Legislature(1999 - 2000)
02/22/1999 01:38 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 22, 1999
1:38 P.M.
TAPE HFC 99 - 26, Side 1.
TAPE HFC 99 - 26, Side 2.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:38 P.M.
PRESENT
Co-Chair Therriault Representative Grussendorf
Vice-Chair Bunde Representative Foster
Representative Austerman Representative Kohring
Representative J. Davies Representative Moses
Representative G. Davis Representative Williams
Co-Chair Mulder was absent from the meeting.
ALSO PRESENT
Juanita Hensley, Administrator, Division of Motor Vehicles,
Department of Administration; Barbara Huff-Tuckness, General
Teamsters Local 959; Mike Ford, Attorney, Legislative Legal
Services, Legislative Affairs Agency; Paul Fuhs, Lobbyist
Sealand Services.
TESTIFIED VIA TELECONFERENCE
Frank Dillon, Executive Vice-President, Alaska Trucking
Association, Anchorage; Harry McDonald, President, Carlile
Trucking Company, Anchorage.
SUMMARY
HB 73 "An Act relating to commercial vehicle
registration fees and taxes; and providing for an
effective date."
HB 73 was REPORTED OUT of Committee with a "do
pass" recommendation and a zero fiscal note by the
Department of Administration.
HB 77 "An Act relating to the Joint Armed Services
Committee, a permanent interim committee of the
Alaska State Legislature; and providing for an
effective date."
Was RESCHEDULED to 2/23/99.
SB 35 "An Act extending the termination date of the
Board of Marine Pilots."
CSSB 35 (L&C) was REPORTED OUT of Committee with a
"do pass recommendation and a zero fiscal note by
the Department of Commerce and Economic
Development.
SENATE BILL NO. 35
"An Act extending the termination date of the Board of
Marine Pilots."
SENATOR DRUE PEARCE, SPONSOR testified in support of SB 35.
She explained that SB 35 would extend the termination date
of the the Board of Marine Pilots. The Legislative Budget
and Audit Committee completed an audit on the Board in 1998.
The audit recommended that the Board be extended to the year
2004. The Senate Labor & Commerce Committee amended the
legislation to a 4-year extension of June 30, 2003. The
Board has established four pilot regions in the state of
Alaska. There are four active associations corresponding to
the regions. The 1998 audit was the cleanest the Board has
received. Recommendations are being dealt with at the Board
level.
Co-Chair Therriault noted that the Board has not always done
so well. He expressed support for the four-year sunset date.
Representative Foster MOVED to report CSSB 35 (L&C) out of
Committee with the accompanying fiscal note.
Co-Chair Therriault noted that the fiscal note is zero
because funding for the Board is contained in the proposed
FY00 budget.
There being NO OBJECTION, it was so ordered.
CSSB 35 (L&C) was REPORTED OUT with a "do pass
recommendation and zero fiscal note by the Department of
Commerce and Economic Development.
HOUSE BILL NO. 73
"An Act relating to commercial vehicle registration
fees and taxes; and providing for an effective date."
Co-Chair Therriault explained that HB 73 revisits
legislation that was passed by the Twentieth Legislature.
Second Session, CSHB 404(RLS).
TED DEATS, STAFF, REPRESENTATIVE MASEK testified in support
of HB 73. He explained that CSHB 404 (RLS) raised temporary
registration fees for out-of-state trucks to fund size,
weight, and safety inspections statewide. This bill
eliminated the requirement of annual registration of
commercial trailers with DMV, saving the state $100,000
thousand dollars by eliminating 10,000 yearly transactions.
It also saved trucking companies the chore of hunting down
hundreds of trailers statewide. In the final days of
passage, it was noted that some municipalities lost tax
revenues by eliminating trailer registrations. The Division
of Motor Vehicles collects taxes for some municipalities
when it registers vehicles.
The bill was amended to include a 'sunset' date of March 30,
1999. The 'sunset' was added to allow the trucking industry,
municipalities, and DMV time to agree on a plan to replace
the lost revenues or go back to yearly registration of
trailers.
After several recent teleconferences and meetings, the
affected parties reached agreement. HB 73 fulfills the
agreement by:
* Making permanent the new registration fees for
commercial vehicles;
* Raising the municipal tax schedule by $75 dollars per
year on trucks over 12,000 pounds, to restore lost
revenue to affected municipalities; and
* Tightening the 'situs' language so that trucks are
registered where they are normally used.
Co-Chair Therriault pointed out that the new registration
fees were passed in the prior session. The fees were
adjusted up to replace the lost revenue from trailer
registration.
Representative Austerman noted that trailers were set at a
one-time $10 dollar fee. He questioned why the $10 dollar
fee was not raised to offset the loss of revenue.
Mr. Deats explained that the lost state revenue was replaced
by raising commercial vehicle registration fees for all
commercial vehicles. An agreement was made to replace the
lost municipal revenue by charging an additional $75 dollars
per truck on trucks over 12,000 pounds, in the 13
communities that collected local tax.
Representative Austerman reiterated concerns that the burden
was placed on the truckers.
Co-Chair Therriault pointed out that trucks and trailers are
a package. Since it is difficult to keep track of trailers
the decision was made to shift the fee to the trucks. The
companies agreed to shift the fee because it results in an
administrative savings.
Representative Austerman noted that a company can have a few
trucks and hundreds of trailers.
Mr. Deats reiterated that all commercial vehicles over
12,000 pounds in municipalities that collect a tax pay an
additional $75 dollars per truck.
JUANITA HENSLEY, ADMINISTRATOR, DIVISION OF MOTOR VEHICLES,
DEPARTMENT OF ADMINISTRATION provided information on HB 73.
She explained that the legislation was proposed at the
request of the trucking industry, including the Alaska
Trucking Association, Teamsters Local 959 and the
Independent Truckers Association. They felt it made good
business sense to shift the tax. All the fees associated
with registering trailers were transferred to the sizes of
power units that pull the trailers. It was discovered while
the legislation was in the Senate that the legislation had
not taken into account the fact that the Division of Motor
Vehicles collects taxes for 13 communities. The tax revenue
for those communities was lost with the passage of CSHB 404
(RLS). The Senate placed a temporary date on the legislation
to allow the industry, municipalities and state to come up
with a solution. House Bill 73 incorporates the solution
agreed upon by all parties.
Co-Chair Therriault observed that the fee is shared back to
the municipalities minus an eight-percent charge for
collection.
In response to a question by Representative J. Davies, Ms.
Hensley reviewed the legislation. She noted that sections 1,
2 and 3 were part of HB 404 and restate current practice.
The municipal tax increase is contained in sections 4 and 6.
Biennial registration is increased by $150 dollars in
section 4 on page 3, lines 12 and 14. Annual registration is
increased by $75 dollars in section 6 on page 4, lines 19
and 21. If a truck is registered for one year the owner
would pay an additional $75 dollars in municipal tax per
truck, per year. If the truck is registered for two years
the owner would pay an additional $150 dollars in municipal
tax per truck, every two years. Section 5 is a new section
that addresses the location of the vehicle at the time that
it is registered. Section 7 sets up a transition period to
allow communities to pass ordinances to increase their
taxing ability. The tax was calculated by spreading the
number of registered trailers across the number of
registered commercial vehicles in the state. She noted that
the bill was widely supported.
In response to a question by Representative Austerman, Ms.
Hensley noted that small utility trailers can be used for a
lifetime. The $10 dollar fee represents the administrative
cost of trailer registration. The Division of Motor vehicles
attempted to set a fee that would be revenue neutral.
Representative Austerman expressed concern that the cost is
being born by the larger power units.
FRANK DILLON, EXECUTIVE VICE-PRESIDENT, ALASKA TRUCKING
ASSOCIATION, ANCHORAGE testified via teleconference in
support of the legislation. He explained that the industry
recommended that the municipal tax be assessed on vehicles
above 12,000 pounds because these are the vehicles that reap
the most benefit from eliminating the trailer fee. The
trucking industry felt that the concept was fair because the
heavier trucks pull most of the trailers in the state. Most
companies operate on margins of only a few cents return on a
dollar. He emphasized that efficiencies benefit everyone. He
noted that they did not anticipate that the tax stream for
municipalities would be disrupted when HB 404 was
negotiated. The additional $75 dollar fee only applies to
the 13 jurisdictions that collect the fee and on trucks over
12,000 pounds. The bill only codifies in statute current
practice. Fees have been paid for January - March 1999. He
acknowledged that there have been some complaints from truck
operators that do not pull trailers. He stressed that this
number is small. He pointed out that it is difficult to
please everyone. He emphasized that the legislation is in
the interest of the Division of Motor Vehicles and the
trucking industry. He referred to the "situs" provision. He
noted that some areas were not getting any local revenue
because companies were not registering their trailers in the
area of use. Although there are hundreds of trailers in the
Unalaska/Dutch Harbor area they were only collecting on 16
trailers because the majority of trailers were registered in
other locations. He noted that under the loophole trailers
engaged in ocean trade would not have to be registered
because they are usually located in international waters.
The legislation closes the loophole. He stressed that the
legislation is also supported by independent truckers.
HARRY MCDONALD, PRESIDENT, CARLILE TRUCKING COMPANY,
ANCHORAGE testified via teleconference in support of the
legislation. He pointed out that the legislation is revenue
neutral. He noted that there is a $100 thousand dollar
transaction savings for DMV. There are also transaction
savings for the trucking industry. He explained the
difficulty of keeping track of trailers for registration and
tags.
PAUL FUHS, LOBBYIST SEALAND SERVIES testified in support of
the legislation. He stressed that the legislation reduces
needless paper work. He noted that California is the only
other state that continues to have trailer registration. He
noted that the legislation has wide support and a zero
fiscal note. He emphasized that Sealand Service has a
relationship with independent truckers. Their trailers are
hauled by independent truckers.
MIKE FORD, ATTORNEY, LEGISLATIVE LEGAL SERVICES, LEGISLATIVE
AFFAIRS AGENCY testified that the title needs to be changed
because of the application of section 5. Section 5 could
also affect noncommercial vehicles. The title change would
not change the substance of the bill. He recommended that
the legislation be amended on page 1, line 1, after "taxes"
insert "relating to determining the taxable location of a
vehicle for purposes of municipal registration taxes."
Representative Foster MOVED to ADOPT Amendment 1, on page 1,
line 1, after "taxes" insert "relating to determining the
taxable location of a vehicle for purposes of municipal
registration taxes." There being NO OBJECTION, it was so
ordered.
BARBARA HUFF-TUCKNESS, GENERAL TEAMSTERS LOCAL 959 testified
via teleconference in support of the legislation. She
observed that the Teamsters Local 959 expressed their
support in a letter dated 2/10/99 (copy on file).
In response to a question by Representative Kohring, Ms.
Hensley explained that revenues go back to the
municipalities minus 8 percent. The 8 percent paid to the
state for the tax collection is deposited into the general
fund. The legislation does not raise or lower revenues.
Co-Chair Therriault asked how much the municipalities would
lose without the legislation. Ms. Hensley clarified that
approximately $249 thousand dollars would be lost to
municipalities without the legislation.
Representative Kohring did not think that the tax was
justified by holding municipalities harmless.
Mr. Dillon noted that the intent is not to lose money, but
to have the same tax base. He noted that the additional $75
dollar tax was not meant to increase the revenue base.
Representative Kohring stressed that he has not seen
evidence that small trucking operations support the
legislation.
Co-Chair Therriault observed that member's packets included
a letter by the Alaska Independent Truckers Association,
dated 2/15/99.
(Tape Change, HFC 99 - 26, Side 2)
Representative Kohring expressed concern that the tax
increase would not benefit the trucking industry.
Representative J. Davies stressed that the purpose of the
bill is to reduce cost for the trucking industry by shifting
the way in which the tax is collected. The intent is not to
increase revenues.
In response to a question by Representative Kohring, Mr.
Dillon noted that 90 percent of the operators in the over
12,000 pound class operate trailers. They will break even if
they have two trailers. He noted that the majority of
members of the Alaska Trucking Association own 1 - 3 trucks
and have 3 - 6 trailers. He stressed that it is not a major
economic issue.
Mr. McDonald pointed out that his company employs an average
of 40 owner/operators around the state. He emphasized that
his company creates a business opportunity for independent
truckers. He maintained that everyone benefits from the
legislation.
Representative Williams MOVED to report HB 73 out of
Committee with the accompanying fiscal note. Representative
Kohring OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Bunde, Davies, Davis, Foster, Grussendorf, Moses,
Williams, Therriault
OPPOSED: Kohring, Austerman
Co-Chair Mulder absent from the vote.
The MOTION PASSED (8-2).
HB 73 was REPORTED OUT of Committee with a "do pass"
recommendation and a zero fiscal note by the Department of
Administration.
ADJOURNMENT
The meeting adjourned at 2:52 p.m.
HFC 8 2/22/99
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