Legislature(1999 - 2000)

02/22/1999 01:38 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 73                                                                                                               
"An Act relating to commercial vehicle registration                                                                             
fees and taxes; and providing for an effective date."                                                                           
Co-Chair Therriault explained that HB 73 revisits                                                                               
legislation that was passed by the Twentieth Legislature.                                                                       
Second Session, CSHB 404(RLS).                                                                                                  
TED DEATS, STAFF, REPRESENTATIVE  MASEK testified in support                                                                    
of HB 73. He explained that CSHB 404 (RLS) raised temporary                                                                     
registration fees for out-of-state trucks to fund size,                                                                         
weight, and safety inspections statewide. This bill                                                                             
eliminated the requirement of annual registration of                                                                            
commercial trailers with DMV, saving the state $100,000                                                                         
thousand dollars by eliminating 10,000 yearly transactions.                                                                     
It also saved trucking companies the chore of hunting down                                                                      
hundreds of trailers statewide. In the final days of                                                                            
passage, it was noted that some municipalities lost tax                                                                         
revenues by eliminating trailer registrations. The Division                                                                     
of Motor Vehicles collects taxes for some municipalities                                                                        
when it registers vehicles.                                                                                                     
The bill was amended to include a 'sunset' date of March 30,                                                                    
1999. The 'sunset' was added to allow the trucking industry,                                                                    
municipalities, and DMV time to agree on a plan to replace                                                                      
the lost revenues or go back to yearly registration of                                                                          
After several recent teleconferences and meetings, the                                                                          
affected parties reached agreement. HB 73 fulfills the                                                                          
agreement by:                                                                                                                   
* Making permanent the new registration fees for                                                                                
commercial vehicles;                                                                                                            
* Raising the municipal tax schedule by $75 dollars per                                                                         
year on trucks over 12,000 pounds, to restore lost                                                                              
revenue to affected municipalities; and                                                                                         
* Tightening  the 'situs' language so that trucks are                                                                           
registered where they are normally used.                                                                                        
Co-Chair Therriault pointed out that the new registration                                                                       
fees were passed in the prior session. The fees were                                                                            
adjusted up to replace the lost revenue from trailer                                                                            
Representative Austerman noted that trailers were set at a                                                                      
one-time $10 dollar fee. He questioned why the $10 dollar                                                                       
fee was not raised to offset the loss of revenue.                                                                               
Mr. Deats explained that the lost state revenue was replaced                                                                    
by raising commercial vehicle registration fees for all                                                                         
commercial vehicles. An agreement was made to replace the                                                                       
lost municipal revenue by charging an additional $75 dollars                                                                    
per truck on trucks over 12,000 pounds, in the 13                                                                               
communities that collected local tax.                                                                                           
Representative Austerman reiterated concerns that the burden                                                                    
was placed on the truckers.                                                                                                     
Co-Chair Therriault pointed out that trucks and trailers are                                                                    
a package. Since it is difficult to keep track of trailers                                                                      
the decision was  made to shift the fee to the trucks. The                                                                      
companies agreed to shift the fee because it results in an                                                                      
administrative savings.                                                                                                         
Representative Austerman noted that a company can have a few                                                                    
trucks and hundreds of trailers.                                                                                                
Mr. Deats reiterated that all commercial vehicles over                                                                          
12,000 pounds in municipalities that collect a tax pay an                                                                       
additional $75 dollars per truck.                                                                                               
JUANITA HENSLEY, ADMINISTRATOR, DIVISION OF MOTOR VEHICLES,                                                                     
DEPARTMENT OF ADMINISTRATION provided information on HB 73.                                                                     
She explained that the legislation was proposed at the                                                                          
request of the trucking industry, including the Alaska                                                                          
Trucking Association, Teamsters Local 959 and the                                                                               
Independent Truckers Association. They felt it made good                                                                        
business sense to shift the tax. All the fees associated                                                                        
with registering trailers were transferred to the sizes of                                                                      
power units that pull the trailers. It was discovered while                                                                     
the legislation was in the Senate that the legislation had                                                                      
not taken into account the fact that the Division of Motor                                                                      
Vehicles collects taxes for 13 communities. The tax revenue                                                                     
for those communities was lost with the passage of CSHB 404                                                                     
(RLS). The Senate placed a temporary date on the legislation                                                                    
to allow the industry, municipalities and state to come up                                                                      
with a solution. House Bill 73 incorporates the solution                                                                        
agreed upon by all parties.                                                                                                     
Co-Chair Therriault observed that the fee is shared back to                                                                     
the municipalities minus an eight-percent charge for                                                                            
In response to a question by Representative J. Davies, Ms.                                                                      
Hensley reviewed the legislation. She noted that sections 1,                                                                    
2 and 3 were part of HB 404 and restate current practice.                                                                       
The municipal tax increase is contained in sections 4 and 6.                                                                    
Biennial registration is increased by $150 dollars in                                                                           
section 4 on page 3, lines 12 and 14. Annual registration is                                                                    
increased by $75 dollars in section 6 on page 4, lines 19                                                                       
and 21. If a truck is registered for one year the owner                                                                         
would pay an additional $75 dollars in municipal tax per                                                                        
truck, per year. If the truck is registered for two years                                                                       
the owner would pay an additional $150 dollars in municipal                                                                     
tax per truck, every two years. Section 5 is a new section                                                                      
that addresses the location of the vehicle at the time that                                                                     
it is registered. Section 7 sets up a transition period to                                                                      
allow communities to pass ordinances to increase their                                                                          
taxing ability. The tax was calculated by spreading the                                                                         
number of registered trailers across the number of                                                                              
registered commercial vehicles in the state. She noted that                                                                     
the bill was widely supported.                                                                                                  
In response to a question by Representative Austerman, Ms.                                                                      
Hensley noted that small utility trailers can be used for a                                                                     
lifetime. The $10 dollar fee represents the administrative                                                                      
cost of trailer registration. The Division of Motor vehicles                                                                    
attempted to set a fee that would be revenue neutral.                                                                           
Representative Austerman expressed concern that the cost is                                                                     
being born by the larger power units.                                                                                           
FRANK DILLON, EXECUTIVE VICE-PRESIDENT, ALASKA TRUCKING                                                                         
ASSOCIATION, ANCHORAGE testified via teleconference in                                                                          
support of the legislation. He explained that the industry                                                                      
recommended that the municipal tax be assessed on vehicles                                                                      
above 12,000 pounds because these are the vehicles that reap                                                                    
the most benefit from eliminating the trailer fee. The                                                                          
trucking industry felt that the concept was fair because the                                                                    
heavier trucks pull most of the trailers in the state. Most                                                                     
companies operate on margins of only a few cents return on a                                                                    
dollar. He emphasized that efficiencies benefit everyone. He                                                                    
noted that they did not anticipate that the tax stream for                                                                      
municipalities would be disrupted when HB 404 was                                                                               
negotiated. The additional $75 dollar fee only applies to                                                                       
the 13 jurisdictions that collect the fee and on trucks over                                                                    
12,000 pounds. The bill only codifies in statute current                                                                        
practice. Fees have been paid for January - March 1999. He                                                                      
acknowledged that there have been some complaints from truck                                                                    
operators that do not pull trailers. He stressed that this                                                                      
number is small. He pointed out that it is difficult to                                                                         
please everyone. He emphasized that the legislation is in                                                                       
the interest of the Division of Motor Vehicles and the                                                                          
trucking industry. He referred to the "situs" provision. He                                                                     
noted that some areas were not getting any local revenue                                                                        
because companies were not registering their trailers in the                                                                    
area of use. Although there are hundreds of trailers in the                                                                     
Unalaska/Dutch Harbor area they were only collecting on 16                                                                      
trailers because the majority of trailers were registered in                                                                    
other locations. He noted that under the loophole trailers                                                                      
engaged in ocean trade would not have to be registered                                                                          
because they are usually located in international waters.                                                                       
The legislation closes the loophole. He stressed that the                                                                       
legislation is also supported by independent truckers.                                                                          
HARRY MCDONALD, PRESIDENT, CARLILE TRUCKING COMPANY,                                                                            
ANCHORAGE testified via teleconference in support of the                                                                        
legislation. He pointed out that the legislation is revenue                                                                     
neutral.  He noted that there is a $100 thousand dollar                                                                         
transaction savings for DMV. There are also transaction                                                                         
savings for the trucking industry. He explained the                                                                             
difficulty of keeping track of trailers for registration and                                                                    
PAUL FUHS, LOBBYIST SEALAND SERVIES testified in support of                                                                     
the legislation. He stressed that the legislation reduces                                                                       
needless paper work. He noted that California is the only                                                                       
other state that continues to have trailer registration. He                                                                     
noted that the legislation has wide support and a zero                                                                          
fiscal note. He emphasized that Sealand Service has a                                                                           
relationship with independent truckers. Their trailers are                                                                      
hauled by independent truckers.                                                                                                 
MIKE FORD, ATTORNEY, LEGISLATIVE LEGAL SERVICES, LEGISLATIVE                                                                    
AFFAIRS AGENCY testified that the title needs to be changed                                                                     
because of the application of section 5. Section 5 could                                                                        
also affect noncommercial vehicles. The title change would                                                                      
not change the substance of the bill. He recommended that                                                                       
the legislation be amended on page 1, line 1, after "taxes"                                                                     
insert "relating to determining the taxable location of a                                                                       
vehicle for purposes of municipal registration taxes."                                                                          
Representative Foster MOVED to ADOPT Amendment 1, on page 1,                                                                    
line 1, after "taxes" insert "relating to determining the                                                                       
taxable location of a vehicle for purposes of municipal                                                                         
registration taxes." There being NO OBJECTION, it was so                                                                        
BARBARA HUFF-TUCKNESS, GENERAL TEAMSTERS LOCAL 959 testified                                                                    
via teleconference in support of the legislation. She                                                                           
observed that the Teamsters Local 959 expressed their                                                                           
support in a letter dated 2/10/99 (copy on file).                                                                               
In response to a question by Representative Kohring, Ms.                                                                        
Hensley explained that revenues go back to the                                                                                  
municipalities minus 8 percent. The 8 percent paid to the                                                                       
state for the tax collection is deposited into the general                                                                      
fund. The legislation does not raise or lower revenues.                                                                         
Co-Chair Therriault asked how much the municipalities would                                                                     
lose without the legislation. Ms. Hensley clarified that                                                                        
approximately $249 thousand dollars would be lost to                                                                            
municipalities without the legislation.                                                                                         
Representative Kohring did not think that the tax was                                                                           
justified by holding municipalities harmless.                                                                                   
Mr. Dillon noted that the intent is not to lose money, but                                                                      
to have the same tax base. He noted that the additional $75                                                                     
dollar tax was not meant to increase the revenue base.                                                                          
Representative Kohring stressed that he has not seen                                                                            
evidence that small trucking operations support the                                                                             
Co-Chair Therriault observed that member's packets included                                                                     
a letter by the Alaska Independent Truckers Association,                                                                        
dated 2/15/99.                                                                                                                  
(Tape Change, HFC 99 - 26, Side 2)                                                                                              
Representative Kohring expressed concern that the tax                                                                           
increase would not benefit the trucking industry.                                                                               
Representative J. Davies stressed that the purpose of the                                                                       
bill is to reduce cost for the trucking industry by shifting                                                                    
the way in which the tax is collected. The intent is not to                                                                     
increase revenues.                                                                                                              
In response to a question by Representative Kohring, Mr.                                                                        
Dillon noted that 90 percent of the operators in the over                                                                       
12,000 pound class operate trailers. They will break even if                                                                    
they have two trailers. He noted that the majority of                                                                           
members of the Alaska Trucking Association own 1 - 3 trucks                                                                     
and have 3 - 6 trailers. He stressed that it is not a major                                                                     
economic issue.                                                                                                                 
Mr. McDonald pointed out that his company employs an average                                                                    
of 40 owner/operators around the state. He emphasized that                                                                      
his company creates a business opportunity for independent                                                                      
truckers. He maintained that everyone benefits from the                                                                         
Representative Williams MOVED to report HB 73 out of                                                                            
Committee with the accompanying fiscal note.  Representative                                                                    
Kohring OBJECTED.                                                                                                               
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Bunde, Davies, Davis, Foster, Grussendorf, Moses,                                                                     
Williams, Therriault                                                                                                            
OPPOSED:  Kohring, Austerman                                                                                                    
Co-Chair Mulder absent from the vote.                                                                                           
The MOTION PASSED (8-2).                                                                                                        
HB 73 was REPORTED OUT of Committee with a "do pass"                                                                            
recommendation and a zero fiscal note by the Department of                                                                      

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