04/11/2012 09:00 AM Senate STATE AFFAIRS

          HB  64-PERM. MOT. VEH. REGISTRATION/TRAILERS                                                                      
                                                                                                                                
9:16:24 AM                                                                                                                    
CHAIR  WIELECHOWSKI  announced  that  the next  bill  before  the                                                               
committee  would  be  HB  64,  which would  allow  DMV  to  issue                                                               
permanent registration to certain vehicles and trailers.                                                                        
                                                                                                                                
RYAN MCKEE,  staff to Representative Bill  Stoltze, introduced HB
  on behalf  of  the sponsor.  He  related that  HB  64 is  the                                                               
permanent  registration  for  non-commercial motor  vehicles  and                                                               
trailers, and applies  to motor vehicles older  than eight years.                                                               
It establishes  a fee for  permanent registration.  For trailers,                                                               
the regular bi-annual fee is $30,  plus $25 which would go to the                                                               
permanent registration  fee. For vehicles, the  regular bi-annual                                                               
fee is $100, plus the $25 permanent registration fee.                                                                           
                                                                                                                                
He  explained that  the bill  allows municipalities,  cities, and                                                               
boroughs  to  establish  a motor  vehicle  registration  tax  for                                                               
vehicles and  trailers that are  registered permanently.  This is                                                               
done by an ordinance approved  by the local legislative body. The                                                               
state DMV must be notified a year before it goes into effect.                                                                   
                                                                                                                                
He  addressed  the  limits  for   the  amount  of  motor  vehicle                                                               
registration  tax  the  state will  collect  for  municipalities,                                                               
cities,  and boroughs  for  permanently  registered vehicles  and                                                               
trailers. If  the tax is above  $100, the state will  not collect                                                               
the  tax;  the  municipalities  will  have  to  collect  it.  The                                                               
effective  date for  this legislation  will be  January 1,  2013.                                                               
Permanent registration  will also be available  beginning January                                                               
1, 2013.  This means that  municipalities, cities,  and boroughs,                                                               
cannot set a permanent rate for the tax until then.                                                                             
                                                                                                                                
CHAIR  WIELECHOWSKI asked  how the  bill  would affect  municipal                                                               
revenues related to vehicle registration.                                                                                       
                                                                                                                                
MR. MCKEE explained  that in the first two years,  2013 and 2014,                                                               
there would be  an increase in municipal revenue  by $11 million.                                                               
In 2015,  there would be a  decrease of $20 million  in municipal                                                               
revenue. He said it would be a savings to the people, though.                                                                   
                                                                                                                                
CHAIR WIELECHOWSKI asked for an analysis after 2015.                                                                            
                                                                                                                                
MR. MCKEE said he did not have that information.                                                                                
                                                                                                                                
CHAIR  WIELECHOWSKI  asked  about  opposition to  the  bill  from                                                               
municipalities.                                                                                                                 
                                                                                                                                
MR. MCKEE reported no concerns from municipalities or the DMV.                                                                  
                                                                                                                                
CHAIR  WIELECHOWSKI asked  if permanent  registration would  pose                                                               
any problems identifying abandoned vehicles.                                                                                    
                                                                                                                                
MR. MCKEE clarified that the  permanent registration is an option                                                               
for individuals. If a vehicle  switches to a different owner, the                                                               
new owner would have to pay the fee again.                                                                                      
                                                                                                                                
9:20:31 AM                                                                                                                    
SENATOR  PASKVAN  noted  opposition  from  the  Alaska  Municipal                                                               
League.  He  opined  that  the  bill has  a  negative  impact  on                                                               
municipalities.                                                                                                                 
                                                                                                                                
MR. MCKEE thought  it was because of the reduction  in revenue to                                                               
municipalities.  He noted  the sponsor  sees  the legislation  as                                                               
giving back to Alaskans.                                                                                                        
                                                                                                                                
SENATOR  PASKVAN  pointed  out  that the  bill  was  not  revenue                                                               
neutral;   therefore   it  is   an   unfunded   mandate  to   the                                                               
municipalities.                                                                                                                 
                                                                                                                                
MR.  MCKEE noted  two  years  of a  surplus  of  revenue for  the                                                               
municipalities.                                                                                                                 
                                                                                                                                
9:22:32 AM                                                                                                                    
WHITNEY  BREWSTER, Director,  Division of  Motor Vehicles  (DMV),                                                               
Department of  Administration, answered  questions related  to HB
.  She  stated that  the  bill  would  allow  DMV to  charge  a                                                               
permanent  registration  fee for  vehicles  eight  years old  and                                                               
older,  as well  as  for non-commercial  trailers. She  clarified                                                               
that  DMV would  see  a bump  in  revenue  in FY  13  and FY  14;                                                               
however, there  would be a drop  in revenue which would  remain a                                                               
loss for  the life-span  of those vehicles.  The loss  of revenue                                                               
would be  $1 to $2 million  and difficult to project.  She stated                                                               
that the loss  of revenue would not  be as great as  shown in the                                                               
fiscal note for FY 15 - FY 18.                                                                                                  
                                                                                                                                
She explained  that DMV does  collect motor  vehicle registration                                                               
taxes  on behalf  of  16 municipalities  and  retains 8  percent,                                                               
which goes  into general fund. Historically,  the collection cost                                                               
is about  $1 million.  She clarified that  the effective  date of                                                               
January 1,  2013, means municipalities  cannot pass  an ordinance                                                               
to allow for a permanent  registration fee until January 1, 2013,                                                               
and cannot begin to collect that fee until January 1, 2015.                                                                     
                                                                                                                                
SENATOR PASKVAN asked what  percentage of non-commercial vehicles                                                               
in Alaska are 8 years old or older.                                                                                             
                                                                                                                                
MS. BREWSTER  replied that currently  there are  369,500 vehicles                                                               
that are  eligible for  permanent registration in  2013 out  of a                                                               
total of a million vehicles.                                                                                                    
                                                                                                                                
SENATOR  PASKVAN asked  if the  vehicles newer  than 8  years old                                                               
would have  to pick up the  revenue slack. He gave  an example of                                                               
the owner  of a car  that was five years  old having to  pay more                                                               
eventually.                                                                                                                     
                                                                                                                                
9:26:57 AM                                                                                                                    
MS. BREWSTER  said the legislature  sets the fees and  would have                                                               
to make that decision.                                                                                                          
                                                                                                                                
CHAIR WIELECHOWSKI noted the arrival of Senator Meyer.                                                                          
                                                                                                                                
CHAIR WIELECHOWSKI  asked if DMV  revenues are from  license fees                                                               
or from the general fund.                                                                                                       
                                                                                                                                
MS. BREWSTER  said DMV  revenues come  from general  fund program                                                               
receipts  and DMV  would be  able to  cover the  costs associated                                                               
with operations contained  in the bill. DMV  is neutral regarding                                                               
HB 64.                                                                                                                          
                                                                                                                                
CHAIR WIELECHOWSKI asked if a loss  of $1.5 million would have an                                                               
impact on DMV program receipts.                                                                                                 
                                                                                                                                
MS. BREWSTER said no.                                                                                                           
                                                                                                                                
CHAIR WIELECHOWSKI  inquired if general  funds would make  up the                                                               
loss.                                                                                                                           
                                                                                                                                
MS. BREWSTER said yes.                                                                                                          
                                                                                                                                
CHAIR WIELECHOWSKI closed public testimony and set HB 64 aside.