Legislature(2003 - 2004)
04/28/2003 02:30 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 156
An Act increasing the motor fuel tax and repealing the
special tax rates on blended fuels; and providing for
an effective date.
Vice-Chair Meyer MOVED to adopt work draft #23-GH1118\Q,
Kurtz, 4/25/03, as the version of the bill before the
Committee.
Representative Croft OBJECTED. He asked about the missing
exemptions. Co-Chair Williams replied that the difference
represented the tax credits for the timber industry and fish
waste. Representative Croft noted that it would get rid of
the contingent effect on the constitutional amendment for
the permanent fund. Co-Chair Williams advised that was the
Governor's original bill.
Representative Croft WITHDREW his OBJECTION. There being NO
further OBJECTION, it was adopted.
ROBYNN WILSON, (TESTIFIED VIA TELECONFERENCE), DEPARTMENT OF
REVENUE, ANCHORAGE, offered to answer questions of the
Committee.
LANDA BAILY, SPECIAL ASSISTANT TO THE COMMISSIONER,
DEPARTMENT OF REVENUE, noted that she had reviewed the
committee substitute with Commissioner Corbus and that the
Department does support the proposed bill. The bill would
levy a twenty-cent per gallon tax on motor fuel. She added
that this bill is a significant part of the Governor's
package to address the current fiscal gap.
Representative Croft MOVED to ADOPT Amendment #1. Co-Chair
Williams OBJECTED.
Representative Croft explained that the amendment would ask
that the State appropriate the statutory amount for road
maintenance assistance to the municipalities. The
municipalities have over 40% of the roads in their
maintenance jurisdiction. Currently, the State has been
under-funding the statutory amount dedicated to roads at 10%
funding. He acknowledged that Amendment #1 is a complicated
amendment. The concept of the amendment gives less for
municipal assistance for roads than the statute requires,
reducing the amount of tax collected by that percentage.
Representative Croft pointed out that this concern is
usually addressed in the dedicated funds section. He
reiterated that the concept is simple, if money is
appropriated in the prior fiscal year, the amount in
statute, the full amount for revenue sharing and road
maintenance, and then collected for full tax. If less has
been received, then that would be the percentage collected
for that tax.
Representative Stoltze asked if these funds would only go to
organized governments or would rural areas also be able to
collect. Representative Croft responded that there is a
formula regarding the square miles of roads maintained by
the municipality in the districts and that determination is
made per road mile.
JOHN MACKINNON, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION & PUBLIC FACILITIES, understood that formula
was handled by the Department of Commerce & Economic
Development. He noted that he had listened to testimony
given by Kevin Ritchie, Alaska Municipal League (AML). He
had given a good explanation for funds added for road
maintenance. In the original Intermodal Surface
Transportation Efficiency Act (ISTEA) crafted in Congress in
1991, Senator Ted Stevens placed a provision, 1-18-E,
allowing only Alaska and Puerto Rico to use federal highway
funds for community roads. In 1991, there was no federal
highway trust fund dollars and that changed to the State
being awarded $72 million dollars. There is a tremendous
amount of highway dollars floating in the municipalities.
Mr. MacKinnon reminded members that the proposed legislation
was a measure to reduce the fiscal gap. He added that the
Department of Transportation & Public Facilities sees this
as a user fee.
Representative Stoltze noted that the amendment contained a
pro rata distribution for the more densely populated urban
areas. He questioned the equity of the issue distribution.
Representative Croft explained that it would limit the
amount and if enough had not been received, then they would
not collect the full amount of the tax. Nothing would be
changed regarding the distribution by road miles.
Representative Stoltze voiced his concern that the amendment
would only benefit downtown Anchorage.
Ms. Bailey pointed out the fluctuating amount indicated in
the amendment. She stated that the original intent of the
Governor was to address the fiscal gap and that the proposed
legislation was an important piece of that package.
A roll call vote was taken on the motion.
IN FAVOR: Joule, Moses, Croft
OPPOSED: Meyer, Stolze, Chenault, Foster, Williams
Representative Whitaker, Representative Hawker and Co-Chair
Harris were not present for the vote.
The MOTION FAILED (3-5).
Representative Croft MOVED to adopt Amendment #2, #23-
GH1118\Q.2, Kurtz, 4/28/03. (Copy on File).
Co-Chair Williams OBJECTED.
Representative Croft explained that Amendment #2 would
attempt an alternative approach. The amendment was
recommended by the AML. It attempts to put together a fund
that would place a portion of that money into assistance for
the municipalities.
Ms. Bailey stated the amendment seeks to place a structure
in statute that would be counter to the Governor's original
intent.
Representative Croft argued that would depend on what the
Governor's original intent was. Representative Croft noted
that if it were to go for maintenance of a road, then it
would be more compatible with the Governor's plan. The
amendment diverts from the general fund specifically to road
maintenance. He believed that would be what most Alaskans
would want with the increase.
A roll call vote was taken on the motion to adopt Amendment
#2.
IN FAVOR: Moses, Croft, Joule
OPPOSED: Meyer, Stoltze, Chenault, Foster, Williams
Representative Whitaker, Representative Hawker and Co-Chair
Harris were not present for the vote.
The MOTION FAILED (3-8).
Co-Chair Williams MOVED to adopt Amendment #3, #23-
GH118\Q.4, Kurtz, 4/28/03. (Copy on File).
Representative Joule OBJECTED for the purpose of discussion.
KEVIN JARDELL, ASSISTANT COMMISSIONER, DEPARTMENT OF
ADMINISTRATION, explained Amendment #3, which is a technical
amendment that identifies how the State purchases its fuel
from resale to gasoline. Currently, when a reseller
purchases fuel from a wholesaler, it pays the gas tax to the
wholesaler. When the State purchases from the reseller,
they can purchase the fuel without paying the gas tax. At
that point, the reseller, under statute, can recoup the gas
tax that it has paid from the Department of Revenue. Only a
reseller of fuel can do that. One of the benefits of the
new contract is that a State agency that has a high use of
fuel, can go to any gas station, purchase that fuel with a
State credit card and the reseller does not have to worry
about going through the process of recouping the tax from
the State. The credit card company pays the reseller the
cost of the tax and the fuel. Under Amendment #3, the
credit card company could go and recoup the tax it has paid.
It would allow the full benefit, use of credit cards and
expands where the State can purchase fuel given the benefit
of not paying the tax.
Representative Joule asked how "local government" would be
defined. Mr. Jardell responded that local government
agencies would go through certain levels. Ms. Wilson added
that the statute identifies official use. The amendment
would not change whether a government agency could receive a
refund or not. It does not change the tax structure and
would simplify paper work to make it whole.
Representative Stoltze asked at what level would State
government be defined. He stated for the record that he
would not vote for a personal exemption. Mr. Jardell
responded that it would only apply to State business as it
now does. He reiterated that it would not apply to personal
use.
MIKE BARNHILL, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, advised that the amendment would not change existing
law. When on official business and using fuel, that person
would be exempt.
In response to comments made by Co-Chair Harris, Mr.
Barnhill pointed out that the definition of motor fuel in
current statute excludes purchases by State, local and
federal government agencies for official use.
Representative Foster asked if it would affect diesel fuel.
Mr. Barnhill replied that it would.
In response to queries by Representative Foster, Ms. Wilson
explained that off-road vehicles and big equipment
not used in conjunction with vehicle license, currently
amounts to a net $.02 cents.
Representative Joule asked if that would apply to the De
Long transportation system, also known as the Haul Road.
Ms. Wilson replied that the off-road refund would be
available if the vehicle is not licensed to be used on
public ways.
Representative Joule WITHDREW his OBJECTION to Amendment #3.
There being NO further OBJECTION, it was adopted.
Representative Joule MOVED to ADOPT Amendment #4, #23-
GH1118\H.2, Kurtz, 4/14/03. (Copy on File).
Co-Chair Williams OBJECTED.
Representative Joule explained the amendment, which provide
for those areas not connected to road systems, continue to
pay at the current rate. He emphasized that rural
communities are already paying "huge" prices for fuel.
Ms. Bailey inquired the effect of the amendment on the
revenue derived from tax. Ms. Wilson responded that she did
not know the numbers that would be foregone by the
amendment. Wholesalers pay the tax in the State and they
are not required to tell where the fuel is sold. She could
not provide that information at this time.
Ms. Bailey maintained that given the fact that Ms. Wilson
was unable to access the net effect, it would be better for
the Committee to pass the bill amended with only Amendment
#3. She believed that Amendment #4 would have detrimental
effects on the Governor's long-term plan.
Co-Chair Williams encouraged Representative Joule to work
with the Administration regarding his concern.
A roll call vote was taken on the motion.
IN FAVOR: Moses, Joule
OPPOSED: Stoltze, Chenault, Foster, Meyer, Harris,
Williams
Representative Whitaker, Representative Hawker and
Representative Croft were not present for the vote.
The MOTION FAILED (2-6).
Representative Foster commented that within his district,
there are airports instead of roads. There are 50 runways
that serve the population. The Department of Transportation
& Public Facilities spends $10 million dollars a year in the
Northern Region. He claimed that was a good return on their
money and that the money on the gas tax would be helping out
those area runways and keeping them open for emergencies.
Representative Foster supported the 3% increase to keep
airports open and roads working. Village areas do not spend
much on keeping their infrastructure in tact and it is
crucial to keep runways open. He acknowledged that everyone
must pay a little to help up with the expenses.
Co-Chair Harris asked Representative Foster how much he paid
for fuel in his area. Representative Foster responded that
cost fluctuates between $1.75 and $4.00 dollars per gallon.
Co-Chair Williams stated that HB 156 would be HELD in
Committee for further consideration.
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