Legislature(1995 - 1996)

05/13/1995 05:30 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 269
HB 10
  HOUSE BILL NO. 122                                                           
       An Act authorizing  payment of a  portion of the  motor                 
  fuel  tax          on  boats and  watercraft  as refunds  to                 
  municipalities; and         providing for an effective date.                 
  Representative  Moses  was  asked  to  join members  at  the                 
  committee table and  present testimony on  HB 122.  He  said                 
  that the  bill would  enable development  of a smaller  boat                 
  fleet.  A  local resident  fishery is absent  from St.  Paul                 
  where an  estimated 90.9%  of the  fishery is  going out  of                 
  state because it lacks needed facilities.  The bill is, on a                 
  long term basis, a tool for creating economic development.                   
  Senator Zharoff expressed concern regarding application of a                 
  tax to municipalities.  He mentioned that there are a number                 
  of unorganized communities that also provide fuel service to                 
  vessels.     Within  his  district,  eight  communities  are                 
  effected.    He   voiced  concern  that  the   bill  is  too                 
  restrictive.  He expressed a  desire to ensure that  anybody                 
  who is  selling fuel  has an  opportunity to recover.     He                 
  referenced harbor needs and responsibility for vessels, that                 
  come and go on a regular basis, to be serviced.                              
  Representative Moses  explained that  the bill is  patterned                 
  after the  fish tax  sharing.  There  will be  discrepancies                 
  which the Dept. of Community & Regional Affairs could handle                 
  after July, 1996.                                                            
  Senator  Sharp  expressed  concern regarding  municipalities                 
  that may have  multiple harbor  facilities (state, city,  or                 
  private-owned), such as Juneau, as well as those under lease                 
  or  under  an  operating  agreement.     He  asked  how  the                 
  Department   of   Transportation  would   distribute  funds.                 
  Representative Moses  responded that there  have always been                 
  such   problems   in  this   state.     The   Department  of                 
  Transportation is  concerned  regarding  whether  the  funds                 
  would  go  to harbor  facilities.   He  acknowledged Senator                 
  Sharp's amendment  which addresses  the concern.   He  noted                 
  that in his district, there is a  great need for a facility.                 
  He stressed need for communities to be allowed to accumulate                 
  credits from the sale of fuel for a future boat harbor.  The                 
  greatest  interest is getting the statute  in place to allow                 
  for  building  of  new  facilities  or  maintaining  present                 
  facilities.   A  1991 study  by the  Dept  of Transportation                 
  revealed that deferred maintenance  on boat harbors  amounts                 
  to over $250 million.  The department recommended a $.10 tax                 
  at that time.                                                                
  Senator Sharp offered an amendment  to correct problems with                 
  multiple harbor  facilities.   It incorporates  the idea  of                 
  reimbursing municipalities that  have an  approved plan  for                 
  construction of  a boat  harbor.   He then  asked who  would                 
  receive funds in a municipality where  there is a mixture of                 
  state,  city,  and  private harbor  facilities,  such  as in                 
  Juneau.   Paul Dick  of the Department  of Revenue responded                 
  that the bill  is modeled  after the fisheries  tax.   There                 
  would be a sharing of funds based on locality.  For example,                 
  the fuel tax  collected in Juneau  would be shared with  all                 
  Co-chair Halford made  reference to a Petro  Marine Services                 
  memo regarding sale of  fuel by municipal facilities.   Is a                 
  private company  taxed to  support a competitor selling fuel                 
  from a municipal dock?   Representative Moses said they  are                 
  taxed $.05/gallon  whether they  collect it  or not.   If  a                 
  private source sells fuel  to a processor or crab  boat, and                 
  the owner goes bankrupt without  paying the vendor, there is                 
  still a responsibility for paying taxes  on that fuel to the                 
  state.   He suggested that the vendor should not have to pay                 
  the state for uncollected funds.                                             
  Sam  Kito III, Legislative  Liaison, Dept  of Transportation                 
  said  that  the  department  supports   the  intent  of  the                 
  legislation.  There  is  also  support  for  Senator Sharp's                 
  amendment.  It  allows communities  to accept ownership  and                 
  take part in  the revenue sharing, if  they accept ownership                 
  of their state-owned facilities.  In  turn, it would provide                 
  for capitalization  of new  facilities for communities  that                 
  sell marine fuel but do not have existing facilities.                        
  Senator Sharp  asked if the  state is interested  in turning                 
  ownership   of   the  small   boat   harbors  over   to  the                 
  municipalities?  Mr. Kito responded that the state has  been                 
  actively involved  in  suggesting  that  communities  accept                 
  ownership of their harbor facilities.  That would enable the                 
  state to remove  itself from  the business of  capitalizing,                 
  repairing, and maintaining ports and  harbors. The state has                 
  been  providing incentives,  as  evidenced in  Craig's South                 
  Cove Harbor transfer  of $500,000.0  for float upgrades  for                 
  the harbor.  The intent is to encourage the city of Craig to                 
  accept ownership of  the facility.   There is no attempt  by                 
  the state  to collect  revenues to  pay for  reconstruction.                 
  Senator Sharp  asked if the  $.03/gallon rebate would  be an                 
  incentive to municipalities?  Mr.  Kito stated that it would                 
  be  an  incentive  which  would  encourage  them  to  accept                 
  ownership of the harbor facilities.                                          
  Senator Zharoff stated that  the money could be used  to pay                 
  refunds  to  municipal  water  and  harbor facilities.    He                 
  questioned  whether  language  in  the  amendment   was  too                 
  restrictive and asked how many communities would be excluded                 
  as  a result  of the  amendment.   Rep Moses stated  that it                 
  depends on the  sharing mechanism.   He said there are  some                 
  communities  that  might  not sell  any  fuel  through their                 
  facilities.   Facilities that might sell  more stand to gain                 
  more revenue.  Senator  Zharoff expressed concern  regarding                 
  patterning the bill  after the raw  fish tax.  He  suggested                 
  that harbors have  nothing to do with  the tax.  The  tax is                 
  based on where the fuel is sold.  The 3%  is the amount that                 
  is supposed to  go back  to the  area in which  it is  sold,                 
  basically  for  harbor improvements.    In situations  where                 
  there is a city and a borough, and the borough receives one-                 
  half, they may  opt to put some  of the money back  into the                 
  community or into another community wanting to create a fuel                 
  Rep. Moses suggested  that constituents will make  sure that                 
  local government  is placing  the funds  where they  belong.                 
  Regarding  the  borough  receiving  one-half  and  the  city                 
  receiving  one-half, he  voiced  his  expectation  that  the                 
  borough would see to it  that it goes to the proper use.  He                 
  acknowledged that there will be  inequities, but he stressed                 
  that  the  good  would  overshadow   inequities  that  might                 
  End    Tape #74, Side 1                                                      
  Begin  Tape #74, Side 2                                                      
  Rep. Moses  voiced his understanding of the restriction.  He                 
  noted  that  in  his  area,  boats  dump  garbage  which  is                 
  subsequently used as landfill.  He said he could see the tax                 
  going towards that  effort as well.   Water and sewer  lines                 
  should also be covered.                                                      
  Senator  Zharoff  expressed  concern regarding  "municipally                 
  owned and operated".  He suggested that a list of qualifying                 
  communities be compiled.  In light of the state's  intention                 
  to  turn  over  facilities  to municipalities,  a  deterring                 
  factor may be that many communities,  such as Port Lyons, do                 
  not  have  the ways  and  means  to operate  and  manage the                 
  facility.   He noted that  it is not  the intent to  put the                 
  state  in a liable  situation.  This  bill could  do harm to                 
  potential   for  return   of  revenue   to  communities   or                 
  municipalities that have water and harbor facilities.                        
  Mr.  Kito  said that  the  amendment is  not  restrictive to                 
  communities that have water and harbor facilities.  They can                 
  submit  a  plan to  DOT with  certification  to the  Dept of                 
  Revenue that  a proposed  harbor facility  will benefit  the                 
  Senator Sharp MOVED  for adoption  of Amendment No.  1.   He                 
  said he  was not  in support  of a  municipality leasing  or                 
  operating a state-owned facility.  Senator Zharoff OBJECTED.                 
  He   noted  that   it   restricts   activities  since   some                 
  municipalities will be excluded.  He asked that DOT research                 
  which  municipalities   would  find  themselves   unable  to                 
  participate as a result  of the amendment.   Senator Zharoff                 
  then WITHDREW his OBJECTION, saying  that if DOT information                 
  indicates  a  large  number  of  communities are  unable  to                 
  participate, there remains ample opportunity between now and                 
  July,  1996,  to  readjust  the  legislation.    No  further                 
  objection having been heard, Amendment No. 1 was ADOPTED.                    
  Senator  Rieger  MOVED  to  adopt  SCSCSHB  122  (FIN)  with                 
  individual  recommendations.    No  objection  being  heard,                 
  SCSCSHB 122 (FIN),  was REPORTED  OUT of committee  with   a                 
  $50.6 fiscal note from  the Dept of Revenue.   Senator Sharp                 
  and  Senator Rieger signed  the committee report  with a "do                 
  pass" recommendation.   Co-chairmen Frank  and Halford,  and                 
  Senators Donley  and  Zharoff  signed  "no  recommendation."                 
  Senator Phillips signed, "Do not pass."                                      
  The meeting was adjourned at approximately 6:10 p.m.                         

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