHOWER stated that, although  the funds are placed into a                                                               
vehicle  tax account,  there  is no  guarantee  that those  funds                                                               
would be used for State Parks. He  said he wanted to be sure this                                                               
was clear.                                                                                                                      
                                                                                                                                
1:54:04 PM                                                                                                                    
SENATOR STEDMAN  shared his  understanding of  the constitutional                                                               
barriers to creating dedicated funds.                                                                                           
                                                                                                                                
1:54:38 PM                                                                                                                    
SENATOR CLAMAN thanked the committee.                                                                                           
                                                                                                                                
1:54:49 PM                                                                                                                    
CHAIR BJORKMAN solicited the will of the committee.                                                                             
                                                                                                                                
1:54:53 PM                                                                                                                    
SENATOR TOBIN moved  to report CSSB 138,  work order 34-LS0749\N,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
1:55:06 PM                                                                                                                    
CHAIR BJORKMAN found no objection  and CSSB 138(TRA) was reported                                                               
from the Senate Transportation Standing Committee.