Legislature(2023 - 2024)SENATE FINANCE 532
03/12/2024 09:00 AM Senate FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| SB236 | |
| SB127 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 236 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 127 | TELECONFERENCED | |
SENATE FINANCE COMMITTEE
March 12, 2024
9:06 a.m.
9:06:14 AM
CALL TO ORDER
Co-Chair Olson called the Senate Finance Committee meeting
to order at 9:06 a.m.
MEMBERS PRESENT
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
Senator Lyman Hoffman, Co-Chair
ALSO PRESENT
Ella Adkison, Staff for Senator Kiehl; Wade Bryson,
Assembly Member, City and Borough of Juneau; Sylvia Heinz,
Team Rubicon, Haines; Steve Bradford, Vice President,
Riverside Condo Association, Juneau; Bryan Fisher, Director
of Homeland Security and Emergency Management, Department
of Military and Veterans Affairs; Ken Alper, Staff to Co-
Chair Olson; Senator Matt Claman, Sponsor; David Scott,
Staff to Co-Chair Stedman.
PRESENT VIA TELECONFERENCE
Carrigan Grigsby, Executive Vice President, Avis Alaska;
Sean Vinck, Associate General Counsel, Turo, Inc.; Fadil
Limani, Deputy Commissioner, Department of Revenue.
SUMMARY
SB 127 TAXATION: VEHICLE RENTALS, SUBPOENAS
SB 127 was HEARD and HELD in committee for
further consideration.
SB 236 GRANTS TO DISASTER VICTIMS
SB 236 was HEARD and HELD in committee for
further consideration.
Co-Chair Olson discussed the agenda.
SENATE BILL NO. 236
"An Act relating to grants to disaster victims."
9:06:49 AM
Co-Chair Olson relayed that it was the first hearing for SB
236.
9:07:09 AM
SENATOR JESSE KIEHL, SPONSOR, explained that the bill would
make changes in Alaskas Disaster Assistance Program. The
changes would kick in for natural disasters that included a
disaster declaration from the governor, but not a disaster
declaration from the President of the United States (U.S.).
He characterized the bill as Alaska helping Alaskans even
when the Federal Emergency Management Agency (FEMA) did not
show up. The bill would make two changes, one of which
involved the amount of aid. Current law set state disaster
assistance at half of the maximum that FEMA paid, which was
currently about $21,000 with inflation adjustment. He
reminded that when a natural disaster affected homes and
livelihoods, $21,000 did not meet needs. The bill would
raise the amount of state aid to $50,000 and would adjust
to a higher amount when the FEMA amount was adjusted
higher.
Senator Kiehl addressed the second change, which pertained
to what he considered a loophole when the program was
created. The state program would help with expenses not
covered by insurance, but the state disaster assistance
could not be applied to damage to condominiums experiencing
damage to the structure. He asserted that the bill would
not allow for double dipping. The bill would allow condo
owners to be eligible for state aid for damage to
condominium structures on the same terms as a single family
homeowner.
9:10:01 AM
ELLA ADKISON, STAFF FOR SENATOR KIEHL, addressed a
Sectional Analysis document (copy on file):
Sec. 1: Repeals and reenacts a previously existing
section in statute without substantive changes so the
format is consistent with later sections.
Sec. 2: Increases the maximum amount of state aid to
the greater of $50,000 or half of the federal maximum:
currently, the maximum is approximately $21,000.
Allows a grantee who is a member of a condo
association to use state aid to pay for their share of
condo-wide damage expenses.
Senator Wilson asked if the bill had an effective date.
Senator Kiehl relayed that the bill had no specific
effective date clause, and the bill would take effect 90
days after being signed by the governor or being passed
into law without signature.
Senator Wilson asked if any past disaster victims would be
eligible if the bill passed.
Senator Kiehl answered no, and that there was no
retroactivity clause in the bill.
9:11:32 AM
WADE BRYSON, ASSEMBLY MEMBER, CITY AND BOROUGH OF JUNEAU,
spoke in favor of the bill. He relayed that he was a 29
year resident of Juneau, and was a small business owner. //
He mentioned a disaster that took place on August 6, 2023,
when the Mendenhall River flooded after there was a glacial
outburst flood resulting in a high water mark that was 180
percent higher than the previous record. He recounted
viewing the flooding with U.S. Senator Lisa Murkowski and
seeing boulders the size of cars and buses that had been
moved with the force of the water.
Mr. Bryson discussed the effect of the flooding disaster on
the neighborhood and the circumstance of losing a home. He
mentioned neighborhood meetings and outreach. He noted that
whole neighborhoods had been affected. He posited that the
average person's largest wealth asset was a home. He
thought the consequences of leaving the state assistance
level at $21,000 instead of raising it as proposed in the
bill could be the difference between being able to start
over in the state or having to leave. He discussed a family
that had lost a house. He thought the bill would be a step
in creating some surety and helping Alaskans. He asserted
that the City of Juneau supported the bill.
9:15:12 AM
Co-Chair Olson considered taxpayer funds for disasters, and
asked how to justify using state funds from Alaskans very
far from the scene of the disaster.
Mr. Bryson thought the nature of living in Alaska was
pertinent. He used the example of another district hit by
an earthquake, after which FEMA did not step in if the
amount of damage to a community was not sufficiently
catastrophic. The bill would apply to home and condo owners
that were productive members of society. He emphasized not
losing population due to disasters.
Co-Chair Olson considered that no one was immune from
disasters. He mentioned Typhoon Merbok in Golovin, where
there was 4 feet of sand inside the new house he had built.
Mr. Bryson mentioned a landslide in a neighboring Southeast
Alaska community, and noted that every community had tried
to provide some level of aid. He thought Alaskans would
appreciate raising the level of aid.
Co-Chair Olson thought Mr. Bryson had put it well.
9:18:19 AM
SYLVIA HEINZ, TEAM RUBICON, HAINES, relayed that she worked
for three years as the Disaster Reconstruction Project
Manager for the Chilkoot Indian Association. She had worked
as coordinator for the Haines Long-term Recovery Group and
also as Deputy Administrator for Alaskas Team Rubicon, a
veterans-based disaster response organization. She had been
involved in recovery efforts of over 200 disaster-affected
households across Alaska. She had seen the phenomenal job
of the Alaska Division of Homeland Security and Emergency
Managements Individual Assistance Program first-hand. She
emphasized that Alaska had one of the best programs in the
country.
Ms. Heinz discussed listed four reasons to support the
bill. She asserted that disasters were increasing in
frequency. She contended that current disaster funding was
insufficient and cited that insurance had only covered one
of the 240 households affected by the disaster in Haines.
She argued that the bill was good for the economy, through
addressing housing needs and supporting local whole-
community recovery. She emphasized that she supported the
bill because she felt trust for the Alaska Division of
Homeland Security and Emergency Management. She discussed
funding accountability and rules governing fund deployment.
9:22:23 AM
STEVE BRADFORD, VICE PRESIDENT, RIVERSIDE CONDO
ASSOCIATION, JUNEAU, testified in favor of the bill. He
relayed that the Riverside Condo Association had to make
some significant decisions regarding repairs to its condos.
The repairs added up to $1.1 million and had to be borne by
the condo owners as current state law did not allow grants
to condo owners. The assessment to each owner in the
association was about $21,000 for 48 units and almost
$27,000 for three larger units. In addition, a number of
condo owners had interior damage to condos, including
cracked sheetrock and flooring damage. He noted that
Building D had lost its foundation and there had been about
100 yards of undermining erosion. He described that through
cooperation of the city and federal, contractors had been
able to assist and save the building from total collapse.
Mr. Bradford continued his remarks. He asserted that the
Riverside Condo owners wholeheartedly supported the
legislation that would place condo owners on the same
emergency benefit eligibility level as single-family
homeowners in the state. He discussed hardship on condo
owners that were not able to receive state aid.
Senator Merrick asked the sponsor about the definition of
"condo." She thought Ms. Heinz had referenced homeowners'
insurance and asked about the intersection between
homeowners insurance and disaster aid.
Senator Kiehl noted that the last line of the bill had a
cross-reference to the definition of unit owners. The bill
used an existing statutory definitions for condo owners. He
offered to provide a copy of the statue to the committee.
Senator Kiehl relayed that so many of the states disasters
involved things that insurance did not cover. He cited that
insurance did not cover movement of earth. He noted that he
had talked with the Division of Insurance about the bill to
ensure that the provisions did not encourage Alaskans to
reduce insurance coverage. He was confident the bill would
not harm peoples desire or ability to get insurance
coverage.
Senator Wilson asked if the bill would cover individuals
that were not the primary residents of the affected home.
He asked about an individual that owned ten condos that
were affected.
Senator Kiehl thought there was staff from the division
could address the question.
9:28:18 AM
BRYAN FISHER, DIRECTOR OF HOMELAND SECURITY AND EMERGENCY
MANAGEMENT, DEPARTMENT OF MILITARY AND VETERANS AFFAIRS,
answered "no." He cited regulations that specified other
factors of eligibility that required a home to be a primary
owner-occupied residence [to receive aid].
Co-Chair Olson asked about fire and if homeowners would be
eligible for the aid referenced in the bill.
Senator Kiehl thought that as long as the fire was declared
a disaster by the governor, it would be eligible for the
program.
Co-Chair Olson asked about if the fire was not in a
persons primary residence.
Senator Kiehl was certain that the bill addressed aid that
was reserved for a persons primary residence.
Mr. Fisher agreed that the aid applied to primary
residences that were owner-occupied.
Co-Chair Stedman thought the committee should consider the
definitions. He mentioned homes purchased for children or
owned within the family. He pondered that the committee
want to consider broadening the definition.
Senator Kiehl was happy to discuss the definition with Co-
Chair Stedman and the division.
Senator Bishop was interested in the definition of
"occupied," and mentioned he had constituents that lived a
subsistence lifestyle that involved occupation of different
residences seasonally. He asked about the definition as it
pertained to seasonal residences.
Mr. Fisher relayed that the definition in the
administrative code specified that a person had to live in
the home for at least six months of the year. If a person
stayed in a home for more than six months, it would be
considered a primary residence.
9:31:49 AM
Senator Wilson referenced the penultimate paragraph in the
analysis on page 2 of FN 1 from the DMVA:
The proposed new advanced structure creates complex
decision points, making it difficult to calculate the
exact impact it would have on costs relating to the
individual assistance program.
Senator Wilson asked whether the complex decision points
related to the department or the individual applying for
disaster funds.
Mr. Fisher answered that the decision points related to the
division, and explained that there were many eligibility
requirements that were in regulation to pay through the
program. He used the example of trying to determine what
portions of a home were eligibility for repair funding. He
listed additional details that added complexity.
Senator Wilson understood the complexity of the
determination. He wanted to ensure the bill would not make
it more difficult for disaster victims.
Mr. Fisher emphasized that the division strove to make
matters easier for victims of disasters to navigate the
program.
Senator Merrick referenced page 2, line 2 that referenced
"an amount not to exceed the greater of $50,000 or one-half
of the maximum allowed. She asked if there was a structure
that was worth $40,000, it would constitute the maximum
that could be received.
Senator Kiehl answered affirmatively, and relayed that
there was not an opportunity to keep extra funds up to the
maximum. He referenced Ms. Heinz comments about using
receipts to determine eligibility.
Senator Bishop thanked Mr. Fisher and those in his
department. He mentioned that he had had two floods in his
district in two years, and appreciated Mr. Fishers team
coming to the village and helping people process claims.
Co-Chair Olson thanked Mr. Fisher on behalf of Golovin for
its work in the area.
Co-Chair Olson OPENED public testimony.
Co-Chair Olson CLOSED public testimony.
SB 236 was HEARD and HELD in committee for further
consideration.
Co-Chair Olson reminded the committee and gallery that it
was Ashley Johnson-Barr Day, and explained that some
members were wearing purple ribbons in commemoration of her
birthday.
SENATE BILL NO. 127
"An Act relating to vehicle rental taxes; relating to
the issuance of subpoenas related to tax records; and
providing for an effective date."
9:36:12 AM
Co-Chair Olson relayed that the committee heard SB 127 had
been heard twice in committee in January. Amendments from
the committee had been incorporated into a Committee
Substitute (CS).
Senator Bishop MOVED to ADOPT proposed committee substitute
for SB 127, Work Draft 33-LS0635\R (2/21/24, Nauman).
Co-Chair Olson OBJECTED for discussion.
9:36:56 AM
KEN ALPER, STAFF TO CO-CHAIR OLSON, discussed the changes
to the bill. He relayed that the CS made two changes from
the prior bill, Version U. The first change would bifurcate
the tax section (AS 40.352.020) and created a separate tax
rate of 8 percent for passenger vehicle rentals through a
network platform, as opposed to the 10 percent tax that
remained in place on traditional vehicle rentals. The
second change was in the uncodified section and prevent the
authorization of the Department of Revenue to go back in
time and look for rentals before the effective date of the
bill. He explained that on rental platforms there was no
window to try to collect back taxes before the effective
date. The original version of the bill gave a six-month
window for looking back at potential past tax obligations.
Co-Chair Olson WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
9:38:58 AM
SENATOR MATT CLAMAN, SPONSOR, explained that he fully
supported the CS, which represented a fairly detailed and
complex negotiations between Turo and the brick and
mortar car rental companies including Avis and Enterprise.
He relayed that representatives from Avis and Turo were
available for questions.
Co-Chair Olson asked about whether Avis supported the CS.
9:40:13 AM
CARRIGAN GRIGSBY, EXECUTIVE VICE PRESIDENT, AVIS ALASKA
(via teleconference), reiterated that there had been
ongoing discussion. He relayed that Avis Alaska was in
support of the CS.
9:40:46 AM
SEAN VINCK, ASSOCIATE GENERAL COUNSEL, TURO, INC. (via
teleconference), echoed earlier comments and relayed that
Turo was in support of the CS, which reflected detailed and
lengthy negotiations between the respective parties. He
thanked the sponsor and stakeholder for work on the bill.
9:41:33 AM
Co-Chair Stedman MOVED Amendment 1.
Co-Chair Olson OBJECTED for discussion.
Co-Chair Stedman spoke to Amendment 1, which dealt with the
unprecedented geographical dispersion of residents around
the state. The amendment also took into consideration the
coastal communities that would be facing difficult economic
times due to hardships in the fishing industry. The
amendment proposed to suspend the vehicle rental tax from
October 1 through March 31. He shared that initially the
intent was to suspend the tax for Alaskans during the given
time period, but that had not been possible. He noted that
the intent of the amendment was to recognize that many
Alaskans had to travel through metropolitan areas and had
to rent cars.
Co-Chair Stedman discussed reasons for residents to travel
to Anchorage, Fairbanks, and Juneau. He mentioned large
gatherings such as the Alaska Federation of Natives, and
the Alaska Municipal League. He expressed concern about
significant costs to the people of rural Alaska. He
understood that the amendment would decrease the earnings
of the vehicle rental tax by about 25 percent, but did not
think it would turn the economics of the state upside-down.
9:44:37 AM
DAVID SCOTT, STAFF TO CO-CHAIR STEDMAN, relayed that he was
present to answer questions on the mechanics of the
amendment. He acknowledged that he knew a lot of people
from rural areas that travelled to Juneau, Anchorage, and
Fairbanks. The amendment aimed to make the travel a little
easier.
Co-Chair Olson asked if Mr. Scott's family was involved in
air transportation in Ketchikan.
Mr. Scott answered affirmatively and noted his family had
been involved in air transportation for a long time but no
longer was.
9:45:30 AM
Senator Wilson wondered how the tax would be implemented.
He referenced Section 4, and asked if people with less than
200 transactions would not pay tax. He wondered if the tax
would affect larger businesses.
Mr. Scott noted that the CS discussed the "rate" of the
vehicle rental tax, the amendment discussed the levy. Under
the amendment, there would no longer be a levy from October
1 to March 1.
Senator Wilson thought the underlying issue of the bill was
to try and get some of the used car sales businesses that
were renting out fleets of cars to be able to pay a fair
share of tax like their competitors. He wanted to ensure
that the smaller mom and pop type businesses were not
adversely affected. He shared concern that there could be
an unfair advantage given to larger companies.
Mr. Scott noted that the tax would not be levied during the
winter months. The rate agreed upon in the CS would all be
suspended from October 1 to March 31.
Senator Kiehl pondered that the areas where there was
significant winter tourism. He mentioned high-wealth
individuals visiting Haines for heliskiing. He had heard
that Fairbanks hotels had the same pricing in the winter as
in the summer, and mentioned international travelers that
came to see the northern lights. He asked whether the
winter visitors would not pay any rental car tax.
Mr. Scott affirmed that the amendment proposed that
individuals would not pay car rental tax from October
through March. He pointed out that during the six months
proposed in the bill, the tax collected comprised 25
percent of the total, while the summer months collected 75
percent of the total.
Co-Chair Stedman thought that another way to think of the
proposed amendment was as an economic stimulus to attract
people to the state in the winter.
Senator Kiehl considered the budgetary implications and
mentioned there was a lot of support for the underlying
bill, including from the state parks. He thought about half
the states Division of Parks and Outdoor Recreations
budget came from the vehicle rental tax. He asked if there
was a plan to replace the funds if the vehicle rental tax
was reduced by about 25 percent.
Co-Chair Stedman relayed that when there were revenue
shortfalls, it fell to the General Fund. He pointed out
that that the vehicle rental tax was just a fund source for
the budget, and the state did not have dedicated taxes. The
funds were targeted as a revenue source but for all
practical purposes the money was fungible and could go
anywhere.
Senator Kiehl appreciated Co-Chair Stedman's responses. He
considered that the committee worked of the committee as if
the state could use additional revenue sources rather than
fewer. He mentioned that another way the state funded state
parks was through receipts, and noted that the biggest part
was commercial users. He noted that half the commercial
users of parks was in Ketchikan. He prosed that if the
amendment diluted the rental tax, it would just shift the
revenue burden elsewhere. He appreciated the intent of the
amendment, but did not know if he could support it.
Co-Chair Stedman pondered the current vehicle rental tax
versus what the collection would be with the proposed
amendment.
9:50:49 AM
FADIL LIMANI, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE
(via teleconference), relayed that the department had not
had an opportunity to closely look at the amendment. He
relayed that he could speak to the vehicle tax revenues
being collected for the current year and the projected
revenues from the fall forecast. He noted that the baseline
vehicle rental tax ranged from about $15.1 million for FY
24 to $18.9 million for FY 33. He estimated that assuming a
status quo with collections from April through September,
the revenue to the state would be about $11.2 million to
$14 million. He estimated that the impact of suspending
collection for half the year from October through March
negative $3.9 million for FY 24 and negative $4.9 million
for FY 33.
Co-Chair Olson understood that the state would losing money
if the amendment were to pass.
Mr. Limani answered affirmatively. He added that there
would be an additional administrative burden associated
with a seasonal tax. He mentioned an uptick in tourism in
certain parts of the state, including the Fairbanks area.
He thought the larger share of the revenues came from out
of state visitors.
Co-Chair Stedman asserted that it was not possible to lose
revenue that was never collected. He asked about a book
with a list of all the state taxes collected. He asked
about the revenue for the last fiscal year for the Vehicle
Rental Tax.
Mr. Limani relayed that for FY 23, the total amount
collected was $15.1 million.
Co-Chair Stedman asked about the estimated amount collected
under the CS with the adopted amendment.
Mr. Limani relayed that assuming for FY 23, the estimated
tax that would be collected if the amendment were passed
would have been $11.3 million.
Co-Chair Stedman asked about the projected revenues for FY
24 if the amendment were to pass.
Mr. Limani relayed that the department estimated a forecast
amount for FY 24 of $15.1 million. If the amendment was in
place, the amount collected would be $11.2 million.
Co-Chair Stedman thought the FY 23 amount collected was $15
million. He asked why the bill was being adopted if the
amount would be the same after its passage.
Mr. Limani asked Co-Chair Stedman to clarify his question.
Co-Chair Stedman understood that the state collected $15
million in vehicle rental taxes the previous fiscal year
and thought that Mr. Limani indicated the state would
collect the same amount after the passage of the bill. He
asked why the legislature would adopt the bill if it was
looking at collecting the same amount of revenue.
Mr. Limani relayed that the department had not contemplated
the CS into the revenue projections. Based on the status
quo of the existing vehicle rental tax, DOR expected $15.1
million for FY 24. He continued that assuming there was a
suspension of the tax from October through March as
proposed in the amendment, the revenue was estimated to
$11.2 million.
9:56:58 AM
AT EASE
9:57:19 AM
RECONVENED
Co-Chair Olson relayed that the committee would continue
consideration of the amendment in the afternoon committee
meeting.
SB 127 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
9:57:51 AM
The meeting was adjourned at 9:57 a.m.