Legislature(1995 - 1996)
04/11/1996 08:20 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 226
"An Act relating to biennial registration of motor
vehicles; imposing biennial registration fees on motor
vehicles and authorizing a scheduled biennial municipal
tax on motor vehicles; relating to fees for motor
vehicle emissions control programs; and providing for
an effective date."
TOM WILLIAMS, STAFF, SENATOR FRANK reviewed amendments
previously adopted by the Committee (see House Finance
Committee minutes 3/29/96). Amendment 1 was adopted as a
technical amendment to eliminate superfluous effective date
sections. Amendment 3 was also adopted. Amendment 3
provided that implementation of biannual registrations and
biannual emissions testing would begin January 1997. Co-
Chair Hanley noted that this date would allow the Department
time to implement the program.
Representative Kelly MOVED to adopt Amendment 7, 9-
LS1452\M.1, 4/9/96 (copy on file).
REPRESENTATIVE JERRY MACKIE testified on behalf of Amendment
7. He explained that the amendment would provide that
registration at a contract office would not be subject to
the $10 dollar fee. He pointed out that rural areas of the
State do not have Division of Motor Vehicle offices. He
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stressed that it is unfair for rural residents to pay the
extra $10 dollar fee to relieve crowding in urban areas.
Representative Martin asserted that those living in smaller
areas get away cheaper with personal contact. He spoke
against the amendment.
Representative Mackie spoke in support of Amendment 7. He
asked why people using contract offices should pay to
alleviate congestion when there is no congestion at these
offices.
In response to a question by Representative Therriault,
Representative Mackie stated that he supports the fee when
transactions occur at Division of Motor Vehicle (DMV)
offices. He emphasized that the State is trying to present
incentives for contract agents to take over some of the
responsibilities that the State cannot support. He noted
that the contract agents operate through local police
departments.
JUANITA HENSLEY, CHIEF DRIVER SERVICES, DIVISION OF MOTOR
VEHICLES, DEPARTMENT OF PUBLIC SAFETY stated that the
Department does not support the amendment. She noted that
the amendment would set up two different types of programs.
She observed that rural communities where DMV offices exist
would have to pay the fee even if there is no congestion.
Other rural communities would not pay the fee if DMV
activities are performed by contract agents. She stressed
that the amendment would not be fair for the entire State.
She clarified that contract agents are not state employees.
They are city employees. The State pays 15 percent for
vehicle registration and 50 percent for driver's license
work to contract agents.
Co-Chair Hanley summarized that if the disincentive to
renewing licenses in person goes away it will cost the State
more money. Ms. Hensley agreed and added that the State
still has to perform paper and computer work on collections
by contract agents.
In response to a question by Representative Brown, Ms.
Hensley discussed HB 210. She noted that HB 210 would not
result in commissioned contract offices. She clarified that
a contract office opened under HB 210 would be exempt from
paying the $10 dollar fee without the adoption of the
amendment. She pointed out that commissioned contract
agents are paid by the State to perform DMV functions.
Contract agents under HB 210 and emissions testing do not
cost the State.
Representative Mackie emphasized that commissioned contract
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agents need incentives to continue operation. He observed
that reimbursements to commissioned contract agents have
been reduced due to the addition of the $10 dollar fee. He
stressed that the State would have to pay more to maintain a
DMV office in small communities.
Ms. Hensley observed that some commissioned contract agents
are employed half-time. She noted that a half-time position
would cost DMV $18.0 thousand dollars. The State paid the
Craig police department $27,443 thousand dollars in FY 96.
The commission contract agent in Craig was paid $19,644
thousand dollars. She estimated that adoption of the
Amendment would result in a loss to the State of $31.0
thousand dollars and additional operating costs of $11.0
thousand dollars to pay for contract additions.
Representative Martin noted that there is a post office in
Craig.
Representative Mackie noted that there are commissioned
contract offices in Craig, Wrangell, Petersburg, Skagway,
Dutch Harbor, Dillingham, Naknek, Barrow, Anderson and
Seward. Ms. Hensley noted that of 13 commissioned contract
agents only five process vehicle registration.
A roll call vote was taken on the MOTION to adopt Amendment
7.
IN FAVOR: Kohring, Mulder, Parnell, Grussendorf, Kelly,
Foster
OPPOSED: Martin, Therriault, Brown, Hanley
Representative Navarre was absent from the vote.
The MOTION PASSED (6-4).
Representative Mulder MOVED to adopt Amendment 5, 9-
LS1452\M.2 (copy on file). He explained that the amendment
would allow municipalities to collect an additional fee for
the ambient air quality program to be collected along with
the motor vehicle emission control inspection fee.
Mr. Williams noted that the sponsor does not object to the
amendment.
RON KING, CHIEF, AIR QUALITY IMPROVEMENT SECTION, DEPARTMENT
OF ENVIRONMENTAL CONSERVATION observed that the Department
supports the amendment.
Ms. Hensley noted that the amendment would not affect the
Department of Public Safety.
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Representative Martin spoke against the amendment. He
asserted that the municipality makes a lot of money
processing unnecessary paper.
Mr. King noted that both the Anchorage and Fairbanks have to
recover the cost of their inspectors and programs. He noted
that the volume of vehicles in Alaska is small in comparison
to the fixed cost that most be sustained. He explained that
of the $10 dollar fee, the vehicle emissions inspection
program costs a little over $7.50 dollars. The remaining
$2.50 dollars is attributed to the air quality program. In
Fairbanks the emissions inspection program costs
approximately $7 dollars and the air quality program $3
dollars.
Representative Brown read from a letter from Tim Rogers, to
Representative Mulder (not on file). She noted that Mr.
Rogers wrote that $295 thousand dollars of Anchorage
emissions inspection revenues are appropriated to the air
quality program as are required match for a $110 thousand
dollar pass through grant from the Environmental Protection
Agency.
Mr. King explained that the Anchorage air quality program
was funded with approximately $295 thousand dollars from the
general fund, as a grant match to $110 thousand dollars in
federal funds. Four years ago, the general fund obligation
was reduced through the substitution of the $2.75 cents
collected on a per car basis in the emissions inspection
program. He emphasized that Anchorage fronted $1.8 million
dollars to start the vehicle inspection program. The $2.75
dollars per car was being used to recover the start up
costs. The start up costs were not completed recovered
before the Anchorage Assembly made the decision to switch
the $2.75 dollars to the air quality program.
In response to a question by Co-Chair Hanley, Mr. King
agreed that the municipality will not be able to charge for
the air quality program without the adoption of amendment 5.
He summarized that there would be a budgetary shortfall to
the municipality of Anchorage of approximately $295 thousand
dollars. He noted that discussions are occurring regarding
the State's assumption of Fairbanks' inspection and air
quality programs.
Co-Chair Hanley noted that if the amendment is not adopted
Anchorage would have to increase property taxes to cover the
cost of the programs.
A roll call vote was taken on the MOTION on adoption of
amendment 5.
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IN FAVOR: Brown, Grussendorf, Kelly, Kohring, Mulder,
Parnell, Therriault, Foster, Hanley
OPPOSED: Martin
Representative Navarre was absent from the vote.
The MOTION PASSED (9-1).
Representative Mulder MOVED to adopt Amendment 8, 9-
LS1452\K.10 (copy on file). He explained that the amendment
would exempt rental vehicles from the two year registration
requirement. He noted that many rental companies have
seasonal fleets.
The Sponsor and the Department of Public Safety had no
objections to Amendment 8.
There being NO OBJECTION, it was so ordered.
In response to a question by Representative Martin, Ms.
Hensley explained that the Anchorage field office has a
fleet dealer unit that registers all vehicle fleets.
Representative Martin MOVED to report HCS CSSB 226 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal note.
Representative Brown OBJECTED for purposes of discussion.
She asked how the fiscal note would be affected by the
adoption of amendment 7. Ms. Hensley noted that there would
be a operating cost under contractual of approximately $5.5
thousand dollars. There would also be a loss of $31
thousand dollars in revenues. Discussion pursued regarding
the fiscal note. Co-Chair Hanley estimated that the
contract costs would show a slight savings, while the
revenue lost to the State would be 85 percent of 10 dollars.
Ms. Hensley noted that if 50 percent of those that are using
the mail now choose to go back into the contract offices
that the Division would need an additional $11 thousand
dollars to pay the commissions.
(Tape Change, HFC 96-111, Side 2)
Discussion regarding the fiscal note continued. Co-Chair
Hanley summarized that contract offices would also lose
revenues. He asked for an updated fiscal note.
In response to a question by Representative Brown, Ms.
Hensley pointed out that half of the vehicles will be
registered the first year in a two year basis. The other
half would be registered in the next year. There will be an
increase in registration fees the first two years. The
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legislation also contains a reduction of $2 dollars for a
two year period. This is shown in the future years as a
revenue loss.
Mr. Williams noted that the $2 dollar break was given to
provide an incentive. Representative Brown maintained that
the $2 dollar reduction is an unnecessary loss of future
income. She stressed the convenience of registering every
two years.
Ms. Hensley noted that there would be a savings in postage.
Co-Chair Hanley asked if there would be decrease in the
workload. Ms. Hensley noted that 60 percent of vehicle
owners mail their registration. She emphasized that the
legislation will allow the Division to operate more
efficiently. She estimated that the legislation will allow
lines at DMV offices to be smaller.
Representative Brown reiterated concerns with the $2 dollar
reduction.
Representative Martin WITHDREW the motion to move HCS CSSB
226 (FIN) from Committee. There being NO OBJECTION, it was
so ordered.
Representative Brown MOVED to delete the $2 dollar
reduction. Representative Martin and Mr. Williams spoke
against the amendment. A roll call vote was taken on the
MOTION.
IN FAVOR: Brown
OPPOSED: Mulder, Therriault, Grussendorf, Kelly, Kohring,
Martin, Foster, Hanley
Representatives Navarre and Parnell were absent from the
vote.
The MOTION FAILED (1-8).
Representative Martin MOVED to report HCS CSSB 226 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal note.
HCS CSSB 226 (FIN) was reported out of Committee with a "do
pass" recommendation and with a fiscal impact note by the
Department of Public Safety.
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