Legislature(1995 - 1996)
05/04/1996 03:00 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 517(TRA)(title am) An Act relating to motor vehicle records and hearings of the Department of Public Safety; increasing the period under which a person may drive a motor vehicle under a temporary permit; relating to ownership of certain abandoned motor vehicles; relating to suspension or revocation of a motor vehicle registration or special permit; relating to renewal of a driver's license by mail; relating to procedures applicable to administrative revocation of a driver's license; relating to commercial driver training schools; increasing the property damage amounts for proof of financial responsibility and proof of motor vehicle eligibility in order to lawfully operate a motor vehicle in the state; amending the definition of `commercial motor vehicle'; relating to prohibited operation of a commercial motor vehicle and to disqualification from driving a commercial motor vehicle; relating to certain notifications in accidents involving property damage; relating to motor vehicle registration procedures; and providing for an effective date. Co-chairman Halford directed that CSHB 517 (TRA)(title am) be brought on for discussion. JULIE TAURIAINEN, aide to Representative Gary Davis, came before committee. She explained that the legislation was requested by the Dept. of Public Safety. It addresses two areas: 1. The first relates to federal mandates required to gain compliance with federal regulations relating to federal motor carrier safety act programs, grant requirements, and the commercial vehicle safety act. Failure to adopt these provisions may result in sanctions of 5 percent of federal ISTEA moneys and funding from the motor carrier safety assistance grant. The state may cumulatively lose $20 million. 2. Housekeeping measures which will increase efficiency within Dept. of Public Safety operations, save costs, and expedite services to the public. Senator Donley directed attention to Amendment No. 1 and explained that it applies to the housekeeping portion of the bill. He referenced the current financial responsibility act. He then explained that in accidents incurring over $500 in damages for which an individual does not have insurance coverage or fails to pay for damages, the individual's license is subject to suspension. The proposed bill would raise the level of damage to $1,500. Senator Donley suggested that was bad public policy. The amendment establishes the threshold at $501. Current law requires that accidents with damages totaling over $500 must be reported. The bill proposes to raise that amount to $1,500. That is reasonable. The second portion of the amendment would increase that threshold to $2,000 simply to reduce the amount of paperwork in instances where no one was injured and there was no problem surrounding the accident. Senator Donley spoke against raising both of the foregoing thresholds equally. While increase of one merely reduces paperwork, the other has the substantive effect of allowing individuals to drive without insurance or avoid paying for damages in automobile accidents. END: SFC-96, #109, Side 1 BEGIN: SFC-96, #109, Side 2 Senator Donley noted that the proposed amendment resets the financial responsibility threshold at $501 rather than the statutory $500 in order to remain within title language and avoid need for the resolution and vote accompanying a title change. He then MOVED for adoption of Amendment No. 1. Co- chairman Halford OBJECTED. JUANITA HENSLEY, Chief, Driver Services, Dept. of Public Safety, came before committee in support of the bill. Mrs. Hensley pointed to budgetary reductions over a number of years and explained that the proposed increase of the financial responsibility threshold from $500 to $1,500 would be the first since 1977. Prior to that time, the limit of reportable damage was $200. The increase does not mean that individuals do not have to carry insurance. Prior to registering a vehicle, the department requires certification (on the vehicle registration application) that the vehicle is covered by insurance for liability limits required by law. Failure to maintain insurance following application would result in unsworn falsification for which prosecution may occur. Mrs. Hensley said she did not have a problem with the latter portion of Amendment No. 1 (Page 2, lines 8 through 16). She expressed a preference for maintaining the limitation at which a driver license would be suspended at $1,500 to provide more efficient operation of the department. She attested to the fact that $500 in damage could be merely "a little ding in a door." She then distributed photos evidencing $2,800 in vehicle damage. Mrs. Hensley next attested to impact of the present $500 limit on the Dept. of Law, the Court System, and Dept. of Corrections. The proposed $1,500 threshold has nothing to do with whether or not an individual has insurance. The department would continue to suspend the driver license if an individual fails to submit proof of insurance at the $1,500 limit. The affidavit of insurance would also continue to be a requirement at the time of registration. Senator Donley suggested that the real issue is, "At what level or amount of damage do we want somebody to be able to escape any sanction for, without paying for, and without having insurance for?" The amount of the accident damage is irrelevant. The Senator further spoke to enforcement problems associated with the higher threshold. Senator Donley mentioned that fiscal notes do not reflect cost savings from increased thresholds. He reiterated that the bill would have a detrimental impact on constituents who are hit by an uninsured driver and sustain $1,400 in damage for which there is no state enforcement of statutory violations. Mrs. Hensley again attested to efficiencies to be gained by the increase. Police departments often do not respond to an accident unless there is $1,500 to $2,500 in damage. Many accidents are presently unreported. Senator Donley acknowledged that reporting is not mandatory. He reiterated that the proposed amendment would provide the option of reporting an accident when an individual has broken the law. Mrs. Hensley noted that the financial responsibility section (four positions) in driver services was deleted from the Governor's budget. The budget also indicates that the division of motor vehicles, driver services section, was eliminating the financial responsibility section that suspends the at-fault driver in motor vehicle accidents. It also states that the division would continue to process suspensions for failure to have insurance, but that it would do so at the $1,500 limit. Discussion followed regarding a determination of damage at the point of accident. Senator Donley cautioned that if the bill passes as presently drafted, "Everybody out there . . . will know that you don't have to have auto insurance as long as you don't do more than $1,500 worth of damage." There will be absolutely no enforcement of insurance requirements. In response to a question from Senator Randy Phillips, Mrs. Hensley said that department opposition to Amendment No. 1 is based on the amount of paperwork involved in the license suspension process when damage is not substantial. The division of insurance reports the average claim in Alaska, three years ago, was $1,600. Senator Donley said that increasing the mandatory reporting level to $2,000 would save considerable paperwork when there is no problem. The increase to $1,500 focuses on problem damages. The issue is compliance with the law which requires two things: 1. Insurance coverage 2. Payment for damage. He suggested that an individual who does only $10.00 worth of damage should not be excused from auto insurance requirements. Co-chairman Halford asked if an accident report would have to be filed if the accident resulted in $2,000 but the individual at fault paid for repairs. Mrs Hensley responded affirmatively. She explained that two separate statutes are involved: 1. The financial responsibility act. 2. Mandatory insurance law. The financial responsibility act says that an individual who causes $500 or more in damages in an accident and does not have insurance will have his or her license suspended by the department. There is parallel suspension. One suspension requires the individual to pay for damages. The other requires everyone to have insurance. A driver can be suspended for being at fault and causing the damage. He or she can also be suspended for not having liability insurance. If the damage is paid, the issue of lack of insurance remains. The individual will have to deal with suspension for that violation and will have to "file SR 22 at $500." Senator Donley said the question is, At what level does enforcement occur?. Under the proposed bill, the department would, in effect, no longer enforce financial responsibility. Enforcement of mandatory auto insurance would continue. Co-chairman Halford voiced concurrence with the department's goal of reaching to $1,500, except for cases in which an individual responsible for the accident does not pay. That threshold should remain at $500. Senator Donley advised that Amendment No. 1 would accomplish that goal. It raises the mandatory report level to $2,000. Mrs. Hensley stressed that the department would continue to require individuals to sign the affidavit of insurance at the time of vehicle registration. Approximately 11 percent of those involved in motor vehicle crashes in Alaska are uninsured. The department does not have the budget to implement and suspend drivers at $501--the threshold set forth in Amendment No. 1. The department will not be processing any financial responsibility suspensions. The department will only suspend drivers for not having required insurance. The only recourse damaged drivers will have is to file suit in small claims court for compensation for damages. Senator Donley noted that the proposed bill would also impact enforcement of mandatory insurance provisions by increasing the threshold from the existing $500 to $1,500. The proposed amendment sets the threshold at $501. Mrs. Hensley referenced earlier attempts by the department to increase the threshold to $1,500 and ultimate inclusion of a negotiated $1,000 limit within an omnibus fees bill. [Co-chairman Frank and Senator Rieger arrived at this time.] Further discussion and examples of provisions of current law versus changes proposed in both the present version of the bill and Amendment No. 1 followed. Mrs. Hensley referenced a situation wherein the injured driver had no insurance, and the driver causing the damage failed to pay and also had no insurance. She advised that three suspensions would issue. Two to the driver causing the damage for failure to pay and lack of insurance, and the third to the uninsured driver whose vehicle sustained damage. She further advised that the department receives approximately 20,000 accident reports per year. Senator Donley said that the proposed amendment should significantly reduce the number. Reports that are received will be focused on problem accidents. In response to a question from Senator Zharoff, Senator Donley explained that a decrease in reporting would occur because reporting would be optional up to $2,000. At the present time, everything over $500 is mandated. Co-chairman Halford called for a show of hands on Amendment No. 1. Amendment No. 1 was ADOPTED on a vote of 4 to 3 (Senators Donley, Frank, Rieger, and Sharp were in support). Senator Donley MOVED that SCS CSHB 517 (Fin) pass from committee with individual recommendations and accompanying fiscal notes. No objection having been raised, SCS CSHB 517 (Fin) was REPORTED OUT of committee with zero fiscal notes from the Dept. of Public Safety and Dept. of Transportation and Public Facilities. Co-chairman Frank and Senators Donley, Rieger, and Sharp signed the committee report with a "do pass" recommendation. Co-chairman Halford and Senators Phillips and Zharoff signed "no recommendation."