Legislature(1997 - 1998)
04/15/1998 01:04 PM House TRA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 482 - MOTOR VEHICLE REGISTRATION Number 2360 CHAIRMAN WILLIAMS announced the last order of business would be HB 482, "An Act relating to registration of noncommercial trailers and to registration of vehicles owned by disabled persons or persons who are 65 years of age or older; and providing for an effective date." PETER ECKLUND, Legislative Assistant to Representative William K. (Bill) Williams, Alaska State Legislature, provided the sponsor statement for HB 482. He read the following into the record: "HB 42, an act relating to the registration of motor vehicles, was introduced to make state government more efficient and user friendly. "Currently, the state issues thousands of vehicle registrations yearly to seniors and disabled Alaskans. Although there is no charge for these vehicle registrations, considerable time and effort goes into issuing them on an annual basis. HB 482 would remove this burden from our seniors and those with disabilities, and help shrink the lines at our [Division of Motor Vehicles] DMV offices as employees are redeployed. "HB 482 also removes the annual $10 registration [fee] for noncommercial trailers and sets a one time $10 registration fee. When a trailer changes owners, the new owner would be responsible for re-registering the trailer and paying a $10 fee. "Adoption of HB 482 will increase efficiencies at DMV and promote a user friendly atmosphere between the public and state government." MR. ECKLUND stated that since introduction of the bill, it's been pointed out there's a possible problem with how taxes are collected in relation to this bill. Currently, the state of Alaska collects municipal taxes for municipalities at the time of registration of commercial and noncommercial vehicles, and then 8 percent is taken off the top and the balance is rebated to the municipalities. Part of the intent of this legislation is to remove the annual registration of noncommercial trailers. He indicated by doing that, they would remove the mechanism by which the state collects a municipal tax for municipalities and rebates that tax. He said after talking with the drafter, one possible solution is that at the time of registration of a noncommercial trailer, which would be once, that's when the tax is collected and rebated to the municipalities and it's not collected at any other time. He said he believes that some municipalities will object to that because they want their tax revenues. He said, "If this is a policy question, Mr. Chairman, how the legislature wants to treat these municipal taxes, do we want to continue collecting the municipal taxes and rebating them to the municipalities? Do we want ...[ends mid-speech because of tape change]." TAPE 98-18, SIDE B Number 0011 REPRESENTATIVE HUDSON asked if a noncommercial trailer is similar to a boat trailer? MR. ECKLUND replied that's correct. He referred to page 2, subsection (3) and stated that "trailer" includes a boat trailer, baggage trailer, box trailer, utility trailer, house trailer, travel trailer, or trailer rented or offered for rent. REPRESENTATIVE ELTON said HB 482 addresses a significant number of trailers and motor vehicles that are registered by people who are 65 years or older, and stated that he needs some help with the fiscal note. He said he needs to be assured that the fiscal impact is only the size that it really is. He said he is somewhat sympathetic to the plight of municipalities and made reference to property taxes and stated that the state has gotten to the point where they don't rebate anything for the municipalities for that. "This is just another hit that they're taking," he added. MR. ECKLUND stated that it's his understanding that currently the state doesn't charge seniors and the disabled a fee, but the state requires them to register annually. He said HB 482 would remove the burden of annual registration and that there won't be any decrease in revenue to the state, or the seniors and the disabled. Number 0087 JUANITA HENSLEY, Chief, Driver Services, Division of Motor Vehicles, Department of Administration, told the committee that currently a senior citizen who is 65 years or older can apply for an exemption one time for one vehicle and they are exempt from paying a registration fee. She noted that individuals who are eligible handicap license plates can apply for one plate free of charge. She said there are approximately 14,000 vehicles in the category of senior citizens and approximately 5,000-6,000 handicap license plates that this bill would cover. She said that it would reduce the number of individuals who are having to register their vehicles every year that actually is costing the state money to register those vehicles and the state does not receive revenue from those vehicles. Ms. Hensley pointed out that the fiscal note was not projected to reflect the decrease of registrations. She said HB 482 will probably be held over and that she would like to rework the fiscal note because she feels DMV needs to show the decrease of registrations they would have in the future. She addressed the biannual registration of trailers stating that half of them would not be registered one year for a lifetime and the other half the following year for a lifetime, and after that, only the new trailers coming in or those that switch ownership to the trailers. She stressed that it will be difficult for her to project the decrease in revenue because a lot of people change ownership of trailers who will still pay the one-time registration fee to change ownership. MS. HENSLEY said the other issue that she is concerned with is the tax issue. She indicated that DMV collects the registration fees and taxes for municipalities. She informed the committee in 1997 DMV registered 78,839 noncommercial trailers, "so when you're looking at a decrease in one year for 40,000 registered trailers and the next year 40,000, it's going to reduce the workload in DMV some, but then we're going to have other people coming in and changing those trailers over, purchasing new trailers, or selling trailers. Those are the ones that we will actually be seeing in the offices as opposed to seeing them in the mail room." Number 0209 REPRESENTATIVE COWDERY asked if HB 482 includes camper trailers. MS. HENSLEY responded in the affirmative. REPRESENTATIVE COWDERY asked if the bill distinguishes house trailers and camper trailers, and specifically, the length of camper trailers. MS. HENSLEY replied that DMV does not currently distinguish between the different types of trailers. REPRESENTATIVE MASEK addressed the term "trailers" on page 2 and asked if there is any way to include a snow machine trailer? MS. HENSLEY replied that snow machine trailer is already included in the bill. She said it is considered a utility trailer. She pointed out that all noncommercial trailers are included in this bill. REPRESENTATIVE MASEK commented that disabled people and seniors are already covered in statute. She stated that she feels this bill is a housekeeping measure which will cut down costs in the long run. She said she feels this is a good bill and offered her support for it. REPRESENTATIVE ELTON asked for clarification that persons 65 or older don't need to pay for car registration. MS. HENSLEY replied that they are eligible for a one-time, one vehicle exemption and advised the committee they don't have to pay for the registration, but they do have to register. REPRESENTATIVE ELTON noted that trailers aren't covered, and asked if this bill would extend the same exemption to trailers. MS. HENSLEY responded that trailers are not covered and there is a $10 biannual fee or $5 a year. She said under this provision seniors would pay a one-time lifetime fee of $10. MR. ECKLUND wanted to clarify on Ms. Hensley's point. He said the way the bill is written, a person over 65 years of age could opt to pay no registration on one vehicle so they could potentially decide between their vehicle or their trailer. He said a trailer only costs $10 and to register a vehicle would cost more, so a person would probably opt to not have to pay on their vehicle. REPRESENTATIVE ELTON asked if the bill would allow seniors to have two exemptions, as long as one is a trailer and one is a vehicle. MR. ECKLUND replied no, just one. Number 0390 TIM ROGERS, Legislative Program Coordinator, Municipality of Anchorage, testified via teleconference from the Anchorage LIO. He commended the committee for attempting to simplify the DMV functions to make them more efficient. He said the municipality has some concerns over the collection of municipal property tax that is collected at the same time as registration. He commented that Mr. Ecklund very adequately described what the municipality's concern is. He stated the only enforcement hammer the municipality has to ensure that people comply with this requirement is the tag on the back of their license plate that says when it expires. If that tag is no longer required, it will be very difficult for them to enforce the requirement to pay the tax. He indicated that for noncommercial trailers in the Municipality of Anchorage, it's no more than approximately $96,000 a year. It is a fairly significant amount of money. He concluded, "I don't know that we have a solution right now, we've got a couple of ideas and we'll be happy to work with you to come up with something, but we're concerned with the way it's written. It could have a significant negative fiscal impact on the Municipality of Anchorage, as well as the other local jurisdictions that have a tax on motor vehicles." CHAIRMAN WILLIAMS asked if he has been working with DMV regarding taxes. MR. ROGERS replied that he has been in contact with Ms. Hensley and that the municipality will continue to work with her on it. REPRESENTATIVE COWDERY asked, "Did you say that the impact to the municipality is $96,000? Is that all seniors or is that the total impact on all the revenues?" MR. ROGERS replied that that is the total impact on all the revenues from noncommercial trailers. REPRESENTATIVE COWDERY asked if he knows what percentage would be senior-owned vehicles. MR. ROGERS said he did not know. Number 0493 KEVIN RITCHIE, Executive Director, Alaska Municipal League, came before the committee to testify. He said, the other major communities that take advantage of this collection program is actually an advantage to property taxpayers because without this program, they would be taxed and a person would have to list it as personal property and pay approximately three times as much if they were trying to do the assessed value. The program is a great advantage to constituents, and it also is an extensive program as a service to taxpayers. He told the committee DMV considers reducing the amount of work that they do as a savings to the state, which is technically a savings to the department, but potentially a loss to the state. He said the money that DMV receives from municipalities is that they take .08 cents on every dollar that is collected, which is quite sufficient to pay for the staff effort in doing it, and he would guess that they make a small profit. In conclusion, he stated that from an overall perspective the state is not losing money, the question then becomes should the state push municipalities into taking this into account on personal property tax and most taxpayers would say no. REPRESENTATIVE HUDSON asked, "If we pass this, the seniors and the disabled that we're trying to help may end up being pushed into property taxes which would be greater?" MR. RITCHIE said the only portion of the bill he is addressing is the specific part that charges a registration tax to people who are not seniors. He said he does not believe seniors pay a tax at all. REPRESENTATIVE HUDSON said he was referring to the local tax. He then asked if Anchorage collects property tax on noncommercial trailers at the present time. Number 0622 MR. ECKLUND interjected and replied that Anchorage does because the state collects it at the time of registration of those trailers. He informed the committee that the state collects it, takes 8 percent off the top and then remits it to the municipality. REPRESENTATIVE HENSLEY referred to Representative Hudson's question and stated that of the 8 percent, it's strictly general fund dollars that gets deposited into the general fund. She stated, "It's not something that's subject to allocation back to the department, so it's just part of that 36 million dollars that we deposit for (indisc.) annual budget." MR. ECKLUND clarified that the seniors part and the disabled person's part really have nothing to do with the trailer part of the bill. He said they are two separate items in the same bill and that they don't have any connection. MS. HENSLEY said, "This is just an efficiency measure that during the re-engineering process and rethinking the way that government does business, the design teams came up with this idea of giving the seniors a break because they wouldn't have to be mailing their registrations in every year, they wouldn't have to be doing this additional work on DMV for something that the state does not receive any revenue for." She informed the committee the municipalities do not receive the taxes for those seniors and one vehicle is exempt from the registration tax. She said the re- engineering design teams also looked at trailers and thought that since it was such a small amount DMV collects over a two-year period at a cost of $5 per year, and that it costs the state more than $5 a year to register a trailer. In conclusion, she said DMV brought this matter before the legislature advising them that these items could be an efficiency measure to help the state out and also to help DMV out in its re-engineering efforts and the efficiency efforts that they are looking at doing. Ms. Hensley noted that DMV's budget for this year is faced with a $500,000 reduction in their operating funds and stated that they need to look at some ways of trying to serve the public better. CHAIRMAN WILLIAMS advised the committee members that HB 482 will be held over for further consideration.
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