Legislature(1995 - 1996)

05/04/1996 03:00 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                 
  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                 
       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                 
  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                 
  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                 
  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                 
       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."                             

Document Name Date/Time Subjects