Legislature(2005 - 2006)CAPITOL 106

02/21/2006 08:00 AM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearing - Public Defender TELECONFERENCED
Moved Out of Committee
Moved Out of Committee
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
Heard & Held
HB 344-VEHICLE TRANSACTION AGENTS                                                                                             
[Contains brief mention of HB 383.]                                                                                             
9:57:20 AM                                                                                                                    
CHAIR SEATON announced that the  next order of business was HOUSE                                                               
BILL  NO.   344,  "An  Act   relating  to  the   commissioner  of                                                               
administration's  appointing agents  to perform  for compensation                                                               
certain transactions  related to  vehicles; and providing  for an                                                               
effective date."                                                                                                                
9:57:35 AM                                                                                                                    
CHAIR SEATON closed public testimony.                                                                                           
9:58:05 AM                                                                                                                    
REPRESENTATIVE  RAMRAS  mentioned   a  conversation  with  former                                                               
testifier, Jim  Arpino, of Affordable  Used Cars, related  to the                                                               
issue of document "doc" fees.   He mentioned HB 383, sponsored by                                                               
Representative Gara,  which would  clarify the  issue of  the doc                                                               
fee.   He stated,  "I would  like to draw  a bright  line between                                                               
what HB 344  does and what document fees do."   He explained that                                                               
he  wants  the  discussion  to  stay  focused  on  "incentivizing                                                               
dealers to  participate in the  advance business  partner [(ABP)]                                                               
programs ...."                                                                                                                  
10:02:38 AM                                                                                                                   
REPRESENTATIVE RAMRAS, in response to  a comment by Chair Seaton,                                                               
clarified that  his comment that  the Division of  Motor Vehicles                                                               
is hated  - made  at a  previous hearing -  was intended  to mean                                                               
that the wait time at the division is what is disliked.                                                                         
10:03:23 AM                                                                                                                   
REPRESENTATIVE  GARDNER directed  attention to  a handout  in the                                                               
committee  packet,   entitled,  "History  of  the   DMV  Business                                                               
Partnership   Program,"  and   the   following  page,   entitled,                                                               
"Proposal  to  allow  Advanced  Business  Partners  to  retain  a                                                               
portion  of  revenue generated,"  the  third  paragraph of  which                                                               
     While this concept is a  terrific bargain to the state,                                                                    
     if the  surcharge exceeds a customer  comfort zone, the                                                                    
     business  will be  returned to  the DMV,  defeating the                                                                    
     original purpose.                                                                                                          
REPRESENTATIVE GARDNER stated that  title and registration cannot                                                               
be returned  to the DMV;  under current legislation,  dealers are                                                               
required to process title and  insurance.  Representative Gardner                                                               
turned to a  letter in the committee packet  from [Duane Bannock,                                                               
Division of Motor Vehicles],  Department of Administration, dated                                                               
February 17, which read in part:                                                                                                
     While  their customers  always have  the right  to take                                                                    
     their  business to  the  DMV,  these Advanced  Business                                                                    
     Partners  sell a  service that  they market  as quicker                                                                    
     and more  convenient and proof has  shown that Alaskans                                                                    
     are willing to pay.                                                                                                        
REPRESENTATIVE  GARDNER  said,  again,  that may  refer  to  some                                                               
services offered,  but not to  title and registration.   She said                                                               
she just wanted to clarify that  matter, because it seems to be a                                                               
source of confusion.  She  concluded, "So, it's true that dealers                                                               
are required to do that, and  they have been doing it without any                                                               
state compensation."   She  said she personally  does not  have a                                                               
problem with compensation  for services.  She stated,  "What I do                                                               
have a problem with is if they're getting it from both sides."                                                                  
10:05:43 AM                                                                                                                   
CHAIR SEATON said there are three  issues to discuss:  a proposal                                                               
to  retain  7.5  percent  of the  fees  collected;  documentation                                                               
preparation  fees,  which  are a  totally  private  and  separate                                                               
charge made  by the dealer;  and a surcharge.   He said  he would                                                               
like the  director of the  Division of Motor Vehicles  to explain                                                               
the surcharge.                                                                                                                  
10:06:51 AM                                                                                                                   
DUANE BANNOCK,  Director, Division of Motor  Vehicles, Department                                                               
of Administration, said  he is the author of not  only the letter                                                               
dated  2/17,   but  also  the   "History  of  the   DMV  Business                                                               
Partnership   Program"   handout   -   both   aforementioned   by                                                               
Representative Gardner.   Mr. Bannock explained  that "customer,"                                                               
as he  uses the  word, can mean  a citizen or  a dealership.   He                                                               
specified  that   the  statutory  requirement   that  dealerships                                                               
complete the vehicle registration is  not to say that dealerships                                                               
are statutorily required  to be business partners.   He indicated                                                               
that  business  partnerships  created   to  allow  ["select  auto                                                               
dealerships to  process the registration  and titles  of vehicles                                                               
sold"]  have  allowed four  of  the  eight DMV  staff  previously                                                               
occupied  with that  work to  instead  provide customer  service.                                                               
There are approximately six of these ABPs in Alaska.                                                                            
10:09:26 AM                                                                                                                   
MR. BANNOCK  noted that  one of  the ABPs does  the DMV  work for                                                               
eight small  dealerships in  Alaska, and for  that work,  the ABP                                                               
charges  a surcharge,  because without  it  she collects  nothing                                                               
from the  State of  Alaska for  doing the work  that in  the past                                                               
only state employees were able to do.                                                                                           
10:10:56 AM                                                                                                                   
REPRESENTATIVE GARDNER asked  Mr. Bannock if it would  be fair to                                                               
say  what is  really being  done  is the  privatization of  state                                                               
10:11:15 AM                                                                                                                   
MR. BANNOCK indicated that there  is a debate over the definition                                                               
of "privatization,"  which he would  not [address at  this time].                                                               
He reiterated the  benefit of lightening the workload  of the DMV                                                               
through  the use  of ABPs,  and he  emphasized his  commitment to                                                               
reducing the wait time at DMV.                                                                                                  
10:12:34 AM                                                                                                                   
CHAIR  SEATON asked  Mr. Bannock  if  the surcharge  of which  he                                                               
spoke is  the same as  the $10 charged  by the DMV  for in-office                                                               
work, versus by-mail work.                                                                                                      
10:12:46 AM                                                                                                                   
MR.  BANNOCK answered  no.   He  said, "I  just used  that in  my                                                               
letter as a simple comparison."                                                                                                 
10:12:54 AM                                                                                                                   
CHAIR  SEATON asked  if there  is a  limitation on  the surcharge                                                               
exacted by the ABP.                                                                                                             
10:13:12 AM                                                                                                                   
MR.  BANNOCK said  there is  no governmental  limit on  that fee;                                                               
however, as Representative Gardner noted  by reading from his own                                                               
proposal  information,  "if  the  surcharge  exceeds  a  customer                                                               
comfort  zone,  the  business  will   be  returned  to  the  DMV,                                                               
defeating  the original  purpose."   In response  to a  follow-up                                                               
question from Chair Seaton, he said  he has seen that happen.  He                                                               
offered an example.                                                                                                             
10:17:04 AM                                                                                                                   
REPRESENTATIVE GATTO questioned  why a 7.5 percent  fee should be                                                               
allowed when there is already a surcharge.                                                                                      
10:17:35 AM                                                                                                                   
CHAIR  SEATON,  in response  to  Mr.  Bannock and  Representative                                                               
Gatto,  said  the   surcharge  is  permissive.     The  bill,  he                                                               
clarified,  would  allow 7.5  percent  of  what is  generated  in                                                               
revenue to be  returned to the preparer, in  compensation for the                                                               
work done,  whether he/she charges a  surcharge or not.   He said                                                               
he thinks the  question is whether having both  the surcharge and                                                               
the 7.5  percent would  allow compensation  for the  same action.                                                               
He suggested another question to  ask is whether [the 7.5 percent                                                               
that  would be  paid  by the  state] is  needed,  or whether  the                                                               
service provided  by the ABPs  generates enough  customer service                                                               
to   be  continued   without  that   7.5  percent.     He   asked                                                               
Representative Ramras if  his comments offered a  clearer view of                                                               
the discussion on the table.                                                                                                    
10:19:42 AM                                                                                                                   
REPRESENTATIVE RAMRAS answered yes.  He said:                                                                                   
     We've got  two really  separate issues,  and one  is on                                                                    
     the table,  and one may  be taken up by  this committee                                                                    
     or  the Twenty-Fifth  Legislature  to  address.   We've                                                                    
     uncovered a  pretty interesting ... issue,  but I think                                                                    
     that you have it.                                                                                                          
10:20:02 AM                                                                                                                   
REPRESENTATIVE GRUENBERG  noted that  in Mr.  Bannock's "Proposal                                                               
to  allow  Advanced Business  Partners  to  retain a  portion  of                                                               
revenue  generated," he  notes that  ABPs are  at liberty  to set                                                               
their own surcharge.  He asked, "If  they can do that, why in the                                                               
world are we  allowing them an additional 7.5 percent?"   He said                                                               
he does not  see any justification for that  kind of governmental                                                               
handout.   He  observed  that the  fiscal note  shows  a cost  of                                                               
$486.6 thousand  the first  year, increasing  over the  next five                                                               
years.  He asked what justification  there is for giving the auto                                                               
industry of  Alaska a half  million dollars of  taxpayers' money.                                                               
In response  to Mr. Bannock, he  specified that he wants  to know                                                               
if there  is anything that  prevents car dealerships  from "using                                                               
the surcharge."  He clarified as follows:                                                                                       
     I guess the  question becomes, "At some  point in time,                                                                    
     are we going to have  to increase registration fees, so                                                                    
     that  we have  the ability  to pay  private individuals                                                                    
     ...  or  companies to  prepare  the  documents, and  is                                                                    
     there   anything  at   all   that   prevents  the   car                                                                    
     dealerships from utilizing and  putting on the ... $10-                                                                    
     or $20-dollar surcharge?"                                                                                                  
10:23:45 AM                                                                                                                   
MR. BANNOCK said he doesn't think  there is anything in law today                                                               
that prevents "anyone from charging any fee."                                                                                   
10:23:59 AM                                                                                                                   
REPRESENTATIVE GRUENBERG said the  only people who have testified                                                               
in support of the bill are  car dealers, and those opposed to the                                                               
bill are customers.   He stated his concern that  the industry is                                                               
clearly anticipating  that HB 344 will  "provide additional funds                                                               
to it."                                                                                                                         
10:25:07 AM                                                                                                                   
MR. BANNOCK said  he has seen one letter of  objection, which was                                                               
written  by  one  of  his  employees  whose  opinion  he  values,                                                               
although he does  not concur with her assessment.   He emphasized                                                               
his  belief that  "we've done  a good  job of  proving that  this                                                               
program works."   He said there  is data to support  the proposed                                                               
legislation,  and  he encouraged  the  committee  to support  the                                                               
bill.  He  recommended that if committee members feel  there is a                                                               
problem  with  allowing general  fund  monies  to go  to  private                                                               
organizations, they  should review  the same  policy used  by the                                                               
Alaska  Department of  Fish &  Game  (ADF&G), on  which he  based                                                               
"this theory."                                                                                                                  
10:26:18 AM                                                                                                                   
CHAIR  SEATON said  there are  requirements  for ADF&G's  fishing                                                               
license program  which prevent those  vendors from  attaching any                                                               
10:26:47 AM                                                                                                                   
REPRESENTATIVE GRUENBERG said the economics of people who sell                                                                  
fishing tackle is much different than those who sell vehicles.                                                                  
The latter makes thousands on a sale.                                                                                           
10:27:25 AM                                                                                                                   
CHAIR SEATON clarified that this issue addresses ABPs, which                                                                    
does not necessarily mean auto dealers.                                                                                         
10:27:47 AM                                                                                                                   
CHAIR SEATON announced that HB 344 was heard and held.                                                                          

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