Legislature(1997 - 1998)
04/01/1998 01:15 PM House TRA
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 278 - MARINE MOTOR FUEL TAX Number 0181 CHAIRMAN WILLIAMS announced HB 278, "An Act imposing a reporting requirement on certain sales, transfers, and consumption or uses of motor fuel, increasing the motor fuel tax on motor fuel used in and on watercraft, and authorizing payment of a portion of that tax as refunds to municipalities; and providing for an effective date," is before the committee. Number 0186 REPRESENTATIVE CARL MOSES, Alaska State Legislature, presented HB 278. He stated, "HB 278 is almost identical to a bill we passed a couple years ago, and subsequently the Governor, through probably poor information, vetoed. It's badly needed, and I don't consider it a tax, I consider it a user fee. It's designed to help maintain and build boat harbors that the state badly needs. It never seems that we get enough money for boat harbors every year. Alone in my district, we have eight boat harbors and a various status of them being built, being surveyed, and onto three different projects or have federal money available now. It's probably still over 50 percent of it is collected in my district, and I maintain over 50 percent of it is paid by nonresident interest. In fact I feel so strongly that it's needed, I don't mind imposing the user-fee, 50 percent of it which is my constituents. That little raise cost me $4.5 million, the total we take in now, the five-cent a gallon tax has been varying from $8 million to $9 million. I might say that at the present five-cent a gallon tax, in comparison to the overall cost of fuel to a fisherman or the vessel operator, it's about one- fifth of the overall cost that it was 30 years ago. In other words, they're paying less in percentage of their overall cost today in a tax, it's by one-fifth of what they paid 30-40 years ago because the price has increased, but the tax has remained the same." REPRESENTATIVE MOSES stated, "It's estimated, two years ago, that our deferred maintenance on boat harbors was $250 million, that's probably more like $350 million or $400 million today. So, that is a considerable portion of our deferred maintenance that we're faced with. And, of course, that's mainly because we haven't budgeted for it. I think the user-fee, as I call it, is highly justified. When I was first in the Legislature in 1965, it was standard practice to appropriate all the money that was taken in with the marine fuel tax to boats and harbors. And, that's when a lot of money was provided for boat harbors. We happen to be at the end of the line, we only have two actual boat harbors that are fully fledged boat harbors and there isn't any pleasure craft in any of them. Those two communities now are doubling the size of their boat harbors, and the federal money is available. In those two communities, and I don't mind mentioning at Sand Point and King Cove. They have taken over full title and maintenance to their boat harbors. That speaks well for them, but they need help to double the size of theirs. And, of course, you won't see any yachts or pleasure craft in their boat harbors, they're all fishing vessels. But they need to double the size because there is a long waiting list for additional moorage." REPRESENTATIVE COWDERY said, as he understands it, Representative Moses wants to refund part of this tax, or all the tax to the municipalities. He asked would that be through revenue sharing. REPRESENTATIVE MOSES replied they would have to come up with a specific plan for a boat harbor facility, or a maintenance plan, which is approved by the Department of Transportation and Public Facilities (DOT/PF). Number 0232 BRYCE EDGEMON, Legislative Assistant to Representative Moses, pointed out representatives from the Department of Revenue and DOT/PF are present and can address that in more detail. REPRESENTATIVE COWDERY asked how do you get around the dedication of funds, would it have to go into the general fund and then be allocated to this? REPRESENTATIVE MOSES replied yes. REPRESENTATIVE COWDERY asked why did the Governor veto the previous legislation. REPRESENTATIVE MOSES stated he is maintaining the Governor must have had poor information or advice. He stressed that it was badly needed then and gets worse every year. He said he has no qualms about changing it. Representative Moses added that he even thought of having a matching deal, if they raised so much money on a two- cent a gallon tax, locally through a special ordinance or sales tax, to having something there where the State would match it. REPRESENTATIVE MOSES said he believes one way to get around the dedicated tax, is where it states that the Legislature "may." He pointed out that back in the 60's it was understood that the amount of taxes collected will go back toward boats and harbors, but we slipped away from that and now less than half of it goes to that purpose. He stressed that the situation gets worse every year. CHAIRMAN WILLIAMS remarked, but we are paying for it today. REPRESENTATIVE MOSES replied that's correct. Number 0246 REPRESENTATIVE HUDSON agreed that the current nickel a gallon was pledged to the improvements of our ports and harbors years back. He said, "I don't know how we're going to do it, because I know we can't go into dedicated funding. But that would be a major step in the right direction if we could just get the Legislature back to their pledge of putting that money back into the ports and harbors. That's where it's collected and that's what it was for. And I know were just using it for wherever we want to. I also know that the condition on a statewide basis of our ports and harbors weren't additional funding consideration. I applaud your bringing this forward." REPRESENTATIVE HUDSON asked Representative Moses, in our statute this is clearly separated from all other fuel taxes, isn't it. This has no other application except for the marine motor fuel tax. REPRESENTATIVE MOSES replied that's correct. REPRESENTATIVE HUDSON asked how does that flow into the general fund, where is it collected. REPRESENTATIVE MOSES replied on a wholesale level from the distributors. CHAIRMAN WILLIAMS said the committee will be working on this and hopefully will get help from the department to make it work for everyone. Number 0263 LARRY MEYERS, Director, Income and Excise Audit Division, Department of Revenue, came before the committee. He reiterated that HB 278 raises the tax on motor fuel from a nickel a gallon to eight cents. He explained the Department of Revenue will be the one responsible for collecting it. Currently these motor fuel returns are filed on a monthly basis and the provision of this bill requires the department to track where the motor fuel is sold or eventually used. He indicated that's something that' unique in the provision. Generally, as was mentioned earlier, the department collects it once at the wholesale level and is not concerned as to where it ends up being used. MR. MEYERS noted additional reporting requirements will be required on the wholesale, eventually the user. If there are resales, the department will have to track it through the system as far as how it's going to be accounted for. Addition paper work will also be required by the user as well as the Department of Revenue. MR. MEYERS said they believe they can make it work. He reiterated that there will be additional reporting requirements. The bill also provides for a new reporting section that talks about exempt users, that's something that's unique now, the department hasn't dealt with that in the past. Mr. Meyers said they think it would be cumbersome. The people filing the reports on a monthly basis would have to list whom they sold to on an individual basis for exemptions. The Department hasn't gone into that much detail in the past and they don't know if that's the direction they we want to go in right now, they think that could be a problem. Over all, other than determining the sites of where the money is going to be allocated back, this is something that's doable. He concluded that they're just trying to find a way that makes it most convenient for both the department and the taxpayer. REPRESENTATIVE HUDSON asked what percentage of the marine fuel tax comes from, say the large fisheries' operation out of Dutch Harbor. Are the larger ships, Seattle-based ships, paying much of the tax? MR. MEYERS responded he doesn't have that information. He explained it generally comes in at the wholesale level and is disbursed throughout the state. If it happens to be consumed at the locality of where the wholesaler was, then that would be the department's only estimate. REPRESENTATIVE HUDSON said because we do collect it from the wholesaler. MR. MEYERS replied that's correct. Number 0289 DENNIS POSHARD, Legislative Liaison, Office of the Commissioner, Department of Transportation and Public Facilities, came before the committee. He stated DOT/PF has taken a neutral position on HB 278. The department is supportive of a means of funding harbors and thinks this is worth looking into. He encouraged the committee to consider tieing a transfer of the facility ownership in with the funding, or the refund of the fuel tax, that could possibly reduce the State's maintenance operations burden as DOT/PF is responsible for the maintenance and operations and own 79 out of the 95 ports and harbors in the state. MR. POSHARD also suggested another consideration might be taking a look at the allocating of fuel tax revenues to the harbor facilities that they're prorated in proportion to other things like replacement values of the facility, the age of the facility, and other considerations. He said the department is looking at need versus just usage of the fuel and the allocation methods. He reiterated they're neutral on the bill and thinks there's other considerations the committee might want to look at. CHAIRMAN WILLIAMS asked Mr. Poshard if he knows why it was vetoed a few years ago. MR. POSHARD said he believes the Governor vetoed the bill because there was a long-range financial planning commission looking at taxes as a whole and the report hadn't come out yet. He indicated the Governor wanted to look at any new taxes as part of the comprehensive plan which was stated clearly in his veto letter of June 30, 1995. CHAIRMAN WILLIAMS asked DOT/PF to work with his office on the suggested changes. MR. POSHARD agreed to. CHAIRMAN WILLIAMS asked if anyone else wanted to testify. Number 0314 CHAIRMAN WILLIAMS announced HB 278 will be held for further consideration.
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