Legislature(1995 - 1996)
04/11/1996 08:20 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 2 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 3 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. 4 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. 5 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 6 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.