Legislature(1995 - 1996)
02/21/1996 01:42 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HJR-49 DEDICATED HIGHWAY FUND
CHAIRMAN GARY DAVIS said a subcommittee met last week to discuss
the language of HJR 49. He apologized for the oversight of not
including a member of the minority in those discussions. He said
this discussion led to a work draft form of CSHJR 49(TRA), version
9-LS1178\K.
REPRESENTATIVE BILL WILLIAMS made a motion to adopt CSHJR 49(TRA)
as the working document. Hearing no objection, CSHJR(TRA) was
adopted as the working document for the House Standing Committee on
Transportation.
CHAIRMAN GARY DAVIS said the essence of the change made and
incorporated in CSHJR 49(TRA) is a change from a highway to a
transportation fund. The transportation fund creates a fund for
the revenues derived from the propulsion of motor vehicles for the
operation and maintenance of roads and highways and also sets up a
fund for revenues derived from marine fuel taxes to be used for the
construction and improvement of harbor facilities.
Number 151
REPRESENTATIVE JAMES expressed concern relating to the inclusion of
marine taxes within CSHJR 49(TRA). She said she had kept the
original HJR 49 narrow in order to get the two-thirds vote needed
to put the resolution on the ballot, and to get the votes necessary
to make it a constitutional amendment.
Number 213
REPRESENTATIVE JAMES said the fiscal note, she believed, would
prevent the passage of CSHJR 49(TRA). She said the fiscal note
identifies that marine fuel taxes go for construction and
improvement, of which only 37 percent have been utilized in the
past. She said the remaining 63 percent of the taxes had gone into
the general fund used for ordinary expenses. She said, as a
result, a huge fiscal note would be required for CSHJR 49(TRA).
Number 295
CHAIRMAN GARY DAVIS, "you yourself have addressed the fiscal note
with the three-fifths vote to spend outside of the dedication area,
so that is the only answer or area we could go to, to address that,
whether that is enough to satisfy that concern or not, I'm not
sure." He believed that the inclusion of the marine component
would improve its chances of passing because of gaining support
from the coastal communities in the state of Alaska.
Number 420
REPRESENTATIVE BRICE asked how the two funds would be segregated in
the fiscal note. He mentioned that only a minimal amount of money
should be spent on administrative costs, leaving as much as
possible for use on construction and development of transportation
needs in the state.
Number 506
BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division,
Department of Revenue, responded to the question regarding the
fiscal note. He said currently the marine fuel taxes are deposited
into the general fund with appropriations coming out of the fund.
He said research would need to be done to determine whether the
amount spent on harbor facilities, in the capital or operating
budget, is equal to the amount of the taxes. He said information
from Office of Management and Budget (OMB) would need to be
received to make that determination and whether a fiscal note is
needed.
Number 596
CHAIRMAN GARY DAVIS commented that it might be possible that we are
spending all the marine fuel tax revenues collected.
MR. BARTHOLOMEW said that it might be possible.
Number 621
REPRESENTATIVE JAMES said according to testimony from the
Department of Transportation and Public Facilities (DOT/PF),
currently, only 37 percent of the marine fuel tax is being spent on
maintenance of harbor facilities. She said the rest of the money
is remaining in the general fund. She requested that Mr. Kito
comment on this information.
Number 676
SAM S. KITO III, Special Assistant, Office of the Commissioner,
Department of Transportation and Public Facilities, commented that
the reference to 37 percent was an average taken over five years.
The 37 percent, of the marine fuel tax, included revenue that went
to the DOT/PF for harbor construction projects. The maintenance
dollars that the state or department expends on the harbors is an
unknown amount at this time.
CHAIRMAN GARY DAVIS remarked that this might be a negligible fee
and commented that operation costs and basic maintenance costs come
from local slippage and moorage fees.
Number 715
MR. KITO said many of these harbors are managed by the
municipalities.
Number 726
REPRESENTATIVE JAMES pointed out that 63 percent of the marine fuel
tax goes into the general fund to pay for other things. She said
a vacancy of 63 percent, from the general fund, would need an
attached fiscal note. She said either the general budget would
have to be cut by that amount or the capital budget would need to
be increased by this amount. She added that the inclusion of a
legislative four-fifths vote to use any additional funds for other
purposes would be difficult.
REPRESENTATIVE JAMES said it is in this area where the difference
between a fund for highway and marine fuel taxes differ. Currently
the revenue derived from the highway fuel tax is less than the
amount expended, whereas there is money derived from the marine
fuel tax being used for other things.
Number 835
REPRESENTATIVE DON LONG mentioned the 37 percent of the marine fuel
tax and said he hadn't seen anything in the constitution that
dedicated that marine fuel tax to a marine fund.
Number 855
MR. KITO said the 37 percent of the marine fuel tax is an estimate
based on what DOT/PF has spent on capital expenditures on marine or
harbor systems, averaged out, compared to the amount collected in
taxes.
Number 871
REPRESENTATIVE LONG clarified that everything goes into the general
fund, but this 37 percent has been identified as the amount of
money expended.
Number 880
REPRESENTATIVE BRICE said approximately three times as much is
being spent on highway maintenance out of the general fund than
what is being brought in from the highway fuel tax.
Number 925
FRANK DILLON, Executive Director, Alaska Trucking Association,
Incorporated, was next to testify via teleconference from
Anchorage. He was in support of a dedicated fund as specified in
CSHJR 49(TRA). He said in 1990, his company suggested a dedicated
fund derived from highway money collected from highway users to be
put back for the maintenance of the highway.
Number 969
MR. DILLON said the language contained, on page two, line two, "or
operating costs", is of concern. He said his company would not
support CSHJR 49(TRA) if that language is included. He said this
fund should be established for maintenance only in a manner that is
clear and narrowly defined. He said the language of this
definition should indicate that it is for maintenance of the
existing transportation infrastructure with current vehicle rights-
of-way.
Number 1015
MR. DILLON said his industry does not envision that the DOT/PF's
budget should be covered by what is collected in a maintenance
fund. He said the community of Alaska highway users is small and
cannot fund DOT/PF's budget. He said the fund should collect
taxes, that are reasonable, to maintain the highways and desist
from the practice of deferred maintenance. He said this policy of
deferred maintenance means that the job is done later at a greater
expense. He said the situation now, is that the maintenance has
been deferred to the point where the DOT/PF is, in some areas,
uncertain about the longevity baseline of their highways. He said
money will need to be expended to bring the highways and roads up
to par.
Number 1093
MR. DILLON said the industry looks at the DOT/PF's budget with
trepidation. He said the average tractor-trailer currently pays a
little bit in excess of $7,000 in state, local and federal taxes
and fees, to operate in the state of Alaska. The combined
contribution, by truck users within the state and truck users
outside the state, is approximately $90 million per year to the
treasury of the state of Alaska. He said this figure was derived
from the fact that the industry gets back approximately seven to
one on highway truck fund dollars, and approximately 40 percent of
the federal highway trust fund is money that comes directly out of
the trucking industry's pocket. This money is paid by truck users
within and outside of the state. He said his industry makes a
significant contribution for highway maintenance and new
construction. He hoped that the reauthorization of the highway
bill in 1997 will free up money for general highway maintenance
purposes so that more maintenance can occur then has in the past.
MR. DILLON said by establishing a dedicated fund, with a clear
understanding that this fund is going to be used to improve the
situation for Alaska highway users, is a marketable device in
getting people to accept a higher highway fuel tax. The polling
done by his industry indicates that without some sort of dedication
to funding, people don't trust that paying a higher fuel tax will
result in better roads. He cautioned that if a higher fuel tax
merely results in higher spending at DOT/PF, the state gains
nothing and the public feels they are paying an even greater
subsidy to the general fund and other uses than they do now.
Number 1205
CHAIRMAN GARY DAVIS said, from committee discussions, there is
agreement concerning the language, "or operating costs". He said
the definition suggested by Mr. Dillon would put everyone
agreement. He said, in discussions by the subcommittee relating to
operating costs, the proposals included maintenance of the roads
and facilities. He said the discussion of facility maintenance
included the fencing around the DOT maintenance facility, the
buildings, the occasional need of new fuel pumps, painting of the
buildings, as well as other things. He said you could get as
detailed as the operating expenses, operators, superintendents and
supervisors. He said these are the things the committee is
addressing when maintenance and operating cost is included and are
found in statutory definitions. He asked if Mr. Dillon had the
same understanding in his definition of maintenance.
Number 1289
MR. DILLON said his perception of maintenance included more than
simply maintaining the highway features such as ditches and
drainage, but he wanted to see the language confined as narrowly as
possible to the actual maintenance of the roadway itself. He
mentioned the confusion surrounding the marine highway system and
exactly what things would be eligible, in terms of maintenance
expenses. He mentioned that the Alaska Marine Highway System is
defined as a highway. He said, even with a tax of 50 cents a
gallon, the fund would probably not have enough money to take care
of the DOT/PF's maintenance desires. He said the DOT/PF has been
inadequately funded for some period of time as seen in their budget
over the past ten years. The DOT/PF has been asked to do more, in
terms of added lane miles and meeting federal requirements, without
receiving adequate funding. He said the state is behind, in terms
of bridge maintenance and pavement maintenance, to the point that
it will cripple the state's economy. He said without an investment
in the infrastructure, a steady and ongoing quality maintenance
program, economic development won't occur because people will not
locate in such an area.
Number 1385
CHAIRMAN GARY DAVIS said the committee would consider all of his
concerns and would address them in the legislation.
Number 1413
MARLA ATKINS testified via teleconference from Cordova. She asked
for clarification of whether the state cross- uses funds for
maintenance of roads, harbors and new construction or whether they
are separated individually by mode.
Number 1441
CHAIRMAN GARY DAVIS said the tax revenues are all put into the
general fund and, as needed and approved by the legislature, they
are distributed to different accounts.
Number 1446
MS. ATKINS referred to page one, Section 7, discussing dedicated
funds, she read "the proceeds of any state tax or license shall not
be dedicated to any special purpose. This provision shall not
prohibit the continuation of any dedication existing prior to
1956", and asked if this meant that there were dedicated taxes from
gas taxes.
Number 1474
CHAIRMAN GARY DAVIS said there are dedicated funds, not
specifically fuel taxes, but that Section 7 relates to any
dedicated funds in the state and mentioned the Fisherman Fund as an
example.
Number 1499
MS. ATKINS referred to Section 18, on page one, regarding the
transportation fund and asked if the taxes from the various modes
would be placed into one account or whether it would be segregated
into specific accounts relating to the specific taxes.
Number 1524
CHAIRMAN GARY DAVIS said the fund is broken down by subparagraph
one and two, which separated the highway funds from the marine
funds.
Number 1539
MS. ATKINS asked how this was going to work if there was not
currently enough money for the highways.
CHAIRMAN GARY DAVIS said hopefully funds would be established for
highway maintenance. He said, currently, only $24 million is being
generated and $75 million is being spent. He said CSHJR 49(TRA) is
only a first step.
MS. ATKINS clarified that currently the funds can be crossed over,
but under CSHJR 49(TRA) this couldn't happen.
Number 1569
CHAIRMAN GARY DAVIS said money could be utilized for other purposes
with a three-fifths vote of the legislature.
Number 1580
MS. ATKINS said she supports the concept of the dedicated gas fuel
tax. She felt the gas tax would need to be raised in order to
maintain the highways. She said the highway infrastructure is
badly in need of work throughout the state. She said, if we are
going to develop tourism and economic development in Alaska, we
need to provide an infrastructure. She said the state gets a
higher return on the gas tax than states back in the East Coast
receive.
MS. ATKINS said she supports a gas tax and would want a dedication
of the fuel taxes to improve the road system, bring maintenance up
to standard and for new roads. She mentioned that Alaska has fewer
line miles than any state in the union which is difficult in terms
of tourism.
MS. ATKINS expressed concern over administrative costs versus
maintenance costs. She referred to the former Lieutenant Governor
Coghill (indiscernible) "understood that they were going to revamp
everything down there if they could and try to leave more people in
the field and less people in the Administration, instead, it turned
out we're back to cutting in the field." She referred to Cordova
and mentioned the states cutback of eleven to six men for
maintenance. She said they cannot keep up with the maintenance in
Cordova.
MS. ATKINS concluded that she wanted to see a raised gas tax that
is dedicated to a specific fund in order to get the public to vote
for it.
Number 1704
BARBARA HUFF TUCKNESS, Teamsters Local 959, testified via
teleconference from Anchorage. She said her organization represent
truckers and various people who use the highway infrastructure.
She said truckers deal with the infrastructure when they are going
up mountain passes with double loaders and de-booting them in order
to take one trailer at a time through some of those areas. She
said this is less of a problem then it has been in the past. She
said Teamsters Local 959 supports CSHJR 49(TRA). She said a focus
needs to be placed on the maintenance of the highways.
Number 1782
REPRESENTATIVE LONG asked how the motor fuel and water taxes are
separated, especially in areas where there is only one pump
station.
Number 1803
MR. BARTHOLOMEW said, currently, the identification is made by the
qualified fuel dealer or wholesaler who is paying the taxes
upstream from a central spot. When the fuel is sold a
determination is made regarding how the fuel will be used. He said
there is some inevitable crossover, but the Department of Revenue
(DOR) records the type of fuel tax according to how it is placed in
the tax returns.
Number 1850
CHAIRMAN GARY DAVIS clarified that it is up to the wholesale dealer
to record it and hopefully they are doing this to the best of their
ability.
Number 1862
MR. BARTHOLOMEW said there would need to be some sort of education
process put on by the DOT/PF and the DOR.
Number 1872
REPRESENTATIVE BRICE questioned how the different types of tax,
associated with different fuel use, was going to be differentiated,
especially in rural Alaska. He also questioned the staff turnover
and whether or not that would impact this process.
Number 1958
MR. BARTHOLOMEW said the DOR would set up some guidelines when the
wholesalers are dispatching it to the rural retailers, so they can
try to come up with an average, periodically reviewed and altered.
Number 1976
REPRESENTATIVE BRICE said this system should not be too precise.
MR. BARTHOLOMEW said the concern would be one of creating more
paperwork. He said the DOR and the industry could develop some
guidelines to allow the industry to do some fuel tax
determinations.
REPRESENTATIVE BRICE said fuel used for marine purposes "probably
runs 35, 40, up to 50 percent of gas sales."
REPRESENTATIVE LONG said it would also depend on the time of the
year.
REPRESENTATIVE JAMES clarified that unleaded gas could be put in
boat motors.
Number 2035
REPRESENTATIVE LONG asked if these taxes included snow machines and
all terrain vehicles.
MR. BARTHOLOMEW said there is a separate tax called the off-highway
use tax. He said if a vehicle was used off-highway there is a 2
cent tax. He explained that the 8 cent per gallon tax is paid, but
an exemption can be filed to receive a 6 cent per gallon rebate.
He said the rebate allows the DOR to track how much off highway use
there is in the state.
Number 2082
MR. DILLON interjected that there is some strict accounting by the
federal government for fuel tax purposes in order to prevent people
from paying the tax. He mentioned that because marine fuel tax was
a lesser amount than the highway fuel tax, he wouldn't be surprised
if trucks in Southeast were running around using boat fuel.
Number 2125
RAY GILLESPIE, Lobbyist representing the City of UnAlaska,
Gillespie and Associates, was next to testify. He said the city of
UnAlaska supports CSHJR 49(TRA) with the inclusion of the marine
fuel as they believe it is a good first step to addressing some of
the funding inadequacies for ports and harbors. He mentioned the
inclusion of marine fuel tax in the CSHJR 49(TRA) will have a
broader appeal statewide.
Number 2154
REPRESENTATIVE JAMES asked what the total amount of revenues
collected from marine fuels was.
MR. KITO said this information was passed out and available in the
committee packet.
REPRESENTATIVE JAMES said a fiscal note, prepared for the highway
use fund, changing $21 million from general fund to the highway
fund, should incorporate the total amount being received from
marine fuels from the general fund to the transportation fund.
Number 2200
CHAIRMAN GARY DAVIS said he would like to pass CSHJR 49(TRA) with
the understanding that an updated fiscal note is requested. He
then asked Mr. Kito if the definition of maintenance and operating
cost was clearly understood in CSHJR 49(TRA).
Number 2222
MR. KITO felt it was clearly understood, but added the definition
of items, funded by this dedicated fund, could be clarified under
statute.
Number 2234
REPRESENTATIVE BRICE said, as he understood Mr. Dillon's concern,
that a statute could be developed allowing CSHJR 49(TRA) more
expenditures to be used for the administrative costs of DOT/PF
versus direct maintenance.
Number 2258
MR. KITO said the language, as worded in CSHJR 49(TRA), would have
to include some direct relationship to maintenance of the highway
system.
Number 2271
REPRESENTATIVE BRICE said by definition, Mr. Kito's and the
commissioners salary can be attributable to maintenance costs. He
suggested tightening the language of CSHJR 49(TRA).
Number 2298
CHAIRMAN GARY DAVIS asked if the administration could allocate a
portion of their time under the language of CSHJR 49(TRA).
Number 2309
MR. KITO said the only place the DOT/PF has any type of cost
allocation is in the federal highway funding. He said DOT/PF tries
to build a federal highway department for whatever costs the
department can, so within the DOT/PF a figure is made and
incorporated into that budget. In regards to maintenance, the
realistic approach would not include DOT/PF administrate costs
within that budget. He said the accounting procedures involved
would be tremendous.
Number 2338
REPRESENTATIVE JAMES said, in accounting principles, that
maintenance would include any appropriate administrative or other
costs that directly related to the maintenance. She expressed
concern over the openness of such language.
TAPE 96-6, SIDE B
Number 000
REPRESENTATIVE JAMES said taking operating costs out of CSHJR
49(TRA), makes it perfectly clear and that the legislature is not
intending to allow administrative costs relating to roads and
highways out of this fund. She added that statutes could be added
to define what the maintenance definition covers.
Number 029
REPRESENTATIVE JAMES made a motion to delete, page two, line two,
"or operating costs". Hearing no objections this deletion was made
to CSHJR 49(TRA).
Number 046
REPRESENTATIVE JAMES expressed concern about combining the marine
fuel tax with the highway fuel tax. She said this inclusion might
gain support in some areas, but lose support in others.
Number 061
REPRESENTATIVE WILLIAMS made a motion to move CSHJR 49(TRA) amended
from committee with individual recommendations and the attached to-
be-amended fiscal note. Hearing no objections, CSHJR 49(TRA) was
moved from the House Standing Committee on Transportation.
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