Legislature(2005 - 2006)HOUSE FINANCE 519
05/03/2005 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB186 | |
| SB174 | |
| SB133 | |
| SB139 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 186 | TELECONFERENCED | |
| + | SB 133 | TELECONFERENCED | |
| + | SB 174 | TELECONFERENCED | |
| += | SB 139 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
May 3, 2005
1:49 P.M.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 1:49:13 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Eric Croft
Representative Richard Foster
Representative Mike Hawker
Representative Jim Holm
Representative Reggie Joule
Representative Mike Kelly
Representative Carl Moses
Representative Bruce Weyhrauch
MEMBERS ABSENT
None
ALSO PRESENT
Representative Jay Ramras; Senator Charlie Huggins; Paul
Dick, Operations Manager, Permanent Fund Dividend Division,
Department of Revenue; Nora Wilson, Legislative Liaison,
Department of Transportation & Public Facilities; Tom Maher,
Staff, Senator Gene Therriault; Rick Urion, Director
Occupational Licensing, Department of Community and Economic
Development; Pat Davidson, Legislative Auditor, Legislative
Audit Division; John Norris, President, U-Haul Company of
Alaska, Anchorage
PRESENT VIA TELECONFERENCE
Kip Knudson, Deputy Commissioner, Aviation, Department of
Transportation & Public Facilities, Anchorage; Joanna Bales,
Program Manager, Vehicle Revenue Tax Division, Department of
Revenue, Anchorage; Sydni Swenson, U-Haul, North Pole; Tom
George, Aircraft Owners and Pilots Association (AOPA),
Anchorage
SUMMARY
HB 186 An Act relating to quarterly payments of a
permanent fund dividend, and to a permanent fund
dividend and eligibility for public assistance;
and providing for an effective date.
HB 186 was HEARD and HELD in Committee for further
consideration.
SB 133 An Act establishing the Aviation Advisory Board;
and providing for an effective date.
SB 133 was reported out of Committee with a "do
pass" recommendation and a zero note by the
Department of Transportation & Public Facilities.
CS SB 139(L&C)
An Act relating to termination and oversight of
boards, commissions, and agency programs;
extending the termination date of the Board of
Marital and Family Therapy; and providing for an
effective date.
HCS CS SB 139 (FIN) was reported out of Committee
with a "no recommendation" and with fiscal note #1
by the Department of Commerce, Community &
Economic Development.
SB 174 An Act excluding certain trucks from the
definition of 'passenger vehicle' for purposes of
the passenger vehicle rental tax; and providing
for an effective date.
HCS SB 174 (FIN) was reported out of Committee
with a "do pass" recommendation, with fiscal note
#1 by the Department of Revenue and a House
Concurrent Resolution to address the title change.
HOUSE BILL NO. 186
An Act relating to quarterly payments of a permanent
fund dividend, and to a permanent fund dividend and
eligibility for public assistance; and providing for an
effective date.
1:51:34 PM
REPRESENTATIVE JAY RAMRAS, SPONSOR, explained that the
Permanent Fund Dividend (PFD) has been and continues to be a
boon to the Alaskan economy for the past 22 years. The
program allows Alaskans to enjoy part of the State's oil
revenue. Since the time of inception, many businesses have
profited from running sales near the time the dividend is
distributed. Often, citizens will use their dividends to
make down payments on high-end consumer products and
effectively end up with more debt than they would have
incurred had they not received a PFD in the first place.
He pointed out that HB 186 allows eligible residents to
electronically receive their dividend and the ability to
elect to receive their payments in either in a lump sum or
to divide their dividend income into four equal, quarterly
payments. Under HB 186, the program takes effect January
2006.
Representative Ramras thought that HB 186 would provide
citizens an opportunity to financially help themselves and
their families throughout the year. However, quarterly
payments are not recommended for those receiving public
assistance because payouts, especially for multiple family
members, could interfere with available federal public
assistance.
2:01:30 PM
Vice-Chair Stoltze asked how it would affect "hold harmless"
provisions. Representative Ramras reiterated that the bill
was not designed for a person on public assistance. The
State has exclusions for someone in that program and there
would be a disclaimer on the form for residents on public
assistance. He stated the legislation would be a "good
deal" for most and could bring a "savings-stability". The
program could be voluntary in nature and administrative
costs would include postage.
2:04:21 PM
Vice-Chair Stoltze questioned how much the legislation would
keep in the State's economy. Representative Ramras had not
requested any studies on that; however, felt strongly that
there are many middle-income families that will benefit.
2:06:20 PM
Representative Holm asked about the possibility of receiving
monthly payments. Representative Ramras commented that
monthly payments would affect the cost of the fiscal note.
Also, he did not think it would help as much as a budgeting
tool for those in the middle-income bracket.
2:07:41 PM
Representative Holm asked if the legislation resulted from a
constituent request. Representative Ramras said no. He
pointed out that many seniors used to use their longevity
bonus as a household budgeting tool.
2:08:23 PM
Representative Holm asked Representative Ramras why he
thought that people, who do not handle their money well,
would opt for the proposed program. Representative Ramras
replied that the program was designed for people who would
like to handle their money better. He emphasized it would
be a voluntary program.
2:10:40 PM
Representative Foster thought the legislation was a good
idea, however, questioned if residents in his district could
receive their dividends mailed rather than electronically
deposited. He thought mailing could be cost prohibitive to
the Department of Revenue. Representative Ramras agreed
that mailing would create a significant fiscal note and
would make it cost prohibitive.
2:12:17
Representative Kelly agreed that it would be good for some
folks to receive monthly checks to cover the costs for bill
paying. Representative Ramras attempted to demonstrate that
the legislation could pay for itself. He believed that if
the program did catch on, it could be broadened out to a
monthly base payment, and noted that quarterly dividends
were modeled after the way stocks generate their dividends.
2:14:19 PM
Representative Foster indicated that from the fiscal note,
it appears it would cost the State of Alaska, fifty cents
($.50) for each family member. He mentioned that many
villagers from his area would not qualify for the program
but would still be required to pay. Representative Ramras
advised that the fiscal note indicates the amount needed to
set up the program. He pointed out another note, indicating
the offset income expected. Representative Ramras believed
it could be a positive note in the future. The cost would
be bore by the General Fund not the Permanent Fund.
2:16:46 PM
Representative Hawker addressed Representative Foster's
concern. He pointed out that the funding source would be
Permanent Fund earnings; however, the manner in which the
dividend calculation works, the amount would be taken off
the top. The effect would be on the dividend and in years
forward, the amount would receive earnings lost from the use
of that money.
2:17:39 PM
Vice-Chair Stoltze asked how long it would take to determine
if the program was working. Representative Ramras suggested
five years as an appropriate sunset date.
Vice-Chair Stoltze inquired about Child Support Enforcement
garnishment. Representative Ramras acknowledged that was a
concern for the banks by taking the Department of Revenue to
task.
Vice-Chair Stoltze worried about the child enforcement
dynamics. Representative Ramras understood that if the
person was a "garnishee", the computer system would then
recognize that and reject them.
2:21:59 PM
Co-Chair Chenault asked if it would be mandatory to get four
payments rather than one per year. Representative Ramras
replied that garnishes would not be able to participate in
the program at all. The Department of Revenue determines
the route for the garnishment procedures and that the option
remains for one payment per year.
Co-Chair Chenault referenced the fiscal garnishment costs
and understood the costs would be handled quarterly.
Representative Ramras did not know.
2:23:58 PM
PAUL DICK, OPERATIONS MANAGER, PERMANENT FUND DIVIDEND
DIVISION, DEPARTMENT OF REVENUE, addressed HB 186,
clarifying that the program would be optional. Dividends
would be paid October, January, April, and July. A person
would not qualify if garnished and that any garnishment
would be honored in full.
2:25:44 PM
Mr. Dick addressed an additional garnishment, the Internal
Revenue Service (IRS) withholding. There are situations, in
which someone might qualify for the quarterly dividend and
then subsequently become garnished by the Child Support
Agency. If there were a garnishment on record, the
Department would take whatever remains in that account and
would pay the remainder for the garnishment. Essentially,
it pulls them from the quarterly option.
Mr. Dick stated that the fiscal note was based on 5,000
people using the option, approximately 1% of the applicant
population. Interest earnings were calculated at 2%
interest.
2:27:39 PM
Mr. Dick mentioned the monthly provisions, finding that the
quarterly amount changed from $12 dollars to $40 dollars per
year, per person participating. He offered to answer
questions of the Committee.
2:28:13 PM
Co-Chair Chenault referenced the garnishment pay out. Mr.
Dick reiterated that the garnishment would be paid in the
amount remaining in the person's quarterly account.
2:29:14 PM
Co-Chair Meyer noted that the bill would be held in
Committee for further consideration and discussion regarding
the merit.
Co-Chair Chenault referenced back up regarding the hold
harmless insertion. Representative Ramras said that the
Division of Public Assistance will provide the disclaimer
and that those recipients would be informed that they do not
qualify.
2:30:44 PM
Representative Weyhrauch asked about quarterly liens.
Representative Ramras responded that it would be the
aggregate amount. He added, there is only one time per
year, a person could make the garnishment claim.
2:31:52 PM
Representative Kelly continued questions regarding
garnishment concerns. Representative Ramras explained the
garnishment claim filing system, adding that if person
missed the deadline for filing their application, they would
not be able to collect the remaining quarterly portion.
2:32:52 PM
In response Representative Kelly, Representative Ramras
explained that any creditor would be able to garnish 100% of
what is due them.
2:33:57 PM
Representative Ramras urged that the bill not be placed in
the "back seat" of the Committee. He requested
reconsideration in a timely manner.
2:34:50 PM
HB 186 was HELD in Committee for further consideration.
2:35:14 PM
SENATE BILL NO. 174
An Act excluding certain trucks from the definition of
'passenger vehicle' for purposes of the passenger
vehicle rental tax; and providing for an effective
date.
SENATOR CHARLIE HUGGINS, SPONSOR, noted that SB 174 had been
introduced to correct an unintended consequence of
legislation passed in 2003. At that time, the Legislature
passed HB 271 as a tourism-based tax on passenger rental
cars and recreational vehicles. The purpose was to tax
visitors using the road system, not local citizens. HB 271
has negatively impacted:
* Alaska citizens needing to move,
* Local independent outlets, and
* Cnsumer truck rental business.
Senator Huggins added that the Department of Revenue has
assessed the tourism-based tax on all rental vehicles,
including trucks less than 26,000 pounds. Interpretation of
the law has resulted in a 10% tax applied to businesses and
citizens renting trucks. The 10% State tax, along with the
local municipal and city taxes, add considerably to the
total rental fee.
In 2004, HB 347 was introduced to correct the unintended
consequence created by HB 271. It provided an exemption for
taxicabs. That corrective legislation was signed into law.
SB 174 ensures that the tax applies more specifically to the
intended target of visitors renting passenger vehicles and
recreational vehicles, rather than the unintended target of
Alaska businesses and citizens who rely on truck rentals for
the continued flow of commerce and movement of household
goods.
2:37:41 PM
Representative Weyhrauch commented that the intent was not
to assess a tax charge on commercial vehicles. He
questioned if it would reign-in the Department's
interpretation of the tax. Senator Huggins explained there
was no ill intended approach on the Department of Revenue.
The target of HB 271 was a not "self-move" type vehicle and
that SB 174 would correct it.
Representative Hawker commented on passage of the previous
legislation and the impact SB 174 would have. Co-Chair
Meyer agreed with the assessment made by Representative
Hawker and that the original intent was not to tax U-Haul
trucks.
2:40:08 PM
JOHN NORRIS, PRESIDENT, U-HAUL COMPANY OF ALASKA, ANCHORAGE,
spoke in support of the proposed legislation. He pointed
out that HB 271 has impacted Alaska citizens needing to
move. The consumer does have other options for moving that
are not taxed. He reiterated the history and the impacts of
the previous legislation. He acknowledged that SB 174
provides relief for trucks that has been given to taxicabs.
Mr. Norris pointed out that the Alaska Trucking Industry
supports the legislation.
2:44:55 PM
SYDNI SWENSON, (TESTIFIED VIA TELECONFERENCE), U-HAUL, NORTH
POLE, voiced support for SB 174.
2:46:39 PM
Representative Hawker MOVED to ADOPT Amendment #1. Co-Chair
Meyer OBJECTED.
Representative Hawker explained that Amendment #1 was
offered on behalf of the House sponsor of the companion
Senate bill. The amendment provides an additional
exemption; "vehicles provided by automobile dealers as
replacement transportation during warranty or service
contract repairs". He acknowledged that the amendment
involves a title change but that it would not endanger the
substance of SB 174.
2:51:10 PM
Co-Chair Meyer inquired the impact the amendment would have
on the Department of Revenue.
JOANNA BALES, (TESTIFIED VIA TELECONFERENCE), PROGRAM
MANAGER, VEHICLE REVENUE TAX DIVISION, DEPARTMENT OF
REVENUE, ANCHORAGE, indicated that they do not have the data
necessary to determine the amount.
2:52:40 PM
Co-Chair Meyer requested the amount anticipated
collected. Ms. Bales said it would be small. There are
only six other states that have their own vehicle rental tax
and it appears it is a 50/50 exemption. Co-Chair Meyer knew
that the City of Anchorage has a car rental tax; he asked
how they dealt with such situations. Ms. Bales replied that
they do exempt U-Haul vehicles.
2:53:53 PM
Co-Chair Chenault asked about the replacement transportation
service contracts and if they would include rentals from a
dealer during the time of repairs. Representative Hawker
understood that was not accommodated.
2:54:59 PM
Co-Chair Meyer asked if Senator Huggins supported the
amendment. Senator Huggins responded that he hoped it was
"friendly" and that he would support it.
2:57:09 PM
Representative Holm asked if Amendment #1 would generate an
indeterminate fiscal note. Co-Chair Meyer thought it would
be slightly higher than the one provided.
2:57:47 PM
Representative Hawker pointed out that Ms. Bales had
indicated that the information was not immediately
forthcoming. Ms. Bales explained it would be a minimal
impact on the rental tax and that the existing note should
be sufficient.
2:59:37 PM
Vice-Chair Stoltze inquired if the language was broad enough
to cover recall. Representative Hawker thought a recall
activity would be part of the warranty process.
3:00:53 PM
Representative Weyhrauch stated that there are no guarantees
with the proposed language. A service contract does not
necessarily include a recall.
Representative Hawker suggested amending the amendment by
adding, "recall".
3:01:32 PM
Vice-Chair Stoltze MOVED the friendly amendment proposed by
Representative Hawker. There being NO OBJECTION, it was
amended.
3:02:12 PM
Co-Chair Meyer WITHDREW his OBJECTION. There being NO
further OBJECTION, amended Amendment #1 was adopted.
Representative Kelly MOVED to REPORT HCS SB 174 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS SB 174 (FIN) was reported out of Committee with a "do
pass" recommendation, with fiscal note #1 by the Department
of Revenue and a House Concurrent Resolution to address the
title change.
3:03:51 PM
SENATE BILL NO. 133
An Act establishing the Aviation Advisory Board; and
providing for an effective date.
NORA WILSON, LEGISLATIVE LIAISON, DEPARTMENT OF
TRANSPORTATION & PUBLIC FACILITIES, explained that the bill
would establish a permanent advisory board within the
Department of Transportation and Public Facilities to make
recommendations to the Commissioner with respect to the
Department's aviation functions.
The permanent board would have the same composition as the
current 10-member interim board, with representatives of
various stakeholders in aviation matters. However, one
additional board member would be added, to provide for an
uneven number of members to avoid tie votes. The Governor
would appoint the board to staggered three-year terms. The
existing interim board members would serve without
compensation other than travel coverage and per diem
expenses.
Ms. Wilson concluded that SB 133 would afford the
Commissioner of the Department valuable input from the
perspective of the aviation industry and the two largest
airport hub communities regarding aviation policy and
management. It would ensure that those stakeholders would
have an ongoing opportunity to advise and make
recommendations to the Commissioner. She urged support.
3:06:45 PM
Vice-Chair Stoltze asked for a list of current board
membership.
3:07:10 PM
KIP KNUDSON, (TESTIFIED VIA TELECONFERENCE), DEPUTY
COMMISSIONER, AVIATION, DEPARTMENT OF TRANSPORTATION &
PUBLIC FACILITIES, ANCHORAGE, listed the members:
* Dan Klase - Representing the unorganized community of
Beetles
* James Dodson - Fairbanks
* William Flower, President, Northern Air Cargo,
Anchorage
* Bob Jacobsen, Owner, Wings Alaska, Juneau
* Paul Landis, Senior Vice-President, ERA Aviation,
Anchorage
* Felix Maguire, Government Affairs Coordinator, Alaskan
Airman's Association
* Wilbur O'Brien, Past President, ERA Aviation
* Mayor Mike Salazar, Former President, Air Carriers
Association, Ketchikan
* Richard Wien, Name Says it All
* Kim Lythgoe, Manager, Cargo Port, Anchorage
3:08:36 PM
Vice-Chair Stoltze asked about the definition of statewide
membership. Mr. Knudson explained that the intent was to
allow an appointment from anywhere within the State.
Vice-Chair Stoltze asked about any mayor representatives
having a conflict of interest. Mr. Knudson replied there
has not yet been a problem.
3:11:34 PM
Representative Hawker asked about fiscal note #2 for the
interim advisory board created in 2003. He wondered why an
increase was needed when the current system has worked well.
Mr. Knudson thought there would be some expense involved and
that to date, coverage has come from the Office of the
Commissioner.
3:13:17 PM
Co-Chair Chenault referenced both fiscal notes. Mr. Knudson
clarified that originally the Department requested $20
thousand dollars through the operating budget. The Senate
removed that from the operating budget and then a fiscal
note was forwarded to accompany the bill.
3:14:59 PM
TOM GEORGE, (TESTIFIED VIA TELECONFERENCE), AIRCRAFT OWNERS
AND PILOTS ASSOCIATION (AOPA), ANCHORAGE, spoke in support
of SB 133 and urged the Committee to pass it.
3:17:20 PM
Representative Hawker MOVED to zero out fiscal note #2 by
the Department of Transportation and Public Facilities. He
pointed out that it has operated for the past two years
within the Department's budget and believed that it could be
accommodated as such in next year's budget.
3:19:33 PM
Representative Joule questioned the effectiveness of a board
with a zero note. Representative Hawker responded it was
not his intent to harm the board in any way. He believed
that the Department could continue to manage the board
without the additional fiscal expense.
There being NO OBJECTION, fiscal note #2 was zeroed out.
Vice-Chair Stoltze MOVED to REPORT SB 133 out of Committee
with individual recommendations and with the accompanying
fiscal note. There being NO OBJECTION, it was so ordered.
SB 133 was reported out of Committee with a "do pass"
recommendation and a zero note by the Department of
Transportation & Public Facilities.
3:22:50 PM
CS FOR SENATE BILL NO. 139(L&C)
An Act relating to termination and oversight of boards,
commissions, and agency programs; extending the
termination date of the Board of Marital and Family
Therapy; and providing for an effective date.
Representative Hawker asked Mr. Maher to describe the
history of the bill and the accompanying amendment.
TOM MAHER, STAFF, SENATOR GENE THERRIAULT, related changes
in the bill. He noted that the House Labor and Commerce
Committee had deleted two sections of the bill that
addressed when a board termination and clarified that the
transfer of authority for regulatory disciplinary powers to
the Department of Commerce. While the Department has
assumed that responsibility, the statutes clearly provide
the Department authority to do so. The proposed provisions
help address the uncertainty, stemming from recommendations
by the Division of Legislative Audit.
3:23:52 PM
Representative Hawker asked why the changes had been made in
the House Labor and Commerce Committee version. Mr. Maher
responded that all necessary testimony had not been present
at that meeting to adequately explain the change. He
deferred to Pat Davidson, Legislative Audit.
3:24:25 PM
PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT
DIVISION, explained that sun setting the board would make it
so that no new professions could enter into that category or
the whole profession might no longer exist in statute.
Additionally, when the board leaves, the regulations
disappear.
3:27:02 PM
Representative Hawker MOVED to ADOPT Amendment #1. (Copy on
File). Co-Chair Chenault OBJECTED for discussion purposes.
He asked if that language would be seen in every board
statute.
Representative Hawker stated that the legislative auditor,
in the Audit of the Alaska Sunset Process and Select
Investigative Issues, recommended that the Legislature,
"clarify responsibility for regulation, in the even an
occupational licensing board terminates". The proposed
language was brought forth by Legislative Legal Division and
is supported by the Department.
Ms. Davidson responded that the amendment was directed to
the centralized licensing statute and therefore, would apply
to all boards under Occupational Licensing. It would not be
included in the profession statutes.
3:28:00 PM
Representative Kelly asked if the Division of Licensing
supported the amendment.
3:28:24 PM
RICK URION, DIRECTOR, OCCUPATIONAL LICENSING, DEPARTMENT OF
COMMUNITY AND ECONOMIC DEVELOPMENT, noted that the
Department supported the language of the amendment. He
urged members to pass the amended bill from Committee.
3:29:24 PM
Co-Chair Chenault WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment #1 was adopted.
3:29:56 PM
Vice-Chair Stoltze MOVED to REPORT HCS CS SB 139 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS CS SB 139 (FIN) was reported out of Committee with a
"no" recommendation and with fiscal note #1 by the
Department of Commerce, Community and Economic Development.
ADJOURNMENT
The meeting was adjourned at 3:30 P.M.
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