Legislature(2015 - 2016)BUTROVICH 205
02/04/2016 01:00 PM TRANSPORTATION
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SB 132-ELECTRONIC TAX RETURNS & MOTOR FUEL TAX 1:47:00 PM CHAIR MICCICHE announced consideration of SB 132. He invited Mr. Binder to come forward and address the open questions from the last hearing. One was the percentage of the gap between revenue and expenses at airports in Alaska that would be covered by the proposed increase in the jet fuel and aviation gas taxes. Senator Stedman also requested more background information on airport costs in his district. 1:48:42 PM At ease 1:48:55 PM CHAIR MICCICHE reconvened the meeting and asked Mr. Binder to discuss how much of the general fund (GF) gap will be filled by increasing the aviation fuel tax by $14 million. JOHN BINDER, Deputy Commissioner, Statewide Aviation, Department of Transportation and Public Facilities (DOTPF), explained that the GF subsidy that goes to the rural aviation system (247 airports not including Anchorage and Fairbanks International) totals about $39 million. The rural system also generated $5.7 million in revenues in FY15 based on land rent, leases and those sorts of things. That brings that number down to around a $33 million subsidy. The aviation fuel tax is collected by DOR and goes directly into the GF; in FY15 it was about $4.1 million. The projected aviation fuel tax increase would bring in $9.5 to 10 million more. That would leave a remaining GF subsidy of $19 to 20 million per year to the rural airport system. CHAIR MICCICHE asked if that is minus the municipal airports that sell fuel. MR. BINDER answered that is correct. He added that of the $14 million that comes in, about $200,000 would go back to seven communities that own and operate their airports (as part of a revenue sharing program through DOR). 1:51:43 PM JERRY BURNETT, Deputy Commissioner, Department of Revenue (DOR), Juneau, Alaska, advised that DOR had gone through its prepared testimony at the last meeting and he had provided a written response to the questions from the last hearing. 1:52:22 PM CHAIR MICCICHE acknowledged that and stated that public testimony would remain open while awaiting a new committee substitute (CS). The logic of the CS is to convince Alaskans that the legislature is not in the tax business, but the state has a fiscal gap that everyone has to work through together. The CS will reflect a reduction in that tax should the price per barrel of oil return to a normal range. MR. BURNETT said the department shares many of the same concerns about taxation and they are discussing taxes, because the state needs additional funds to balance the budget. 1:53:50 PM LARRY DEVILBISS, representing himself, Palmer, Alaska, said he farms beef cows, and last year, fuel was by far his largest expense; he spent 50 percent more on that than fertilizer. So, the increase in tax will have an impact on him. He was concerned that electronic filing will require extra paperwork and that the 12 cent off-road exemption has to also be applied for. "That is probably equally as ominous to me as the extra charge," he said. MR. BURNETT explained that the bill requires taxpayers to file electronically, but it does not change the paperwork requirement for getting the off-road exemption. CHAIR MICCICHE said the committee understands the frustration that comes with the feel of someone reaching into your pocket, and he belongs to a team that feels strongly that significant reductions are still required. Legislators are trying to manage a gap that is unlikely to go away even if they are very successful. 1:58:31 PM SENATOR DUNLEAVY asked what the anticipated revenues are from this bill. MR. BURNETT answered the total anticipated new revenues from this bill is $49 million. SENATOR DUNLEAVY asked how much is currently brought in. MR. BURNETT answered around $40 million. He pointed out that the increase on aviation jet fuel tax is more than double the current tax. 1:59:20 PM AVES THOMPSON, Executive Director, Alaska Trucking Association (ATA), Anchorage, Alaska, testified in support of SB 132. He said that one of their priorities for 2016 is development of a balanced, durable, long-term, fiscal plan utilizing cuts to state government, use of Permanent Fund earnings and taxes if required. The fuel tax increase proposed in SB 132 is acceptable to the ATA within the framework of the long-term, fiscal plan. They believe that action is critical in this legislative session. MR. THOMPSON said the ATA has long supported a fuel tax increase if the funds could be dedicated to transportation needs. They know that won't happen in this bill, but they feel strongly that they need to help resolve the fiscal issues by doing their part. 2:00:33 PM CHAIR MICCICHE said his understanding is that a letter from ATA will be forthcoming. MR. THOMPSON said he would follow up with a letter. SENATOR DUNLEAVY asked Mr. Burnett what exempted categories there will be. MR. BURNETT replied that the exempted category is off-road use: construction, farming, and ATVs; a school bus working under a private contract with the local school district would not necessarily be exempt. SENATOR DUNLEAVY noted that those costs will likely be passed along to the school districts. MR. BURNETT said they would expect the cost of this type of tax to be passed on to the ultimate consumer in one way or another. SENATOR STEDMAN informed his constituents that a tax bill will not automatically move from committee. It might not have the votes or be in a different form. SENATOR BISHOP asked if the marine fuel tax stays the same in the bill. MR. BURNETT answered that the marine fuel tax changes from 5 cents a gallon to 10 cents a gallon in this bill. It is accounted for separately and it would apply to commercial fishermen, but not to the Alaska Marine Highway System. SENATOR STEDMAN asked for a regional breakdown of fuel consumption in the state. MR. BURNETT responded that the department taxes at the distributor level, but there should be local government tax records for communities that charge a local tax on fuel. SENATOR DUNLEAVY asked if additional administration would have to be put in place to handle the additional tax. MR. BURNETT answered that no additional overhead would be needed. CHAIR MICCICHE asked him to explain the system as it is now, because this bill is just changing the numbers on the existing form. MR. BURNETT explained that the current system, which is taxed at the distributor level, will be used but just the tax rates will change. There will be some implementation costs for programing and forms, but over time using electronic filing it will be less costly. 2:05:47 PM CHAIR MICCICHE found no further questions and held SB 132 in committee awaiting a committee substitute. Public testimony was open.