Legislature(2009 - 2010)CAPITOL 17
03/23/2010 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HJR47 | |
| HB357 | |
| SB272 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 47 | TELECONFERENCED | |
| += | HB 257 | TELECONFERENCED | |
| += | HB 357 | TELECONFERENCED | |
| + | SB 272 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 272-RENTAL CAR CHARGES
CHAIR P. WILSON announced that the final order of business would
be SENATE BILL NO. 272, "An Act relating to charges for rented
motor vehicles, including cost recovery fees, and making a
violation of the rented motor vehicle charge provisions an
unfair trade practice."
2:25:54 PM
EDRA MORLEDGE, Staff, Senator Charlie Huggins, Alaska State
Legislature, paraphrased from the sponsor statement, as follows
[original punctuation provided]:
SB 272 is a technical bill that would allow rental car
companies to do in Alaska what they already do in thirty
other states. Alaska law is currently silent on the issue
of separately-listed charges on rental car statements for
the recovery of fees. This bill would require those fees to
be listed separately and clearly identified on the rental
car agreement.
The industry standard is to turn over the rental car fleet
every twelve months and to associate the costs of licensing
the vehicles, concessions, and airport or facility-related
costs with the vehicles themselves. In addition to
government taxes and surcharges, rental car companies
assess additional "cost recovery fees" to offset those
costs. Consumers should be made aware, and be able to see
the fees they are charged, on both the rental bill and in
an online quote. This bill would provide full disclosure
and transparency of "cost recovery fees" included in rental
car agreements. In addition, this legislation would make
violating the provision an unfair trade practice.
2:27:32 PM
MS. MORLEDGE explained that the bill passed the other body
without any opposition. The Department of Law supports the
bill, as does the industry, she stated.
2:29:00 PM
REPRESENTATIVE MUNOZ referred to the "Business Advisory" dated
August 30, 2006 from the Department of Law and asked whether the
bill is necessary.
MS. MORLEDGE explained that the "Business Advisory" resulted
because complaints arose that fees were being charged that may
be in violation of the federal Consumer Protection Act.
However, it came to the attention of the Department of Law that
the state did not have any enforceable laws.
2:29:54 PM
CHAIR P. WILSON passed the gavel to Representative Munoz.
2:30:15 PM
SHANE SKINNER, Controller, Enterprise Rent-A-Car, explained that
he represents Enterprise Rent-A-Car in Alaska and Washington
State. He concurred that the current Alaska statute is silent
and this bill would create clarity since it would require full
disclosure of all taxes and fees. The bill would limit the fee
amounts to the amounts paid to government entities, including
rental taxes, airport fees, or license and registration fees.
2:31:13 PM
REPRESENTATIVE GRUENBERG referred to Section 1, and related that
the fees must be listed in the rental car agreement, which is a
document people sign before "they take the keys to the car." He
stated that if the intent is disclosure, that the fees should be
clear in any advertising and quotes, not just be contained in
the "fine print."
MS. MORLEDGE agreed the intent is full disclosure, which
includes when potential customers are perusing quotes and at the
time that the car is being returned to the car rental agency.
REPRESENTATIVE GRUENBERG suggested that it should be clear in
the bill. He referred to page 2, line 1, which he suggested
should read, "in the written car rental agreement" for better
disclosure. He then referred to page 2, line 3, to "government
tax, or government surcharge." He offered his belief that this
language is broader than the sponsor's intent, since government
taxes could include withholding or municipal property taxes. He
related his understanding that the sponsor would like to limit
the tax to certain types of taxes.
MS. MORLEDGE agreed that is the sponsor's intent.
2:35:07 PM
MR. SKINNER explained that the current statute allows car rental
agencies to pass through property taxes or employment taxes but
car rental companies do not currently assess those types of
charges. Currently, a facility management charge (FMC) is
assessed at the Anchorage airport, through an agreement with the
concessionaire. He expressed concern that if the language is
narrowed down that the effect may be to disrupt the agreement
currently in place with the state.
2:36:06 PM
REPRESENTATIVE GRUENBERG said he did not intend to do so. He
did not want additional government charges to be passed through
to customers.
MS. MORLEDGE agreed that it is not the sponsor's intent to pass
on superfluous taxes. She pointed out that the intent of the
bill is to ensure that any taxes charged by a car rental company
must be included in the quote and agreement so the consumer
could make the choice.
2:37:31 PM
REPRESENTATIVE GRUENBERG clarified his understanding that this
is a disclosure bill and a car rental company could "do what it
wanted to do" but must disclose the fees.
MS. MORLEDGE answered yes.
REPRESENTATIVE GRUENBERG wanted the bill to provide clarity as
to whether companies are allowed to pass through a variety of
taxes, including corporate income taxes and employee withholding
taxes. He suggested that the sponsor should define government
taxes or surcharges.
MR. SKINNER reiterated that current Alaska statute provides "a
blank check." The intent of SB 272 is to "tighten up" and
create some foundation since no restrictions currently apply.
2:39:23 PM
REPRESENTATIVE T. WILSON related her understanding that this
bill is not telling a car rental company how to run its company.
MS. MORLEDGE answered that is correct.
REPRESENTATIVE T. WILSON summarized that SB 272 would require a
car rental company to disclose any charges to enable consumers
the ability to compare the car rental fees to another company's
fees. Thus, the consumer would have the information to make an
informed decision on the rental vehicle's cost.
REPRESENTATIVE PETERSEN offered his belief that this bill is
good idea for consumers. He related an anecdotal experience he
had trying to figure out the car rental costs. He offered that
Alaska has a tourism industry and his desire that it should be
easy for consumers to decipher the taxes and fees charged.
2:40:50 PM
REPRESENTATIVE GRUENBERG referred to page 2, line 22, to the
term "inspection" and he asked whether that term referred to
annual emission inspections, brake inspections, or what type of
inspection this would encompass.
MR. SKINNER related that the language in this bill or a close
variation of it was passed in 18 states. Some states have
initial inspection costs to put a vehicle on the road and that
is the intent of this provision.
MR. SKINNER, in response to Representative Gruenberg, clarified
that all fees are limited to what is paid to the government
authority. Thus, the consumer can go on-line to see the extreme
variations and this bill would disclose fees so the variations
in fees are not profit centers for companies.
REPRESENTATIVE GRUENBERG clarified that the inspection does not
refer to lubrication or brake inspections.
MR. SKINNER explained that this provision refers to government-
mandated inspections. Thus, the provision would allow the car
rental company to recoup fees and taxes it pays the government.
REPRESENTATIVE GRUENBERG suggested the language be clarified to
refer to government mandated inspections.
MS. MORLEDGE referred to page 2, line 22, and explained that
"inspection" refers to the "licensing cost" listed in line 21.
She referred to AS 45.45.460, which is the section that defines
vehicle licensing costs.
REPRESENTATIVE GRUENBERG related his understanding that some
types of inspections are required in the business by the
government and that is what is meant by licensing cost. He
stated that provision is clearer to him.
REPRESENTATIVE GRUENBERG suggested that at least one definition
could be eliminated from the bill. He offered that if the
agreements were called rental motor vehicle agreements, that
"car" would not need to be defined as "motor vehicle." He
pointed out that consumers may rent trucks.
MS. MORLEDGE offered her belief that the reason the "car rental
fees" was used is because it is the most common term and would
apply to the broader term, that car would apply to all motor
vehicles.
2:46:19 PM
REPRESENTATIVE GRUENBERG offered that this bill will be read as
a "consumer protection" bill. The current language could be
confusing for consumers and he hoped to make it "user friendly."
He suggested that someone renting a motorcycle could interpret
the language and may not think he/she was gaining the
protections in the bill. He asked if "car" could be changed to
"motor vehicle."
MS. MORLEDGE answered that she did not think the sponsor would
object to the type of improvements and "clean up" language that
Representative Gruenberg is suggesting. She offered her belief
that the sponsor would like to move the bill along, noting the
bill has another committee of referral.
2:47:25 PM
REPRESENTATIVE MUNOZ asked whether Representative Gruenberg
would work with the sponsor if the bill moved from committee.
REPRESENTATIVE GRUENBERG agreed to do so.
2:48:32 PM
REPRESENTATIVE T. WILSON offered work to improve the bill in the
next committee of referral in the House Labor and Commerce
Standing Committee.
2:48:51 PM
REPRESENTATIVE MUNOZ, after first determining no one else wished
to testify, closed public testimony on SB 272.
REPRESENTATIVE T. WILSON moved to report SB 272 out of committee
with individual recommendations and the accompanying fiscal
notes.
REPRESENTATIVE GRUENBERG objected.
2:49:45 PM
REPRESENTATIVE GRUENBERG explained that the statutes have
percentages, perhaps ceilings, but the bill does not contain any
ceiling or guidance for consumers. He wondered if some kind of
ceiling, perhaps geographic, could be added. Otherwise, the
marketplace is allowed to freely roam, he stated.
MS. MORLEDGE answered that a ceiling is not listed on the cost
recovery fees since those fees are mandated by the government
and varies between governments. Some of the fees are under
local control so they are not state-mandated fees.
REPRESENTATIVE GRUENBERG suggested that Arizona is allowing for
reimbursement of the licensing fees. He surmised that other
states are going beyond just disclosure.
2:52:44 PM
MS. MORLEDGE referred to Hawaii and reported that car rental
companies do not charge the licensing fees. The fees are not
capped because the bill contains a good faith estimate clause
under AS 45.45.460. That section explains how those fees are to
be calculated. She commented that Ed Sniffen, DOL, was
"comfortable with that." She explained that if an issue arose,
Mr. Sniffen believes that this bill would give him "the teeth"
to deal with the issue.
2:53:34 PM
REPRESENTATIVE GRUENBERG stated he was satisfied. He removed
his objection. There being no further objection, SB 272 was
reported from the House Transportation Standing Committee.
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