Legislature(2009 - 2010)BUTROVICH 205

01/28/2010 01:00 PM Senate TRANSPORTATION

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01:04:35 PM Start
01:04:55 PM SB218
01:24:00 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
                SB 218-SUSPENDING MOTOR FUEL TAX                                                                            
1:04:55 PM                                                                                                                    
CHAIR KOOKESH announced the consideration of SB 218 and said he                                                                 
did not intend to move the bill today.                                                                                          
GINGER BLAISDELL, Director, Administrative Services Division,                                                                   
Department of Revenue, read the following sponsor statement into                                                                
the record:                                                                                                                     
     Escalating  costs  are  placing a  difficult  burden  on                                                                   
     many  Alaskans,  particularly  for  those  who  live  in                                                                   
     rural  areas of  the state.  Suspending  the motor  fuel                                                                   
     tax is one  step toward making Alaska's  living expenses                                                                   
     more reasonable  across the state. The actual  amount of                                                                   
     money  saved would vary  depending on  the type of  fuel                                                                   
     being  purchased;  however  most consumers  should  save                                                                   
     eight cents per gallon when filling up their vehicles.                                                                     
     It is  important to note that  while the motor  fuel tax                                                                   
     suspension  would provide temporary  assistance for  two                                                                   
     years,  we still need  to work  together to seek  longer                                                                   
     term solutions to the energy costs facing us.                                                                              
     It is the  needs of Alaska's families,  communities, and                                                                   
     businesses that  justify the proposal contained  in this                                                                   
1:07:25 PM                                                                                                                    
Senator Myers joined the committee.                                                                                             
MS. BLAISDELL provided the following sectional analysis:                                                                        
     Section  1(a) -  Suspends  the motor  fuel  tax for  two                                                                   
     years beginning July 1, 2010 and ending June 30, 2012.                                                                     
     Section  1(b) - Requires  motor fuel  dealers to  report                                                                   
     the  amount of  motor fuel  sold or  transferred in  the                                                                   
     state to  the Department of  Revenue and provides  for a                                                                   
     penalty of up to $5,000 for failure to report.                                                                             
     Section 1(c)  - The Department of Revenue  would be able                                                                   
     to  immediately  draft  regulations   to  implement  the                                                                   
     Section  1(d)  -  Motor  fuel   dealer  is  defined  for                                                                   
     purposes of  who must report sales or transfers  of fuel                                                                   
     in the state  to include anyone who would  have remitted                                                                   
     taxes except  for the  fact that the  fuel tax  had been                                                                   
     Section 2  - Repeals Section  1(a) (the tax  suspension)                                                                   
     on June 30, 2012.                                                                                                          
     Section 3  - Repeals Section  1(b)(c) and (d)  on August                                                                   
     31, 2012.                                                                                                                  
     Section 4 - Provides for an immediate effective date.                                                                      
1:08:04 PM                                                                                                                    
JOHANNA  BALES,  Deputy  Director,  Tax  Division,  Department  of                                                              
Revenue,  clarified  that  this  bill suspends  the  tax  for  all                                                              
highway, marine, jet fuel and aviation motor fuel tax types.                                                                    
SENATOR MEYER  asked if  this is  basically the  same as  the bill                                                              
that passed  two years ago, which  suspended the $0.08  motor fuel                                                              
MS. BALES replied this would do exactly the same thing.                                                                         
CHAIR  KOOKESH  asked  where  the  tax  would  go  if  it  weren't                                                              
MS. BALES  replied it would go  to the general fund.  A subaccount                                                              
in   the  general   fund  is   used  for   highway  projects   and                                                              
maintenance, she added.                                                                                                         
CHAIR KOOKESH  observed that this  effectively takes money  from a                                                              
fund to repair and maintain highways.                                                                                           
MS.  BALES said  yes,  but the  fuel  tax has  been  a very  small                                                              
portion   of  the  amount   that  is   appropriated  for   highway                                                              
maintenance and repair.                                                                                                         
CHAIR  KOOKESH  asked if  that  money  is  used to  match  federal                                                              
MS.  BALES said  yes,  but the  total  fuel tax  is  comparatively                                                              
small  so it  is  heavily  supplemented  with other  general  fund                                                              
SENATOR MENARD  asked how  much Alaska pays  in fuel  tax compared                                                              
to other states.                                                                                                                
1:10:48 PM                                                                                                                    
MS.  BALES replied  Alaska has  the lowest  rate at  $0.08/gallon.                                                              
The  next closest  is  Georgia  at $0.15/g  and  the  top rate  is                                                              
Washington at $0.375/g.                                                                                                         
SENATOR MEYER  pointed out that  Alaska also has the  highest fuel                                                              
prices  in the  nation  so it's  nice not  to  pay the  additional                                                              
$0.08/g. He asked Senator Davis if she has a similar bill.                                                                      
SENATOR  DAVIS reported  that her  bill, which  is in the  finance                                                              
committee,  is virtually  the  same.  She noted  that  she has  an                                                              
amendment  to  SB   218,  but  she  won't  offer   it  today.  The                                                              
administration  is aware of  her bill and  wants one or  the other                                                              
to pass.                                                                                                                        
1:12:22 PM                                                                                                                    
SENATOR  MEYER  asked  if the  administration  is  concerned  that                                                              
Congressman  Young said  that suspending  the tax  could hurt  the                                                              
state  as  far  as  getting  additional  money  from  the  federal                                                              
MS. BALES  explained that  part of  the matching program  requires                                                              
reporting of  the amount of  fuel used  on highways and  this bill                                                              
requires  those  reports.  As  long  as  the  state  continues  to                                                              
report, federal highway dollars will not be affected.                                                                           
SENATOR  MEYER  asked if  it's  just  a  matter of  reporting  and                                                              
there's no obligation  for the state to actually  collect the fuel                                                              
MS. BALES said that's correct.                                                                                                  
SENATOR  PASKVAN asked  if  increasing the  motor  fuel tax  would                                                              
result in a larger federal revenue share.                                                                                       
MS. BALES said no;  what would affect the share is  if Alaska were                                                              
to use more highway fuel.                                                                                                       
SENATOR PASKVAN asked  what the fuel tax would be  if it reflected                                                              
the actual cost to maintain a road.                                                                                             
1:14:36 PM                                                                                                                    
MS. BALES offered to look in to that.                                                                                           
SENATOR   PASKVAN   asked   if  the   administration   has   given                                                              
consideration  to how  electric  cars or  high-mpg vehicles  might                                                              
contribute to road  upkeep. If two vehicles travel  ten miles they                                                              
should each pay roughly the same for road upkeep, he opined.                                                                    
MS. BALES  said the  federation of tax  administers, of  which her                                                              
office is a member, is trying to address that issue.                                                                            
1:17:02 PM                                                                                                                    
TOM OBERMEYER, Staff  to Senator Davis, offered  his understanding                                                              
that  the  $41  million  fiscal  note  reflects  revenue  that  is                                                              
largely produced  from aviation and  jet fuel. DOR  could probably                                                              
break the number down further, he said.                                                                                         
CHAIR KOOKESH  announced he  would hold  bill to answer  questions                                                              
like that and to work with Senator Davis to align the bills.                                                                    
MR. OBERMEYER  said the  main difference  between the  two relates                                                              
to  the  enactment  language.  Senator  Davis's  bill  provides  a                                                              
contingency in case the Act doesn't take effect on July 1, 2010.                                                                
SENATOR MENARD noted  the email from Congressman  Young warning of                                                              
the potential  loss in federal funding.  She offered to  provide a                                                              
copy to Ms. Blaisdell.                                                                                                          
SENATOR DAVIS asked  who Congressman Young sent the  letter to; it                                                              
isn't in the packet.                                                                                                            
1:20:38 PM                                                                                                                    
SENATOR  PASKVAN said  his  packet contains  an  ADN article  that                                                              
discusses the  correlation between  the state and  federal monies.                                                              
He understands  that the  ongoing debate on  the federal  level is                                                              
that Alaska  receives much more  than it contributes.  States that                                                              
contribute  more than they  receive and  are in deficit  financing                                                              
take issue  with this. It's  a concern  on the federal  level that                                                              
we must consider, he said.                                                                                                      
CHAIR KOOKESH  asked Ms.  Blaisdell at the  next hearing  to break                                                              
down the dollar amounts each motor fuel tax type.                                                                               
SENATOR MEYER  said he  believes that  constituents can  spend the                                                              
$0.08  fuel tax more  wisely than  the Legislature.  It helps  the                                                              
overall  economy by  keeping costs  down. He  supports SB  218 and                                                              
Senator Davis's  bill but  he also appreciates  that the  Chair is                                                              
being cautious.                                                                                                                 
1:23:37 PM                                                                                                                    
CHAIR  KOOKESH   reiterated  that  he   wants  to  have   all  the                                                              
information  and to  address all  the concerns  before moving  the                                                              
bill. He held SB 218 for further work.                                                                                          

Document Name Date/Time Subjects
Motor fue tax suspension sponsor statement 25jan10.doc STRA 1/28/2010 1:00:00 PM
SB 218
Hearing Request SB218 motor fuel tax 20jan10.docx STRA 1/28/2010 1:00:00 PM
SB 218
PR 10-005 Governor Parnell Calls for Two-Year Motor Fuel Tax Suspension 011210.doc STRA 1/28/2010 1:00:00 PM
SB 218
Motor fue tax suspension sponsor statement 25jan10.doc STRA 1/28/2010 1:00:00 PM