Legislature(2003 - 2004)

03/27/2003 01:32 PM House TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 156-INCREASE MOTOR FUEL TAX                                                                                                
CO-CHAIR MASEK announced  that the first 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."                                                                                                         
CO-CHAIR MASEK clarified that in  a   previous meeting, Amendment                                                               
1  had passed  and Amendment  2 had  been withdrawn.   Therefore,                                                               
Amendment 3  [labeled 23-GH1118\A.2,  Kurtz, 3/26/03]  was before                                                               
the committee.  Amendment 3 read:                                                                                               
     Page 1, line 1, following "fuel tax":                                                                                    
          Insert ", relating to the fund into which the                                                                       
     proceeds of the motor fuel tax is paid,"                                                                                 
     Page 4, following line 13:                                                                                                 
          Insert new bill sections to read:                                                                                     
        "* Sec. 3.  AS 43.40.010(g) is amended to read:                                                                       
          (g)  The proceeds of the revenue from the tax on                                                                      
     all motor  fuels, except as  provided in (e),  (f), and                                                                
     (j) of  this section, shall  be paid into a  state fund                                                                
     entitled "highway  maintenance revenue fund"  and shall                                                                
     be  used  [DEPOSITED  IN A  SPECIAL  HIGHWAY  FUEL  TAX                                                                
     ACCOUNT IN THE STATE  GENERAL FUND. THE LEGISLATURE MAY                                                                    
     APPROPRIATE  FUNDS  FROM  IT] for  expenditure  by  the                                                                    
     Department  of  Transportation  and  Public  Facilities                                                                    
     directly  or  as  matched  with  available  federal-aid                                                                    
     highway    money   for    maintenance   of    highways,                                                                    
     construction of  highway projects and  ferries included                                                                    
     in the program provided  for in AS 19.10.150, including                                                                    
     approaches, appurtenances,  and related  facilities and                                                                
     acquisition  of rights-of-way  or easements,  and other                                                                    
     highway  costs including  surveys, administration,  and                                                                    
     related  matters.     All  departments  of   the  state                                                                    
     government  authorized to  spend  funds collected  from                                                                    
     taxes  imposed  by  this chapter  shall  perform,  when                                                                    
     feasible, all  construction or  reconstruction projects                                                                    
     by  contract after  the projects  have been  advertised                                                                    
     for  competitive  bids,  except  that,  when  feasible,                                                                    
     arrangements shall be  made with political subdivisions                                                                    
     to  carry   out  the  construction   or  reconstruction                                                                    
     projects.   If it is  not feasible  for the work  to be                                                                    
     performed    by   state    engineering   forces,    the                                                                    
     commissioner  of transportation  and public  facilities                                                                    
     may  contract  on  a professional  basis  with  private                                                                    
     engineering firms  for road design, bridge  design, and                                                                    
     services in connection with surveys.   If more than one                                                                    
     private engineering firm is available  for the work the                                                                    
     contracts shall be entered into on a negotiated basis.                                                                     
        * Sec. 4.  AS 43.40.010(h) is amended to read:                                                                        
          (h)  All motor fuel tax receipts shall be paid                                                                        
     into the  highway maintenance revenue fund  or into the                                                                
     general  fund,  as  appropriate.    If  paid  into  the                                                                
     general fund,  the receipts shall be  [AND] distributed                                                                
     to  the proper  accounts in  the general  fund.   Valid                                                                    
     motor fuel  tax refund  claims shall  be paid  from the                                                                    
     highway maintenance  revenue fund  or from  the related                                                                
     [FUEL]   tax   account   in  the   general   fund,   as                                                                
     Renumber the following bill sections accordingly.                                                                          
     Page 4, following line 22:                                                                                                 
          Insert new bill sections to read:                                                                                     
        "* Sec. 6.  AS 43.40.070 is amended to read:                                                                        
          Sec. 43.40.070.  Refund warrants.  Upon approval                                                                    
     of a  refund claim by  the department, a  warrant shall                                                                    
     be  drawn on  the highway  maintenance revenue  fund or                                                                
     from  the related  [FUEL] tax  account  in the  general                                                                
     fund, as appropriate, in favor  of the applicant in the                                                                
     amount of the claim.                                                                                                       
        *  Sec. 7.    The  uncodified law  of  the State  of                                                                  
     Alaska is amended by adding a new section to read:                                                                         
          CONTINGENT EFFECT.  This Act takes effect only if                                                                     
       a constitutional amendment proposed by the Twenty-                                                                       
     Third Alaska  State Legislature repealing sec.  7, art.                                                                    
     IX, Constitution of the State  of Alaska, is adopted by                                                                    
     the  voters under  sec. 1,  art. XIII,  Constitution of                                                                    
     the State of Alaska."                                                                                                      
     Renumber the following bill section accordingly.                                                                           
     Page 4, line 23:                                                                                                           
          Delete "July 1, 2003"                                                                                                 
          Insert   "on    the   effective   date    of   the                                                                    
      constitutional amendment specified in sec. 7 of this                                                                      
Number 0203                                                                                                                     
ERIC MUSSER, Staff to Representative  Beverly Masek, Alaska State                                                               
Legislature, spoke to  the effect of Amendment 3,  saying that if                                                               
a  highway maintenance  revenue fund  was established  within the                                                               
general fund, it would dedicate all  of the proceeds of the motor                                                               
fuel tax to a dedicated fund  for the express use of highway road                                                               
Number 0240                                                                                                                     
MR. MUSSER continued that Section  6 sets up the refund mechanism                                                               
that  pays a  refund from  the same  revenue fund.   The  biggest                                                               
impact is  in Section 7, in  which the current effective  date is                                                               
contingent  upon voter  approval  of  a constitutional  amendment                                                               
that  allows  for  dedicated funds.    Currently,  Article  [IX],                                                               
Section 7,  prohibits express dedicated revenue  except for those                                                               
dedications  that existed  prior to  statehood.   He said  that a                                                               
separate resolution would be introduced  tomorrow and read across                                                               
[the House floor]  that would put the question to  the voters, if                                                               
Number 0392                                                                                                                     
REPRESENTATIVE KOHRING moved to  adopt Amendment 3 [text provided                                                               
previously].  There being no objection, Amendment 3 was adopted.                                                                
Number 0420                                                                                                                     
REPRESENTATIVE  KAPSNER  offered  Conceptual Amendment  4.    She                                                               
referred  to Sarah  Gilbertson's previous  testimony [meeting  of                                                               
3/18/03] in which  it was mentioned that 43 percent  of the roads                                                               
in  Alaska  are  maintained by  municipalities.    Representative                                                               
Kapsner said that  out of the states that have  a motor fuel tax,                                                               
four  states  do  not  share   their  portion  of  the  tax  with                                                               
municipalities.   She said  it could be  argued that  Alaska does                                                               
share  because  of  municipal  assistance  and  revenue  sharing.                                                               
However, because  a dedicated  fund [would]  exist, she  asked if                                                               
the committee would be in favor  of allocating 31 percent of what                                                               
is garnered in taxes to go back to the municipalities.                                                                          
Number 0520                                                                                                                     
CO-CHAIR MASEK asked how Conceptual  Amendment 4 would change the                                                               
dynamics of the bill, now that Amendment 3 had been adopted.                                                                    
MR.  MUSSER   offered  his  understanding  that   the  Conceptual                                                               
Amendment would  ensure a fair distribution  of those maintenance                                                               
funds  to communities  that do  not have  the base.   He  said he                                                               
believed that there was no  preclusion that would prohibit any of                                                               
the revenues from being disbursed;  there would still be regional                                                               
operations  and management  processes through  the Department  of                                                               
Transportation  &  Public  Facilities  (DOT&PF.)    He  said  the                                                               
funding  mechanism   does  not   distinguish  between   local  or                                                               
organized municipalities.                                                                                                       
Number 0594                                                                                                                     
CO-CHAIR MASEK  objected to Conceptual  Amendment 4,  saying that                                                               
HB 156  had already  gone through  considerable changes  and that                                                               
the   House  Finance   Committee  would   be  dealing   with  the                                                               
administration of funding.                                                                                                      
Number 0600                                                                                                                     
REPRESENTATIVE  KAPSNER  reiterated,  for  Representative  Fate's                                                               
benefit, that  the committee had  passed Amendment 3,  which sets                                                               
up a  dedicated fund.   She explained that  [Conceptual Amendment                                                               
4] asks that  consideration be given to allocating  31 percent of                                                               
the dedicated  fund to the municipalities  because municipalities                                                               
maintain 43 percent of the roads in the state.                                                                                  
CO-CHAIR  MASEK reiterated  that her  objection to  the amendment                                                               
was due to  the bill having already been "gone  over quite a bit"                                                               
and  also because  the issue  could be  dealt with  in the  House                                                               
Finance Committee.                                                                                                              
Number 0663                                                                                                                     
CO-CHAIR HOLM said  he was curious as to the  suggested amount of                                                               
31  rather than  43, since  43 percent  of the  roads are  in the                                                               
REPRESENTATIVE KAPSNER  replied that the amount  was derived from                                                               
the  findings  put  forth  by   the  Alaska  Legislative  Digest,                                                             
indicating that  the average amount  that was shared,  from among                                                               
the 50 states,  was an amount of 31 percent;  she said she wanted                                                               
to go with  the average.  She added, "We  could make an amendment                                                               
to the amendment to make it more, if you'd like."                                                                               
REPRESENTATIVE FATE asked if there  was any present allocation to                                                               
the communities.                                                                                                                
REPRESENTATIVE  KAPSNER  replied  that  there  wasn't,  and  that                                                               
Alaska  is one  of only  five states  that does  not allocate  to                                                               
communities, based on motor fuel tax.                                                                                           
Number 0750                                                                                                                     
JOHN  MacKINNON,   Deputy  Commissioner  of  Highways   &  Public                                                               
Facilities,   Office   of   the   Commissioner,   Department   of                                                               
Transportation  & Public  Facilities (DOT&PF),  said that  he was                                                               
not speaking  for the administration, from  DOT&PF's perspective,                                                               
but  wanted to  add  that Alaska  operates  differently from  the                                                               
other states.   He explained that  in Alaska and in  Puerto Rico,                                                               
federal highway funding  from the federal motor  vehicle fuel tax                                                               
does get  used in communities.   He said he believed  that almost                                                               
43 percent of  the total federal allotment is  used for community                                                               
transportation and  for Trails and  Recreation Access  for Alaska                                                               
(TRAAK)  projects.   He  said  the  balance  is used  for  Alaska                                                               
Highway  System roads  and  National Highway  System  roads.   He                                                               
pointed  out that  although the  contributions  don't go  towards                                                               
maintenance on an annual basis  for snow removal and road upkeep,                                                               
the state  contributes to local  roads in communities  to rebuild                                                               
those roads as part of  community construction projects.  He said                                                               
that  Alaska has  the ability  and does  contribute a  tremendous                                                               
amount  of the  share  of federal  highway  funding, relative  to                                                               
other states.                                                                                                                   
REPRESENTATIVE  FATE  asked  if  31 percent  or  any  significant                                                               
percentage would have an impact  on maintenance, which he assumed                                                               
was the intent.                                                                                                                 
MR. MacKINNON  said that  as long as  the maintenance  needs were                                                               
made up through the general  fund rather than the dedicated fund,                                                               
there  would be  no  impact  on DOT&PF,  and  it  might help  the                                                               
municipalities.  He said that the  department has a need of about                                                               
$60  million a  year  just  to take  care  of  winter and  summer                                                               
highway  maintenance.   He  said that  presently  that amount  is                                                               
derived from general fund sources, and  as long as the amount was                                                               
"made  up  one way  or  another,"  the  state highways  would  be                                                               
CO-CHAIR MASEK  noted that there  was $50 million in  addition to                                                               
that amount.                                                                                                                    
REPRESENTATIVE  FATE  said,  regarding the  amount  required  for                                                               
maintenance,  if there  were dedicated  funds to  be added  or if                                                               
something happened  so that  there was  a restriction  in general                                                               
funds, then  that dedicated fund  could possibly make up  part of                                                               
those  maintenance dollars,  thereby giving  more flexibility  to                                                               
how general fund monies could be spent.                                                                                         
Number 0997                                                                                                                     
CO-CHAIR HOLM  offered that  if the  31 percent  requirement were                                                               
put in statute, there would  be no flexibility.  However, without                                                               
that  language  in  statute,  the   legislature  would  have  the                                                               
flexibility to allocate  funds, in any combination,  to DOT&PF or                                                               
to the municipalities.                                                                                                          
CO-CHAIR HOLM asked what amount  would be reasonable to consider,                                                               
given the  differing needs  and the  diversity within  the state.                                                               
He asked  if it made sense  to specify a given  percentage of the                                                               
motor vehicle tax, and if so, what that number would be.                                                                        
MR.   MacKINNON  replied   that   he  had   the  same   question,                                                               
specifically, how  to dedicate a  portion to  the municipalities.                                                               
He  commented that  the largest  percentage of  revenue would  be                                                               
generated from Central  Alaska and asked if this  meant that most                                                               
of [the  revenue] would be returned  to that area.   He said that                                                               
without   the  dedication,   the  legislature   would  have   the                                                               
flexibility of putting revenue where it was needed.                                                                             
Number 1084                                                                                                                     
REPRESENTATIVE  KAPSNER offered  that her  calculations indicated                                                               
that having  a 20-cent motor  fuel tax generates $69  million for                                                               
the state.   From  Mr. MacKinnon's comment  that the  state needs                                                               
$60  million for  road  upkeep, she  suggested  that perhaps  3.3                                                               
percent instead of 31 percent  could be appropriated because that                                                               
percentage  amount would  account  for the  $9 million  leftover.                                                               
She said  that this  could be an  offering to  the municipalities                                                               
and could be changed later.                                                                                                     
CO-CHAIR  HOLM respectfully  suggested  that this  had no  merit,                                                               
because of there being no justification for it.                                                                                 
REPRESENTATIVE  KAPSNER   responded  that   she  was   trying  to                                                               
accommodate the concerns  of the municipalities, in  light of the                                                               
43 percent  upkeep of the  roads, while also being  respectful of                                                               
DOT&PF's need for $60 million  for summer and winter maintenance.                                                               
She pointed  out that  the tax generates  $69 million,  leaving a                                                               
remainder  of   $9  million  that   could  possibly  go   to  the                                                               
municipalities.  She explained that  $9 million calculates out to                                                               
be 3.3 percent of what is generated from the tax.                                                                               
MR.  MacKINNON commented  that  as it  is  presently written,  it                                                               
would be up to the discretion  of the legislature to allocate any                                                               
leftover monies in that dedicated fund to the municipalities.                                                                   
CO-CHAIR  MASEK  said  that the  [Matanuska-Susitna]  Borough  is                                                               
organized to  use property  taxes; the  borough uses  monies that                                                               
are  paid  into the  road  service  areas  to then  maintain  the                                                               
borough's  roads.   She  added  that  she  wasn't sure  how  this                                                               
information impacted Conceptual Amendment 4.                                                                                    
MR.  MacKINNON  stated that  the  allocation  would be  difficult                                                               
because there  are municipalities  and communities that  have not                                                               
only property tax,  but sales tax as well, while  some areas have                                                               
neither.    He said  that  those  [taxes]  go into,  among  other                                                               
things, the maintenance of roads.                                                                                               
REPRESENTATIVE OGG said he thought  the idea had merit.  However,                                                               
in listening to the figures  and percentages mentioned during the                                                               
discussion,  he suggested  that the  issue be  considered in  the                                                               
House  Finance Committee.   He  said that  attempting to  "try to                                                               
figure out  a percentage  right here and  now, with  what limited                                                               
time that we have, just seems hasty."                                                                                           
Number 1255                                                                                                                     
A roll call vote was  taken.  Representatives Kohring and Kapsner                                                               
voted in favor of Conceptual  Amendment 4.  Representatives Fate,                                                               
Ogg, Holm,  and Masek  voted against  it.   Therefore, Conceptual                                                               
Amendment 4 failed by a vote of 2-4.                                                                                            
Number 1299                                                                                                                     
CO-CHAIR MASEK  asked if there  was any further discussion  of HB
REPRESENTATIVE  KOHRING stated  that he  was opposed  to HB  156,                                                               
although  he thought  that the  amendment which  dedicated monies                                                               
and set up  the highway maintenance fund was a  step in the right                                                               
direction.   He  said he  thought  emphasis should  be placed  on                                                               
reform   within   the   bureaucracy,  spending   reduction,   and                                                               
government efficiency.   He said  this bill  was one of  many tax                                                               
proposals put  forth by the  governor that  should be put  on the                                                               
back  burner  until  effectiveness   and  efficiency  within  the                                                               
government was first evaluated.   He suggested that consideration                                                               
be given  to figuring  out ways to  contribute to  offsetting the                                                               
deficit  in terms  of spending  reductions,  rather than  raising                                                               
taxes.  He  said that he thought this effort  to be premature and                                                               
therefore he would object to HB 156.                                                                                            
Number 1363                                                                                                                     
REPRESENTATIVE FATE said this bill  would impact his district and                                                               
that he understands that fuel taxes  are low, but he wanted it on                                                               
record that  even though  he wouldn't  hold the  legislation from                                                               
moving forward, he didn't particularly  like the 20-cent increase                                                               
and thought  it would be  detrimental to people in  his district.                                                               
He said  this was  an "awfully  huge step  right from  the start,                                                               
although we  do need some  revenues," and he suggested  that this                                                               
amount would be too severe for this  type of a tax.  He said that                                                               
there should be some kind  of an increase, but questioned whether                                                               
it should be 20 cents.                                                                                                          
REPRESENTATIVE KAPSNER said  she was not in favor of  HB 156, not                                                               
because  additional  revenue  were  not needed,  but  because  it                                                               
puts  an unfair  burden on  rural communities.   She  stated that                                                               
communities pay a very high cost;  some are paying $4.00 or $4.50                                                               
per gallon.   She pointed  out that when  the price of  fuel goes                                                               
up,  the communities  feel the  impact, but  when the  price goes                                                               
down, the  pumps in the  communities do not reflect  that change.                                                               
Furthermore,  she said  that  many of  the  communities in  rural                                                               
Alaska don't  have roads, don't  benefit from  road construction,                                                               
and yet  will still be  paying the tax.   She assessed  that most                                                               
people will  not access the form  [on line] or have  it mailed to                                                               
them.  She  said she looked at  the rebate form and  it is fairly                                                               
complicated; she stated that she would oppose the bill.                                                                         
Number 1459                                                                                                                     
CO-CHAIR  HOLM  moved  to  report  HB 156,  as  amended,  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
Number 1469                                                                                                                     
REPRESENTATIVE KAPSNER objected.                                                                                                
A roll  call vote  was taken.   Representatives Fate,  Ogg, Holm,                                                               
and Masek  voted in favor of  reporting HB 156, as  amended, from                                                               
committee.   Representatives  Kohring and  Kapsner voted  against                                                               
it.   Therefore,  CSHB 156(TRA)  was  reported out  of the  House                                                               
Transportation Standing Committee by a vote of 4-2.                                                                             

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