Legislature(1995 - 1996)

04/28/1995 08:55 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     HOUSE FINANCE COMMITTEE                                   
                         April 28, 1995                                        
                            8:30 A.M.                                          
  TAPE HFC 95-104, Side 2, #000 - end.                                         
  TAPE HFC 95-105, Side 1, #000 - 424.                                         
  CALL TO ORDER                                                                
  Co-Chair  Mark Hanley  called  the  House Finance  Committee                 
  meeting to order at 8:55 p.m.                                                
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Navarre                         
  Representative Grussendorf    Representative Parnell                         
  Representative Kelly          Representative Therriault                      
  Representative Kohring                                                       
  ALSO PRESENT                                                                 
  Representative  Carl   Moses;  Senator  Johnny   Ellis;  Bob                 
  Bartholomew,  Director, Income  and  Excise Audit  Division,                 
  Department  of  Revenue;  Margot  Knuth, Criminal  Division,                 
  Department of  Law;  Cheryl  Sutton,  Staff,  Representative                 
  HB 122    An Act  authorizing payment  of a  portion of  the                 
            motor fuel tax on boats  and watercraft as refunds                 
            to municipalities; and providing  for an effective                 
            CSHB 122 (FIN) was reported  out of Committee with                 
            "no  recommendation" and with a fiscal impact note                 
            by the Department of Revenue.                                      
  HB 297    An Act relating  to fees for a  commercial fishing                 
            vessel license.                                                    
            HB  297  was reported  out  of Committee  with "no                 
            recommendation" and with  a fiscal impact  note by                 
            the Department of Fish and Game.                                   
  SB 67     An Act relating to the crime of unlawful evasion.                  
            SB 67 was  reported out of Committee with and with                 
            two zero fiscal  notes; one  by the Department  of                 
            Administration,   dated   3/9/95;   one   by   the                 
            Department of Law,  dated 3/9/95;  and one by  the                 
            Department of Corrections, dated 3/9/95.                           
  HOUSE BILL NO. 122                                                           
       "An Act authorizing  payment of a portion of  the motor                 
       fuel  tax  on  boats  and   watercraft  as  refunds  to                 
       municipalities; and providing for an effective date."                   
  REPRESENTATIVE CARL MOSES,  SPONSOR provided members  with a                 
  proposed  committee  substitute  for  HB   122,  work  draft                 
  the work draft would increase the marine motor fuel tax from                 
  $.05 to  $.08 cents.   Three cents  on each gallon  would be                 
  shared back  to the  municipality where the  fuel was  sold.                 
  The revenue  generated  from  the $.05  cent  tax  would  be                 
  deposited in  to the  General Fund.   He  stressed that  the                 
  $40.0 thousand dollar administrative cost  would be deducted                 
  by the portion shared to municipalities.  He emphasized that                 
  during the last 10  years funding for boats and  harbors has                 
  declined.  He advocated making  special concessions to small                 
  boats of  64  feet and  under.   He  observed  the need  for                 
  facilities.    He  stressed  that  HB  122  would provide  a                 
  mechanism  to maintain or build harbor facilities.  He noted                 
  in some communities boats have been  lifted on to city docks                 
  due to the lack of safe moorings.                                            
  In response to a question  by Representative Therriault, Mr.                 
  Moses stated that the accounting and collection of $.05 will                 
  not be changed.                                                              
  In  response  to   a  question   by  Representative   Brown,                 
  Representative Moses reiterated that the  tax will be shared                 
  back to the communities where the tax was collected.                         
  Representative Brown  noted that new  reporting requirements                 
  would be imposed on motor fuel sales.                                        
  DIVISION,  DEPARTMENT OF  REVENUE  stated  that  motor  fuel                 
  dealers contacted  by  the Department  indicated  that  they                 
  would  be  able  to  comply  with the  additional  reporting                 
  requirement.  He observed that under  current law the tax is                 
  collected at the wholesale  level.  The tax is  collected on                 
  the first sale or transfer within  the State.  The committee                 
  substitute would require  that a secondary sale  or transfer                 
  that changes cities would  have to be reported.   The person                 
  who  transported  the  fuel  across   city  lines  would  be                 
  responsible for reporting.   The fuel is only taxed  once at                 
  the wholesale level.  The  reporting requirement would allow                 
  the Department to track the disposition of fuel use.                         
  In  response   to  a  question   by  Representative   Kelly,                 
  Representative Moses acknowledged that  municipalities could                 
  impose a motor fuel tax.  He emphasized that a statewide tax                 
  would prevent competition among municipalities.                              
  Representative   Navarre   expressed   concern    that   the                 
  legislation  would  take away  from  the State's  ability to                 
  raise revenues.  He  emphasized that there are a  wide range                 
  of opportunities to raise revenues on a local level.                         
  Representative Mulder asked if other  funding sources exist.                 
  Representative Moses noted  that the United States  Corps of                 
  Engineers assist where breakwaters are required.                             
  Representative Mulder emphasized that an overall problem  in                 
  relation to the  state's transportation  system exists.   He                 
  suggested that a ballot amendment should be placed to see if                 
  voters will adopt a fuel tax increase dedicated to improving                 
  roads, airports, and harbors around the state.                               
  In  response to  a  question  by Representative  Therriault,                 
  Representative  Moses   observed  that  the   tax  would  be                 
  deposited in the General Fund.  He noted that the Department                 
  of Transportation and  Public Facilities  would like to  see                 
  the  funding  dedicated  for  maintenance  or  new  facility                 
  construction.  He  felt that utilities and  landfills should                 
  be included.   Representative Therriault did not  think that                 
  municipal dumps should be funded by motor fuel taxes.                        
  Representative  Moses observed  that  marine fuel  purchased                 
  from gas  stations would  already be  paying a  tax of  $.08                 
  cents on a gallon.                                                           
  Representative  Grussendorf observed that  the city of Sitka                 
  has an enterprise harbor fund  to encourage privatization of                 
  State harbors.  Any money  generated from the fishing  fleet                 
  is  used to support  the water front.   He stressed that the                 
  public will  support a  tax that  is used  to support  local                 
  harbor needs.                                                                
  Representative   Moses  noted  the   need  for   small  boat                 
  In  response   to  a   question  by   Representative  Kelly,                 
  Representative Moses noted that CDQ funds have  been used to                 
  build docks.   He noted  that CDQ  funds do not  have to  be                 
  spent  on  dock  facilities.    Representative   Grussendorf                 
  pointed  out  that CDQ  funds  only  pertain to  Bering  Sea                 
  communities.  They do not have a statewide affect.                           
  Representative  Therriault  summarized that  the legislation                 
  would  impose  a uniform  tax  on municipalities  to prevent                 
  Representative Brown observed  that the title  would require                 
  reporting for all  motor fuels.   Mr. Bartholomew  explained                 
  that section  5 on  page 3  incorporates current  regulation                 
  requirements  for  reporting.    He   stated  that  the  new                 
  reporting requirement  for marine  motor fuel  is on page  5                 
  Representative  Navarre  pointed  out   that  the  committee                 
  substitute  sets up  a mechanism  in which any  increases in                 
  motor fuel tax would include water craft and motor fuel, and                 
  be shared back to  municipalities at a rate of 37.5 percent.                 
  He emphasized  that any future  increase in  motor fuel  tax                 
  would   be  accompanied  by  a  demand  for  some  level  of                 
  allocation to municipalities.  He stressed that the areas of                 
  greatest sales would benefit  most from the shared tax.   He                 
  observed  that  there  are  huge  portions  of  the  state's                 
  transportation system that  are not  within areas where  the                 
  fuel might actually be sold.                                                 
  In response to a question by Co-Chair Foster, Representative                 
  Moses clarified that  the administrative fee would  be taken                 
  from  the  municipalities'   portion  of   the  tax.     Mr.                 
  Bartholomew  added  that  the   accompanying  Department  of                 
  Revenue fiscal note would be revised to reflect the net zero                 
  Representative  Mulder argued  that  if coastal  communities                 
  receive a  share of marine  fuel tax  that there will  be no                 
  incentive for them to  approve a ballot measure  to increase                 
  the motor fuel  tax.  He spoke in favor of a dedicated motor                 
  fuel tax for  support of the State's  transportation system,                 
  administered directly by  the State.  He emphasized that the                 
  only way that a motor fuel tax proposition will be supported                 
  is if there  is broad base support.  He  maintained that the                 
  big picture must be considered.                                              
  Representative  Moses  expressed  concern that  the  federal                 
  government will look at the State's highway fund formula and                 
  decide that the State  is not taxing itself.   He emphasized                 
  that the State is  behind in addressing these problems.   He                 
  observed that if  the tax were instituted  by municipalities                 
  it would be possible  for dealers to  escape the tax by  the                 
  use of barges for fuel sales.                                                
  Representative Mulder  suggested that a  constitutional vote                 
  needs to  be taken.   Representative  Brown stated  that she                 
  does not  support dedicated  funds.   She acknowledged  that                 
  facilities have been allowed to  deteriorate.  She expressed                 
  support for expanding  the legislation to include  all motor                 
  fuels.   She observed  that there  are many  interest groups                 
  that would have a  legitimate reason to argue for  their own                 
  dedicated fund.  She  felt that the public would  understand                 
  that   it  is   necessary  to  support   the  transportation                 
  infrastructure.    She reiterated  support for  inclusion of                 
  other motor fuel taxes.                                                      
  Representative Moses pointed out that  there is currently no                 
  accounting method to determine where  the marine fuel tax is                 
  being paid.   He estimated that non-residents  and residents                 
  in his  district  pay  a  large portion  of  the  tax.    He                 
  reiterated  the  need   for  maintenance   and  new   harbor                 
  facilities in his  district.  He asserted  that his district                 
  is 10 to 15 years behind in supporting these needs.                          
  Representative Grussendorf  spoke in support  of providing a                 
  funding source  for municipalities  to address  their harbor                 
  needs.  He observed that there is competition to attract the                 
  fishing fleet.  He emphasized  that a steady revenue  stream                 
  would  allow  municipalities  to  make  provisions  for  the                 
  services the  fishing fleet  needs.   He  observed that  the                 
  fishing  fleet  has a  positive  effect on  a municipality's                 
  Representative  Grussendorf   MOVED  to  adopt   work  draft                 
  so ordered.                                                                  
  Representative Mulder  MOVED to adopt an  updated Department                 
  of Revenue fiscal  note to  reflect that the  administrative                 
  cost will  be deducted from  the share  of the tax  given to                 
  In  response  to  a   question  by  Representative   Mulder,                 
  Representative Moses acknowledged that there is no guarantee                 
  that revenues raised as a result of the legislation would be                 
  used to fund harbor maintenance or projects.                                 
  (Tape Change, HFC 95-105, Side 1)                                            
  Representative  Navarre  maintained   that  the  State   has                 
  attempted to meet  the growing  need for harbor  maintenance                 
  and facilities.   He stressed that the  State's contribution                 
  for  harbor  facilities  has  been  adequate  given   fiscal                 
  constraints.  He  pointed out  that municipalities have  the                 
  ability  to  raise revenues  through  harbor and  other user                 
  fees.    He expressed  his  concern  with the  erosion  of a                 
  potential tax base for the State.                                            
  Representative  Brown  questioned   if  language  would   be                 
  included in the front section of the HB 100 to authorize the                 
  Department to distribute back the  money collected under the                 
  statute.   Mr.   Bartholomew noted  that other  shared taxes                 
  administered  by the  Department  of Revenue  are authorized                 
  through the front section.                                                   
  Representative Moses stated that  the language in HB  122 is                 
  almost identical to authorization  language in other  shared                 
  Representative Grussendorf  MOVED to report  CSHB 122  (FIN)                 
  out of  Committee with  individual recommendations  and with                 
  the   accompanying  fiscal  note  which  reflects  that  the                 
  administrative cost would  be deducted  from the $.03  cents                 
  shared   with   municipalities.     Representative   Navarre                 
  A roll call  vote was taken on  the MOTION to move  CSHB 122                 
  (FIN) from committee.                                                        
  IN FAVOR: Grussendorf,  Kelly,  Kohring,   Mulder,  Parnell,                 
  Therriault,         Foster, Hanley                                           
  OPPOSED:  Navarre, Brown                                                     
  Representative Martin was absent from the meeting.                           
  The MOTION PASSED (8-2).                                                     
  CSHB  122  (FIN) was  reported  out  of Committee  with  "no                 
  recommendation"  and  with  a  fiscal  impact  note  by  the                 
  Department of Revenue.                                                       
  HOUSE BILL NO. 297                                                           
       "An  Act  relating  to fees  for  a  commercial fishing                 
       vessel license."                                                        
  REPRESENTATIVE CARL  MOSES, SPONSOR testified in  support of                 
  HB 297.  He stressed that there has been an inequity  in the                 
  vessel  licensing fee.   He noted  that a  14 foot  skiff is                 
  charged  the same  $20 dollar fee  as a  300 foot  off shore                 
  troller.  He  observed that similar legislation  passed both                 
  Houses  in  the  previous session,  but  was  vetoed by  the                 
  Governor.    He  stated that  the  previous  legislation was                 
  amended in the  Senate to increase non-resident  fees beyond                 
  resident fees.   The Governor was concerned  that litigation                 
  involving disparities between resident and non-resident fees                 
  could  be  affected by  the legislation.    He added  that a                 
  disparity  in  resident  and  non-resident   fees  could  be                 
  confusing where residency differs among owners.  He observed                 
  that  the   legislation  will  raise   approximately  $544.0                 
  thousand dollars.  He expressed the intent that the revenues                 
  raised by the  legislation be used to support the Department                 
  of Fish and  Game's budget.   He emphasized the fairness  of                 
  charging according to the ability of a vessel to harvest the                 
  Co-Chair Hanley acknowledged that he has a boat in the 25 to                 
  50 foot range.   He questioned if the Department  would have                 
  the flexibility to issue two year licenses.                                  
  CHERYL SUTTON,  STAFF, REPRESENTATIVE  MOSES clarified  that                 
  the Department would be  able to issue two year  licenses at                 
  double the  cost of a one year licenses.   She noted that it                 
  is not the intent  of the legislation to provide  a discount                 
  for a two year license.                                                      
  Representative  Navarre  MOVED  to  report  HB  297  out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.                                                    
  Representative   Therriault   OBJECTED   for    purpose   of                 
  discussion.  He referred  to the intent section.   He stated                 
  that anticipated that  the FY 97 House  Finance Subcommittee                 
  for the Department  of Fish and  Game will develop a  budget                 
  for  the  Department  within the  constraints  of  available                 
  funding.  Representative Therriault WITHDREW his objection.                  
  Representative Kohring summarized  that funds resulting from                 
  the increase in  vessel fees will  go into the General  Fund                 
  with the intent that they will  be appropriated for fish and                 
  game related uses.                                                           
  Representative Moses commented that most of the fees will be                 
  received before the January 1, 1995.                                         
  Representative Grussendorf pointed out that program receipts                 
  generated through limited entry  permits are deposited  into                 
  the  General  Fund.   He observed  that  the request  for an                 
  investigator by the Limited Entry Commission was denied.  He                 
  emphasized that there is no guarantee that the money will be                 
  used for the Department of Fish and Game.                                    
  There  being  NO  OBJECTION,  HB 297  was  reported  out  of                 
  HB   297   was   reported   out   of  Committee   with   "no                 
  recommendation"  and  with  a  fiscal  impact  note  by  the                 
  Department of Fish and Game.                                                 
  SENATE BILL NO. 67                                                           
       "An Act relating to the crime of unlawful evasion."                     
  SENATOR JOHNNY ELLIS, SPONSOR testified in support of SB 67.                 
  He observed that Anchorage downtown activists  requested the                 
  legislation  in   response  to  concerns  that   escapes  of                 
  misdemeanants  from  halfway  houses  were  not  being taken                 
  seriously.   He  observed that  there were 23  walk-aways by                 
  misdemeanants in half-way houses in FY  93, 68 in FY 94, and                 
  31 to date in FY 95.  He stated that walk aways have gone on                 
  to commit drunk driving and drug crimes.  He maintained that                 
  the current sanction  should be  consolidated at the  higher                 
  felony level of up  to one year in  prison and up to  a $5.0                 
  thousand dollar  fine.   Misdemeanants would  have the  same                 
  deterrent as felons for escaping from  a half-way house.  He                 
  observed that  a  consensus  was  achieved  by  neighborhood                 
  activists and operators of the half-way houses.                              
  Co-Chair Foster questioned the zero  fiscal impact.  Senator                 
  Ellis emphasized that the intent is to create a deterrent.                   
  that there is no difference in the cost of prosecuting class                 
  A or class  B misdemeanor  cases.  She  stressed that  while                 
  there  would be  no fiscal cost  from the  legislation there                 
  would  be  a  deterrent impact.    She  emphasized  that the                 
  legislation simplifies the criminal code  and is welcomed by                 
  the Department of Law.                                                       
  In  response to  a question  by  Co-Chair Foster,  Ms. Knuth                 
  noted  that the typical offender  housed in a half-way house                 
  is non-violent.                                                              
  Representative Parnell  questioned  why there  would  be  no                 
  increase to  the Department  of Corrections  to reflect  the                 
  increased jailed time.   Ms. Knuth  stated that there is  an                 
  assumption that the  actual period  of incarceration is  not                 
  likely to go up.  She observed  that there would be a longer                 
  period  of supervision under a suspension  of sentence.  She                 
  acknowledged that there  may be some additional time  if the                 
  suspension  is revoked.   She  added that  if  the suspended                 
  sentence is revoked another offense would be involved.                       
  Representative Martin  queried if  offenders that  walk away                 
  from a  half-way house would  have to serve  their probation                 
  time.   Ms. Knuth noted  that there will  be times when  the                 
  half-way house constitutes the offender's sentence.                          
  Senator Ellis observed a trend toward more serious offenders                 
  being  placed  in halfway  houses  due to  over  crowding in                 
  correctional facilities.   He acknowledged  that it is  good                 
  policy  to  have  a  facility from  which  offenders  can be                 
  transitioned back into the community.                                        
  Co-Chair Foster MOVED to report SB  67 out of Committee with                 
  individual recommendations and with  the accompanying fiscal                 
  The meeting adjourned at 10:05 a.m.                                          

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