Legislature(2011 - 2012)CAPITOL 17
02/10/2011 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HB10 | |
| HB102 | |
| HB57 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 10 | TELECONFERENCED | |
| *+ | HB 102 | TELECONFERENCED | |
| *+ | HB 57 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 102-SUSPENDING MOTOR FUEL TAX
CHAIR P. WILSON announced that the next order of business would
be HOUSE BILL NO. 102, "An Act suspending the motor fuel tax;
and providing for an effective date."
1:28:46 PM
MARC LUIKEN, Commissioner, Department of Transportation & Public
Facilities (DOT&PF), introduced Johanna Bales from the
Department of Revenue (DOR). He said that the proposed tax
suspension is one of many measures the governor is putting forth
to improve the economic health of Alaskans. Suspending the
motor fuel tax demonstrates a consistent tax policy, just as
modifying Alaska's Clear & Equitable Share (ACES) would
potentially lower the tax burden on oil companies. The governor
would like to lower the tax burden for individual Alaskans, as
well, he said. He related that suspending the motor fuel tax
would provide immediate tax relief for every citizen in every
community throughout the state. He explained that the amount
saved would vary depending on the type of fuel purchased but
most consumers should save up to $.08 per gallon when fueling
their vehicles or airplanes. Many Alaska communities deal with
the highest energy costs in the nation. This proposed bill
represents one step this administration is taking to improve
Alaskans' daily living expenses. This bill would provide a
temporary reduction in the cost of motor fuel while efforts
continue to find long-term solutions to higher energy costs.
Some people have speculated that suspending the motor fuel tax
may impact Alaska's federal funding for transportation.
However, the state's motor fuel tax has no relationship to
Federal Highway Administration (FHWA) funds. Thus, suspending
the motor fuel tax will have no impact on Alaska's current
federal highway or airport funding levels. Additionally,
Alaskans also fund significantly more for transportation than is
collected in the state motor fuel tax revenues, he said.
1:31:04 PM
COMMISSIONER LUIKEN explained that in the proposed FY 12 budget,
$328.5 million is set aside for the DOT&PF's operating budget
and another $117 million in general fund dollars will supplement
the capital budget. He concluded that figure represents almost
12 times more than is collected in the motor fuel tax. The
federal tax, which is also paid at the pump, contributes to the
Federal Highway Administration Trust Fund (FHWA). These funds
are redistributed back to the states via formulas set forth in
the federal bills related to highways and airport improvement.
He advised that these formulas have nothing to do with whether a
state collects a separate motor fuel tax since there is no
federal requirement for states to collect a gas tax to support
transportation. He asked whether the Congress would retaliate
for Alaska suspending this motor fuel tax and answered that
"it's unlikely." He pointed out that at least four states have
suspended their motor fuel taxes prior to the most recent
surface transportation bill, Safe, Accountable, Flexible and
Efficient Transportation Equity Act of 2004 (Safetea Lu), which
went into effect in 2005. He remarked that those states saw an
increase in federal highway aid. He commented on a recent
Juneau Empire article, addressing this subject. The article
quoted as saying, "It's difficult to assert that Alaska needs
more money when it contributes little itself and is seeking to
reduce that." He referred to charts in member's packets.
1:32:49 PM
COMMISSIONER LUIKEN offered that this chart demonstrates that
Alaskans have consistently funded transportation out of the
state's general funds in lieu of funding other worthy state
interests. The chart shows that since Safe, Accountable,
Flexible, Efficient Transportation Equity Act: A Legacy for
Users (SAFETEA-LU) went into effect in 2005, the state has
funded over $300 million for transportation in five of the six
years, peaking in FY 07 at $600 million. He related suspending
the motor fuel tax would affect the state's budget in that it
may equate to a decrement in the budget. He referred to the
capital budget, reporting that 76 percent is derived from
federal receipts. The remaining 24 percent is derived from the
state's general fund and other sources such as the International
Airport System (IAS) receipts, bonds, Alaska Industrial
Development and Export Authority (AIDEA) dividend funds and
Highway Working Capital funds for the state equipment fleet.
The general fund and the state capital budget are derived from
the same source that funds 56 percent of the DOT&PF's operating
budget. He said that is what it is: a general fund. He
referred again to the newspaper article indicated that the state
would be forfeiting $40 million in state transportation funding.
However, he argued that since no direct link between the motor
fuel tax revenue and the DOT&PF's budget. He concluded that one
could not make a link between the motor fuel tax and the
DOT&PF's budget. He asserted that suspending the motor fuel tax
in 2008 did not impact the department's budget nor will it
impact the DOT&PF's budget now. In fact, suspending the motor
fuel tax would significantly impact Alaska's economy. It will
benefit many of our largest industries, including the largest
employer, the fishing industry. The United Fisherman of Alaska
(UFA) indicated suspending the motor fuel tax would benefit to
thousands of fishermen statewide. Trucking and aviation
industries and consumers will also profit, he said. The DOT&PF
received letters of support from the Alaska Air Carriers
Association, indicating the economic benefits this suspension of
the motor fuel tax would have on hundreds of Alaska's rural
commercial air carriers. Additionally, Alaska Airlines provided
a letter of support for this bill, as did the National
Federation of Independent Businesses. He said, "The bottom
line: right now there is no compelling need to collect a motor
fuel tax - at this time." Suspension of the tax benefit every
Alaskan in every community, while some will gain more than
others, but it will be meaningful to all since this money is
returned to Alaskans' pockets, he also said.
1:36:01 PM
JOHANNA BALES, Deputy Director, Tax Division, Anchorage Office,
Department of Revenue (DOR), stated that technically this bill
would suspend the motor fuel tax for two fiscal years beginning
with July 1, 2011 and ending June 30, 2013. She explained that
motor fuel dealers would still need to report their highway fuel
sales in order for the state to meet its reporting requirements
to the FHWA on fuel consumption in Alaska, or its FHWA funding
could be affected. This bill does ensure that the DOR would
continue to receive is reports. She noted that Alaska's current
motor fuel tax for highway use is set at $.08, $.05 for marine,
$.043 for jet fuel, and $.037 for aviation fuel. At $.08 cents
per gallon, the excise tax is the second lowest in nation, yet
the fuel pump costs are the second highest in the nation. She
remarked that it is only more expensive to purchase fuel in
Hawaii. She said "Obviously, it's not our tax that is making
Alaskans pay a lot, but this little amount of tax, if suspended,
would put about $40 million back into our economy to help
Alaskans." In response to Chair Wilson, she explained that 60
percent of the revenue collected from aviation fuel tax is
shared with municipal airports. She noted that the governor has
requested an appropriation to replace any revenue airports may
lose as a result of the tax suspension. In further response to
Chair Wilson, she said the anticipated loss in aviation fuel tax
to municipalities is not reflected in the fiscal note. She
related that request would be handled during the budget process.
She explained the DOR's fiscal note has a notation explaining
the special appropriation to municipalities.
1:38:24 PM
CHAIR P. WILSON asked for an overall cost to the state to
suspend the motor fuel tax.
MS. BALES answered that in terms of loss of revenue and the
$140,000 in municipal sharing, that the overall cost to
implement HB 102 would be approximately $39,140,000, since the
state receives approximately $39 million in fuel taxes. In
further response to Chair Wilson, she responded that all of the
motor fuel tax goes directly to the general fund.
1:39:48 PM
REPRESENTATIVE JOHNSON pointed out that his packet does not show
any letters of support.
COMMISSIONER LUIKEN offered to submit them to the committee. In
further response to Representative Johnson, the commissioner
offered to contact the governor's office for any letters in
opposition to HB 102.
1:40:24 PM
REPRESENTATIVE MUNOZ related her understanding that airports
receive a portion of this tax, including Juneau and Ketchikan.
She asked whether the governor including funding to the
facilities during prior years when the aviation tax was
suspended.
MS. BALES related the governor has indicated his assurance that
an appropriation would be requested in the operating budget,
noting that in 2008, airports received an appropriation for the
period when the aviation tax was suspended.
1:41:00 PM
CHAIR P. WILSON asked whether funding for this proposal was
included in the Governor's FY 12 budget.
MS. BALES related her understanding that the appropriation is
not included in the FY12 operating budget. She also offered to
check whether the request is included in the amended budget.
1:41:24 PM
REPRESENTATIVE PRUITT asked for ways the state would "make up"
for this lost revenue.
MS. BALES answered that the state current collects a significant
amount of oil taxes and the treasury is "fairly healthy." She
offered her belief that the governor feels that any losses would
be recovered by oil taxes received in the past several years due
to the high price of oil, which "incidentally" is one of the
reasons that Alaskans are paying higher prices at the pump.
REPRESENTATIVE PRUITT asked whether the current budget would
spend $25 million from savings.
MS. BALES said she was uncertain.
1:42:35 PM
CHAIR P. WILSON offered her belief that thus far the state plans
to use its savings account to fund a portion of the proposed FY
12 budget. She asked for the total amount of any costs to
proposals that are geared to help Alaska be considered a
business friendly state.
MS. BALES offered to put together some information for the
committee, but she did not have any figures at this time for
effects of proposed legislation.
1:44:25 PM
BOB HAJDUKOVICH, Chief Executive Officer (CEO), ERA Aviation,
explained that Era Aviation represents four airlines in the
state: Era Aviation, Frontier Flying Service, Hagland Aviation
Services, and Arctic Circle Air Service. These airlines are
wholly owned by Alaskan investors and currently transport over
60 percent of rural passengers, transport 55 percent of the
bypass mail to rural communities in Alaska and consume 5.6
million gallons of jet fuel and 500,000 gallons of aviation
gasoline. This bill would have a direct impact on these
airlines of over $200,000 per year. He said, "At this point,
anything helps." He offered his belief that the direction is
right, that the governor hopes to save money for Alaskans and is
less concerned about the impact on Alaska's savings fund at the
moment. He recalled earlier comments on proposed legislation
that would affect new business in Alaska. He pointed out that
his business is a foundational service that is a necessity in
Alaska, in particular in rural communities. Currently, the
price per barrel is $.88 over last year, which directly affects
the airlines profits by $5 million based on 5.6 million gallons
of jet fuel. He equated this increase to translate to $8.21 per
passenger, per leg, based on the 600,000 passengers transported
annually.
1:47:11 PM
MR. HAJDUKOVICH remarked that the $202,000 seems like a drop in
the bucket compared to $5 million expense increase in fuel
costs, but it is significant since the offset is received in
higher oil prices the state receives. The direct benefit for
the proposed tax decrease is that it directly impacts Alaskans,
not to the state coffers, which is critical. He said he has not
seen oil prices driven by supply and demand for well over ten
years. He said if the industry was more elastic the increased
costs could be passed through to its customers. He also
remarked that the airlines would see ebbs and flows in oil
prices and prices would be changed to reflect the ebb and flow.
However, the airlines have seen a progressive increase and no
change in the supply or demand, or for rural communities to
adapt to oil prices. He recalled a catastrophic situation,
about a year and a half ago, in which oil prices peaked, noting
the villages are still trying to recover. He acknowledged that
the delegation wants the administration to "ante up" but he said
it is the consumer who bears the cost increases, not the state.
His company represents the consumers, the users of the fuel. He
remarked that the governor is trying to show that it is open for
business and pushing back some of the funding to the consumers
is critical, he stated. He predicted that the national
political scene is not going to change appreciably, that the
congressional delegation will have uphill battle trying to find
funding for Alaska. He offered that "we have to look after
ourselves to an extent..."
1:49:24 PM
MR. HAJDUKOVICH remarked that he visited Juneau last week and
was disturbed by a comment he overheard, which was that the
state is fortunate that while production is down, the price of
oil is high, with little to no recognition that as an end user
that the industry has a "break even" point. Further, the
industry could tip over since it is not possible to pass on $150
per barrel oil prices structure. He recalled oil prices were
$39 ten years ago, that the industry could handle $75 per barrel
prices. He reported a disturbing meeting he held with U.S.
Postal Service (USPS) earlier today over the future of the
bypass mail system. He reported that the USPS is losing $10
billion per year and spends $100 million in Alaska, and lose $70
million on that investment in Alaska. He suggested that Alaska
would find continuing pressure at the federal level to find ways
to be aggressive to cut funds considered to be earmarks or
subsidies to Alaska. He concluded that the state needs to keep
its economy moving in the right direction. He said, "Businesses
that are current need to stay in business so we can be there for
that uptick in the trend, so that hopefully when we're open for
business for drilling or resource development, we'll still be
here to take advantage of those opportunities."
1:51:02 PM
CHAIR P. WILSON recalled for the past four years the delegation
members have reported that other states perceive that Alaska has
not paid its fair share of its transportation funds. The
delegation encouraged Alaska to show it was "stepping up to the
plate" to provide its share. She remarked that other states
view the state's share of funds, which are returned to the state
in FHWA funding. She further recalled that Alaska has been
receiving more per capita than any other state. Even though the
motor fuel tax has no correlation to the FHWA funds, other
states do not view it that way. She anticipates that Alaska
will be receiving less in federal funds than it has in the past.
1:53:03 PM
REPRESENTATIVE FEIGE recalled years ago, he traveled through
West Virginia, and it seemed every highway was named the Robert
C. Byrd Memorial Highway. He remarked that many of our federal
funds were as a result of the late U.S. Senator Ted Stevens,
just as the West Virginia highway was named after its senior
senator. He stated that the funding system has operated in this
way, and some states receive a disproportionate amount. He
agreed with the previous speaker, Mr. Hajdukovich, that
suspending the motor fuel tax would have a positive impact on
Alaskans, and while some income would be lost on that "side of
the pot" the state can recoup the revenues.
1:55:10 PM
CHAIR P. WILSON, after first determining no one else wished to
testify, closed public testimony on HB 102.
[HB 102 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 10 Sponsor Statement.doc |
HTRA 2/10/2011 1:00:00 PM |
HB 10 |
| HB 10 Support Information.doc |
HTRA 2/10/2011 1:00:00 PM |
HB 10 |
| HB 10 Support Other States.docx |
HTRA 2/10/2011 1:00:00 PM |
HB 10 |
| HB0010A.PDF |
HTRA 2/10/2011 1:00:00 PM |
HB 10 |
| HB 57 backup DOT.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB010-TRA-DOA-DMV-02-04-11.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 10 |
| HB 57 Burnett letter of support.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB 57 Kennedy Letter of support.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB 57 Sectional Analysis.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB 57 Bikes Program Description.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB057-DOT-AS-2-4-11.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| Anchorate Palmer Wasilla Plan.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB 57 Paperman support.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB 57 Lindholm support.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB57 Sponsor Statment.pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB57 text (2).pdf |
HTRA 2/10/2011 1:00:00 PM |
HB 57 |
| HB 102 fiscal Note DOA.pdf |
HTRA 2/10/2011 1:00:00 PM HTRA 3/15/2012 1:00:00 PM HTRA 3/22/2012 1:00:00 PM |
HB 102 |
| HB 102 fiscal Note DOR.pdf |
HTRA 2/10/2011 1:00:00 PM HTRA 3/15/2012 1:00:00 PM HTRA 3/22/2012 1:00:00 PM |
HB 102 |
| HB 102 Governors Sponsor.pdf |
HTRA 2/10/2011 1:00:00 PM HTRA 3/22/2012 1:00:00 PM |
HB 102 |
| HB 102 Sectional.pdf |
HTRA 2/10/2011 1:00:00 PM HTRA 3/15/2012 1:00:00 PM HTRA 3/22/2012 1:00:00 PM |
HB 102 |
| HB 102 text.pdf |
HTRA 2/10/2011 1:00:00 PM HTRA 3/22/2012 1:00:00 PM |
HB 102 |