Legislature(2003 - 2004)

03/11/2003 02:13 PM House TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 156-INCREASE MOTOR FUEL TAX                                                                                                
Number 0444                                                                                                                     
CO-CHAIR MASEK  announced that the  next order of  business would                                                               
be HOUSE BILL NO. 156, "An  Act increasing the motor fuel tax and                                                               
repealing the special  tax rates on blended  fuels; and providing                                                               
for an effective date."                                                                                                         
Number 0554                                                                                                                     
GEORGE   LEVASSEUR,    Maintenance   and    Operations   Manager,                                                               
Southcentral   District,    Northern   Region,    Department   of                                                               
Transportation and Public Facilities  (DOT&PF), noted that he was                                                               
Acting State Maintenance  Engineer, and gave an  overview of what                                                               
is encompassed by the highway user  fee.  He said that increasing                                                               
the  highway user  fee  from $.08  to $.20  a  gallon would  take                                                               
effect  July 1,  2003.    The increase  from  $.08  to $.20  will                                                               
generate  $41  million in  additional  revenue  to the  State  of                                                               
Alaska.  The total, raised from  the highway user fee at $.20 per                                                               
gallon, will be $70 million  annually.  Each year, the department                                                               
spends $60 million  in highway maintenance and  an additional $50                                                               
million  in federal  match for  highway construction;  this is  a                                                               
total of  $110 million  per year.   Even after  the tax  rises to                                                               
$.20  per gallon,  38 states  will have  a higher  fuel tax  than                                                               
Alaska,  when  taking  into  account  all  state  taxes  on  fuel                                                               
Number 0640                                                                                                                     
MR.  LEVASSEUR  stated that  the  national  average is  $.20  per                                                               
gallon.   The current rate of  $.08 was enacted in  1961 when the                                                               
annual highway maintenance costs were  $10 million.  If that $.08                                                               
was  adjusted  for  inflation, using  the  Consumer  Price  Index                                                               
(CPI), the  rate would actually  be $.48.   The department  has a                                                               
large backlog of deferred highway  maintenance projects that have                                                               
not been addressed due to lack  of funding.  The projects include                                                               
jobs  such as  brush cutting,  culver replacement,  ditching, and                                                               
replacing signs.  Several years  of increased maintenance will be                                                               
needed to complete these deferred  maintenance projects.  This is                                                               
a highway user  fee for vehicles used on roads  and highways.  It                                                               
is not intended to affect  fuel used for snowmobiles, all-terrain                                                               
vehicles (ATVs), or motorboats.   Alaska is no longer required to                                                               
use oxygenated  fuels to meet  air quality standards.   This bill                                                               
eliminates  the  tax  benefit  that  producers  and  distributors                                                               
receive on  the production and distribution  of oxygenated fuels.                                                               
According to the  air quality requirements of  EPA, Anchorage and                                                               
Fairbanks are no longer areas of non-attainment.                                                                                
Number 0748                                                                                                                     
CO-CHAIR HOLM noted that there was  no mention of JP-8 [jet fuel]                                                               
and recalled  that the tax  for JP-8 was  about $.035.   He asked                                                               
why the fuel for [Boeing] 747s was not being taxed.                                                                             
Number 0798                                                                                                                     
MR.  LEVASSEUR responded  that landing  fees are  applied to  the                                                               
large jets  that land  in Anchorage,  Fairbanks, and  Juneau, and                                                               
there  are  fuel  flowage  fees   as  well.    In  rural  Alaska,                                                               
increasing  the  cost  of  aviation   fuel  -  which  is  already                                                               
extremely high - wouldn't generate a  lot of money.  Landing fees                                                               
and  fuel  flowage fees  are  already  being  paid at  the  large                                                               
airports.   He stated  that DOT&PF spends  about $18  million per                                                               
year on airport maintenance.                                                                                                    
CO-CHAIR HOLM  asked if  the cost  of airport  maintenance versus                                                               
the landing  fees and  other fees could  be looked  into further.                                                               
He said that  with the tremendous amount of money  being put into                                                               
the Anchorage airport, for example,  he was interested in finding                                                               
out more information  on the possibility of  lessening the impact                                                               
to the state.                                                                                                                   
MR. LEVASSEUR  said that  landing fees were  only charged  at the                                                               
international airports.  He commented  that the Juneau airport is                                                               
operated by  the municipality and  the remaining airports  do not                                                               
have  landing fees.   He  said  he would  provide information  on                                                               
maintenance costs  versus the state's collected  landing fees and                                                               
fuel flowage fees to Co-Chair Holm.                                                                                             
CO-CHAIR MASEK asked  if the increased motor fuel  tax would only                                                               
be at the  pumps where gas is obtained for  vehicles, thereby not                                                               
impacting  rural areas  such as  Anvik  where fuel  is barged  or                                                               
flown in to the area.                                                                                                           
MR. LEVASSEUR said the tax pertains to highways.                                                                                
Number 0966                                                                                                                     
REPRESENTATIVE  HEINZE asked  for  further  clarification on  the                                                               
types of fuel that would be taxed.                                                                                              
MR.  LEVASSEUR confirmed  that the  tax  has nothing  to do  with                                                               
aviation fuel  and does not  apply to off-highway vehicles.   The                                                               
current rate of  $.02 per gallon for a  construction vehicle, for                                                               
example, will remain the same.                                                                                                  
CO-CHAIR  MASEK asked  how the  tax would  apply to  purchases of                                                               
fuel at a  gas station for an outboard  motor, four-wheeler, ATV,                                                               
or lawnmower.                                                                                                                   
MR.  LEVASSEUR  referred  that  question  to  the  Department  of                                                               
Number 1030                                                                                                                     
REPRESENTATIVE KAPSNER  asked, if a  person drove a  snow machine                                                               
to the  gas pump in  Bethel, whether  the receipt could  be saved                                                               
for a refund.   She also asked how the tax would  apply to a road                                                               
like  the Chief  Eddy Hoffman  Highway, which  is only  about six                                                               
miles  of  road, or  some  of  the  other  hubs that  don't  have                                                               
highways in or  out of the community, but yet  are referred to as                                                               
MR. LEVASSEUR  said he would  research that question  and provide                                                               
additional information.                                                                                                         
Number 1088                                                                                                                     
RONALD  GEORGE (ph),  Anchorage,  testified that  he agreed  that                                                               
additional money  was necessary because  the highways need  a lot                                                               
of  work.   He expressed  concern about  U.S. Representative  Don                                                               
Young's reference to increasing the fuel tax to $.33 per gallon.                                                                
MR.  LEVASSEUR  said that  a  federal  fuel tax  already  exists.                                                               
About $.25  per gallon bought at  the pump goes into  the Federal                                                               
Highway Trust Fund.  The  federal government disburses that money                                                               
to the  states on a formula-based  means.  That money  is used to                                                               
fund DOT&PF's summer construction program.   He said the fuel tax                                                               
would not  be $.32  in addition  to what is  now being  paid, but                                                               
would be a raise of a few cents.                                                                                                
CO-CHAIR  HOLM asked  if the  change from  $.08 to  $.20 had  any                                                               
bearing on  the additional $.25  to $.33 that  Representative Don                                                               
Young was proposing.                                                                                                            
MR. LEVASSEUR said the state rate was  not tied in any way to the                                                               
federal rate.   He  said he  was not sure  what the  federal rate                                                               
increase was going to be.                                                                                                       
CO-CHAIR  MASEK indicated  that  HB  156 would  be  held over  in                                                               

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