Legislature(1999 - 2000)
02/17/2000 01:10 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
HB 59 - MOTOR FUEL TAX CHAIRMAN HALCRO announced the next order of business as House Bill 59, "An Act relating to the motor fuel tax; and providing for an effective date." [Not yet adopted was a proposed committee substitute (CS), Version G (1-GH1040\G, Kurtz, 2/17/00.)] CHAIRMAN HALCRO explained that in a meeting with Commissioner Joseph L. Perkins of the Department of Transportation & Public Facilities, it was agreed that all monies would be directed towards maintenance, including the existing tax and any proposed increase. In addition, the proposed CS includes a requirement for the department to bid out to the private sector all maintenance jobs. He noted that the department has the ability to bid on those jobs itself. CHAIRMAN HALCRO further stated that after hearing testimony from Kevin Ritchie [Executive Director, Alaska Municipal League], it was agreed that municipalities would get a rebate. He noted that the original intent of the 9-cent increase to go towards match- money for federal highway funds no longer applies. The proposed committee substitute, therefore, would require 5 cents, of the 9- cent increase, to be rebated back to municipalities. The remaining 4 cents would go to the Department of Transportation & Public Facilities for maintenance projects. CHAIRMAN HALCRO referred to a spreadsheet from the Municipal & Regional Assistance Division [Department of Community & Economic Development] entitled, "HB 59 CS With 5 Cent Allocation to SRS Road Maintenance Account at FY 00 Road Miles," that illustrates what each community would get under the proposed committee substitute. He said the Municipality of Anchorage would get over $2 million, which could go to either supplementing public works projects, hauling snow or lowering property taxes. He pointed out that this type of proposal has never been done before. He also noted that the 5-cent rebate would make up for the losses in the municipal revenue sharing assistance program that occurred last year. He called it a "win-win" [proposal]. CHAIRMAN HALCRO further stated that the gas tax has been at 8 cents a gallon since 1961. It has not been adjusted for almost 40 years, and it doesn't take much to agree that the state's transportation infrastructures have dramatically increased over the last 40 years. CHAIRMAN HALCRO stated in conclusion that he is very wary of increasing taxes, but this is a user fee. Since the September 14 advisory vote, his constituents have indicated that they want "something like this"; they want their money to go towards a tangible benefit. He also pointed out that the proposed CS contains a sunset clause of July 1, 2005. That way, the communities and citizens can see whether or not their tax dollars are translating into funds for road improvements, which is the intent of the legislation. Number 1475 REPRESENTATIVE COWDERY asked Chairman Halcro whether his staff has analyzed how the gas tax compares to other states. CHAIRMAN HALCRO replied that Alaska ranks fiftieth at 8 cents a gallon. Alaska would rank forty-fifth increasing it by 9 cents. REPRESENTATIVE COWDERY pointed out that Alaska is at the top in terms of the cost of gas. He said: If we're not going to save the people money, I don't think when somebody fills their car up, they know whether it's going to taxes or just coming out of their pocketbook. That's what they're going to think. That's why I discussed with you earlier that I wasn't very enthused about this. ... REPRESENTATIVE COWDERY mentioned the low price of gas in Anchorage, and mentioned the outlying areas. He concluded: So the people, I don't think they will distinguish, except the bottom line, how much it costs to fill their tank up - whether it goes for 20 cents for tax or a nickel for tax. So that's why I'm not really enthused about this. ... If you want to move it out of committee, I would support that, but I'm not going to guarantee that I support the idea. Number 1574 CHAIRMAN HALCRO stated that this is obviously a difficult situation, and there are a lot more people in the capitol building concerned with reelection than reality. He said, The fact is, with road maintenance or anything else, ... it's this chair's opinion that we need to stop whistling as we walk past the graveyard, because, you know, we have some serious problems in this state. And 9 cents a gallon: ... we have not raised this gas tax in 40 years. ... In my community alone, I can point out three or four major highways that have been built in the last 20 years. I am very sensitive to taxes, very sensitive, but the fact of the matter is, we have to start somewhere, and on September 14 the people said, "No, not this plan; come back with another." The people want as close to user fees as you can get, and that's exactly what a gas tax is. Number 1619 REPRESENTATIVE MASEK said the comment made about individuals getting reelected is going overboard in relation to this piece of legislation. She said: We are elected, and we do have to serve our constituents. We have to get reelected every two years. That's the norm, and I don't sit here thinking I'm going to be here for ten years. I go back to the polls and vote, as my constituents do. REPRESENTATIVE MASEK further stated that according to surveys she has conducted in her district regarding the state's fiscal crisis, an increase in the gas tax is not acceptable. She will not support it, even though the concept is great. She feels that the state is not at a crisis [point] yet. The Department of Transportation & Public Facilities is doing an outstanding job in terms of getting the roads up to standard, especially since they have to also deal with the airports and the Marine Highway System; they have to stretch their budget. Furthermore, the state receives a lot of federal funding through TEA-21 [Transportation Equity Act for the 21st Century], and the state's congressional delegation continues to work hard to ensure that the state gets its fair share. She agrees that there is room for improvement, but she does not think that raising the gas tax will solve many of the problems. She, therefore, feels uncomfortable in supporting the proposed CS at this time. Number 1758 CHAIRMAN HALCRO pointed out that TEA-21 funds cannot be used to repair potholes, haul snow, or grate roads, which is where the department's discretionary general fund money goes. He stated, as a member of the transportation finance subcommittee, that they are tasked with cutting $1.5 million from the department's budget this year. He said: We saw what happened last year. We have seasonal roads that won't be opened until June or July. We have snow hauling that's being capped, so communities are going to suffer. And this is a good way, I feel, it's a good way to start the discussion. And, if we're not willing to start the discussion, what are we doing here? CHAIRMAN HALCRO further stated that a rebate to local communities is money that can be used to either offset property taxes or supplement public works projects. He understands and agrees with some of the previous comments, but the bottom line is, the state has created a transportation infrastructure and it cannot pay for its maintenance and repair. Number 1823 REPRESENTATIVE COWDERY said if he had to make a decision based on whether he would be here or not, he might change his vote, but he does not make his decisions that way. He hopes to come back one more time, but after that, if he's not reelected, he would consider it a promotion. CHAIRMAN HALCRO said the discussion needs to start somewhere. He doesn't care if it starts with the gas tax or something else. In addition, people cannot be afraid. He has ten thousand constituents in his district, and he certainly can't read their minds. However, it's not until something like this is pushed to the forefront that people react in the form of e-mails, public opinion messages and phone calls. It's hard to know if an idea will "fly" until it's pushed. Number 1887 REPRESENTATIVE KEMPLEN stated, in reference to the September 14 advisory vote, that it is clear the plan before the voters was not fair. He said: The issue of fairness is something that we have to be addressing when we're crafting any type of solution to the state's fiscal dilemma. And this piece of legislation first, as currently crafted, doesn't pass that test of fairness. Fairness would mean that we have to be fair to all users of the road system, even those who are low-income residents and they don't have access to a vehicle but they depend upon public transit to get to and from work and get around town. They should not be shortchanged in how we produce solutions here. REPRESENTATIVE KEMPLEN suggested inserting "public transit" after the phrase "maintenance of highways" on page 6, line 22, of Version G. It would give those who depend on the public transit systems a fair share of the resources raised as a result of the proposed committee substitute. Number 2005 REPRESENTATIVE ALBERT KOOKESH stated that the last time he counted, only five or six communities had public transit systems. The only small community is Metlakatla, which has two buses. He's not sure that the suggestion by Representative Kemplen would cover the issue of fairness. CHAIRMAN HALCRO stated that public transit is a function of local governments, which are exempt from paying the fuel tax; they are not affected by the increase. Furthermore, rebating this money to communities would allow them to underwrite some of the public transit routes that don't have a ridership. He also pointed out that the funds would go toward repairing roads, which the public transit systems use everyday. In addition, public transit systems do a tremendous job of providing transportation programs for the low-income and the rules that govern them should be left at the local level. He doesn't see a place for them in state statute. He called on Dennis Poshard from the Department of Transportation & Public Facilities to discuss the issue further. Number 2099 DENNIS POSHARD, Legislative Liaison/Special Assistant, Office of the Commissioner, Department of Transportation & Public Facilities, came before the committee to answer questions. The department would not be opposed to adding public transit systems. The department already provides facilities and works with local governments in relation to CMAQ [Congestion Management/Air Quality] funds. The department also uses other grants from the federal government to help local communities implement transit systems. Number 2140 REPRESENTATIVE KEMPLEN asked Mr. Poshard whether it's true that there are a number of public transit systems in the state. MR. POSHARD replied that there are public transit systems in Barrow, Kodiak, Mat-Su, Anchorage, Fairbanks, Juneau, Bethel and Metlakatla. Number 2171 REPRESENTATIVE KEMPLEN stated, according to his understanding, that many of these public transit systems struggle to make their annual budgets, and some help with the cost of maintenance could make the difference between "being viable" and "going under." He asked Mr. Poshard whether his comment is correct. MR. POSHARD replied that nationally he's not aware of any public transit system that operates solely on income received from the users. Every public transit system relies to some degree on public funding through federal, state and city grants. In relation to Alaska, several public transit systems have had a hard time coming up with their operating expenses. He said, "It's pretty easy, you know when we work with them, to come up with the capital funds to implement them, but actually keeping their operations afloat is a more difficult task." REPRESENTATIVE COWDERY made a motion to adopt the proposed CS, version 1-GH1040\G, Kurtz, 2/17/00, as a work draft. There being no objection, Version G was before the committee. Number 2264 REPRESENTATIVE KEMPLEN made a motion to insert the language, "public transit," after the language, "maintenance of highways," on page 6, line 22 [Amendment 1]. REPRESENTATIVE KOOKESH seconded the motion. CHAIRMAN HALCRO objected. He reiterated that public transit is a local function, and the funds that would be rebated under the proposed CS could be used for the local transit system. It doesn't need to be put in state statute. REPRESENTATIVE KOOKESH pointed out that if the proposed CS passes as written, the Municipality of Anchorage stands to gain $1.6 million, which could go towards their public transit system. He clarified that he'd seconded the motion for discussion purposes only. REPRESENTATIVE KEMPLEN stated that public transit systems receive federal funding from ISTEA [Intermodal Surface Transportation Efficiency Act] and NECTEA [National Economic Crossroads Transportation Efficiency Act] for capital equipment. It's legitimate for the legislature to look at that equipment as an investment and to maintain it as an asset. He further said: As with a number of the smaller public transit operations, if there is difficulty between being able to pay for a driver and to operate a transit, and then being able to do the preventative maintenance on their bus, they're going to keep that service on the road and they're going to stretch out on the preventative maintenance. A roll call vote was taken. Voting to adopt Amendment 1 were Representatives Kemplen and Kookesh. Voting against it were Representatives Kohring, Masek, Cowdery and Halcro. Therefore, Amendment 1 failed to be adopted by a vote of 2-4. Number 2440 REPRESENTATIVE KOOKESH said he agrees this is one way to utilize a user fee. He called it a viable plan and a great step forward. But he said he was a little uncomfortable because many small communities will not get anything, even though they "pay at the pump" in some way or another. He asked whether a "floor" has been considered and suggested that he might propose such an idea. TAPE 00-9, SIDE B Number 0001 CHAIRMAN HALCRO said Representative Kookesh makes a good point. The issue of a floor could be looked at as the bill moves forward, to ensure that everybody is treated fairly. CHAIRMAN HALCRO announced that he would not move the proposed CS out of committee that day, but would bring it up within the next week or two. [HB 59 was held over.]
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