Legislature(2015 - 2016)BUTROVICH 205

02/16/2016 01:00 PM TRANSPORTATION

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Audio Topic
01:17:39 PM Start
01:18:15 PM SB132
01:37:39 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Public Testimony --
+= SB 132 ELECTRONIC TAX RETURNS & MOTOR FUEL TAX TELECONFERENCED
Moved CSSB 132(TRA) Out of Committee
         SB 132-ELECTRONIC TAX RETURNS & MOTOR FUEL TAX                                                                     
                                                                                                                                
1:18:15 PM                                                                                                                    
CHAIR  MICCICHE announced  consideration of  SB 132.  [Work draft                                                               
CSSB  132, version  29-GS2912\H,  was before  the committee.]  He                                                               
said public testimony is still open  and that at the last meeting                                                               
the  Department  of  Revenue  (DOR)   was  asked  to  bring  some                                                               
projections on oil at the $70 to $90 a barrel range.                                                                            
                                                                                                                                
1:18:55 PM                                                                                                                    
JERRY BURNETT, Deputy Commissioner,  Department of Revenue (DOR),                                                               
Juneau, Alaska, said  the projections he provided  include all of                                                               
the  revenues  that   are  available  on  an   annual  basis  for                                                               
appropriation by the  legislature. The estimate for  FY17 is $6.2                                                               
billion;  $6.1  billion  of  it   is  total  available  recurring                                                               
revenue.  He explained  the various  places  where revenues  come                                                               
from  provided in  the charts  and said  he didn't  know how  the                                                               
legislature would chose to balance the budget this year.                                                                        
                                                                                                                                
SENATOR  STEDMAN said  the direction  of the  question wasn't  so                                                               
much the  aggregate total  revenues subjected  to appropriations,                                                               
but the  mechanics of the severance  tax portion of the  tax bill                                                               
and the impacts the credits have.                                                                                               
                                                                                                                                
DAN  STICKLE, Assistant  Chief Economist,  Department of  Revenue                                                               
(DOR),  Juneau,  Alaska,  said  for the  revenues  that  come  in                                                               
through  the oil  and  gas production  tax there  is  a point  at                                                               
around $80/barrel  where for each  $1 of  value in the  barrel of                                                               
oil the  state takes an increasing  share. At this point  the tax                                                               
transitions from the  gross minimum production tax  to paying the                                                               
progressive 35 percent income tax.                                                                                              
                                                                                                                                
1:22:58 PM                                                                                                                    
SENATOR STEDMAN said  this would have to be looked  at in another                                                               
committee,  but  stated  that   "Nobody  pays  35  percent.  It's                                                               
mathematically impossible."                                                                                                     
                                                                                                                                
CHAIR MICCICHE explained that the  reason he picked the $85 price                                                               
point is because  it gave some room  in the $80 to  $85 range. If                                                               
the budget  is reduced  as planned, there  would be  more revenue                                                               
than needed at those price ranges.  He thought it the right place                                                               
to  promise  Alaskans  they  would  be  returning  some  of  this                                                               
revenue.  However,  some of  the  measures  may not  go  through,                                                               
including a draw and that would be a very different picture.                                                                    
                                                                                                                                
He wanted to  discuss a potential amendment.  The changes include                                                               
removing the  electronic submission,  because it  was problematic                                                               
in accordance Legislative  Legal. That could be  fixed in another                                                               
bill perhaps. The claw back was  added that at $85/barrel for the                                                               
previous calendar  year that  the taxes  would revert  to current                                                               
rates. Two  new exemptions were  added for fuels in  an emergency                                                               
vehicle  and students'  transportation  services and  made a  few                                                               
statutory cleanup changes. Then finally,  the tax is sunsetted on                                                               
July 1, 2018.                                                                                                                   
                                                                                                                                
1:25:19 PM                                                                                                                    
SENATOR  MICCICHE said  another  area of  interest  is they  want                                                               
Alaskans to  be able to  transparently view this pool  of revenue                                                               
with  a special  accounting fund  by each  fuel tax  category. He                                                               
asked  what dedicating  funds back  to transportation  would look                                                               
like and to have that as a conceptual amendment.                                                                                
                                                                                                                                
MR.  BURNETT  answered  that  a   number  of  revenues  that  are                                                               
accounted for in  a separate fund. For example,  when the alcohol                                                               
tax  was last  increased it  created an  Alcohol Substance  Abuse                                                               
Fund where half of the alcohol tax  was put in that fund and then                                                               
it's  separately accounted  for in  the budget.  Doing a  similar                                                               
type  measure with  this  is possible.  This  money is  currently                                                               
accounted  for  in  subaccounts  of   the  General  Fund,  so  it                                                               
certainly can  be identified.  He was  certain the  Department of                                                               
Transportation  and Public  Facilities'  (DOTPF) budget  contains                                                               
significantly  more general  funds dollars  than is  collected in                                                               
motor fuel taxes. But, there is  no technical or legal issue with                                                               
doing what he suggests.                                                                                                         
                                                                                                                                
CHAIR MICCICHE asked if there is a cost.                                                                                        
                                                                                                                                
MR. BURNETT answered that the  department had never accounted for                                                               
an additional cost in a fiscal note  for setting up a new fund in                                                               
the past when it was an accounting type fund.                                                                                   
                                                                                                                                
1:28:57 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
1:30:07 PM                                                                                                                    
CHAIR  MICCICHE  called  the  meeting back  to  order  and  noted                                                               
letters  of support  and two  letters of  opposition. Finding  no                                                               
further comments, he closed public testimony.                                                                                   
                                                                                                                                
SENATOR  BISHOP  offered  conceptual  Amendment  1  to  create  a                                                               
special accounting fund  for the motor fuel tax  to be identified                                                               
by  fuel  source;  and  he  emphasized the  fund  is  not  to  be                                                               
dedicated. There were no objections and Amendment 1 was adopted.                                                                
                                                                                                                                
SENATOR BISHOP  moved to report  CSSB 132, version H  as amended,                                                               
from  committee  with  individual  recommendations  and  attached                                                               
fiscal note(s).                                                                                                                 
                                                                                                                                
1:31:42 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
1:32:21 PM                                                                                                                    
CHAIR MICCICHE called the meeting back to order.                                                                                
                                                                                                                                
SENATOR DUNLEAVY  objected. He said  vetting the bill has  been a                                                               
good process,  but it's  premature for taxes.  It will  raise $46                                                               
million,  but  he is  on  the  Finance  Committee that  is  still                                                               
finding "pockets  of money." So,  from his perspective  they need                                                               
to spend  another year  "doing due diligence"  on these  funds in                                                               
the various departments  and divisions, and when they  get to the                                                               
point of  discovering all the  pots of  money and they  have been                                                               
used to cover this hole, he  would feel more comfortable having a                                                               
serious conversation about revenue  measures. If they default too                                                               
quickly to revenue measures they will  never get to the bottom of                                                               
these funds and some of the things money is spent on.                                                                           
                                                                                                                                
SENATOR STEDMAN  said he wouldn't  support this measure  now, but                                                               
he also thought it might be  needed in the future. Other areas in                                                               
the tax  structure need significant  work and pale  in comparison                                                               
to the revenue this measure is going to generate.                                                                               
                                                                                                                                
1:34:44 PM                                                                                                                    
SENATOR  EGAN  said  he  would  reluctantly  support  this  bill,                                                               
because he  wants it out of  this committee and into  the Finance                                                               
Committee where it can be tackled to a greater degree.                                                                          
                                                                                                                                
SENATOR BISHOP said  he would also support the  bill; his reasons                                                               
for supporting it haven't changed from his origianl testimony.                                                                  
                                                                                                                                
CHAIR  MICCICHE  clarified  that  he,  too,  didn't  know  if  he                                                               
supports  the  bill,  but  he  wants  to  move  it  to  the  next                                                               
committee.  He   explained  that  the   Transportation  Committee                                                               
reviews the effect  on transportation and they had  done that and                                                               
added  provisions that  make the  taxes revert  to current  rates                                                               
when  it goes  beyond  where he  feels  transportation should  be                                                               
contributing at that  level and two new fuel  tax exemptions have                                                               
been  added. They  also sunset  the bill  is two  so it  could be                                                               
reviewed  if  it  does  pass  the  legislature.  They  have  also                                                               
provided an amendment allowing for  a special accounting funds so                                                               
that Alaskans can transparently see  where those funds are coming                                                               
from and what their totals are.                                                                                                 
                                                                                                                                
A  roll call  vote  was taken:  Senators  Egan, Bishop,  Micciche                                                               
voted yea;  Senators Stedman and  Dunleavy voted  nay. Therefore,                                                               
CSSB 132, version \H as amended, moved from committee.                                                                          

Document Name Date/Time Subjects
SB132 DOR response for 'trigger' estimate analysis.pdf STRA 2/16/2016 1:00:00 PM
SB 132