HB 233-RATES: MOTOR VEHICLE WARRANTY WORK  6:16:53 PM CHAIR BJORKMAN reconvened the meeting and announced the consideration of CS FOR HOUSE BILL NO. 233(TRA) am "An Act relating to rates and time allowances for motor vehicle warranty work; and relating to unfair practices by manufacturers." 6:17:15 PM CHAIR BJORKMAN opened public testimony on HB 233. 6:17:39 PM DAVID BRIGHT, Senior Attorney, Alliance for Automotive Innovation, Washington, D.C., testified with concerns on HB 233. He said the Alliance for Automotive Innovation was the trade association representing automobile manufacturers. He noted that he submitted a written statement to the committee explaining automakers' concerns with HB 233 and a request that they not forward it. Rather than repeating the content of the letter, he said he wished to address testimony that this committee heard from the proponents of the bill, and to flag a problem that amendments to HB 233 create, which is introduce a perhaps unintended level of ambiguity into the bill relative to the [original] introduced version. 6:18:25 PM MR. BRIGHT first addressed the amendments. He said the original version of HB 233 required manufacturers to pay car dealers the number of hours that that particular dealer charged retail customers for similar work. The [subsequent] B and C versions of HB 233 instead required manufacturers to pay not less than the time allowances provided in independent labor time guides. He explained that the problem with that is that there were several independent labor time guides, and they don't always agree with each other on the amount of time for repair. So, he said, what this language would do is create a situation where the manufacturer doesn't know even what it's supposed to pay, which he said he suspected, was an unintended consequence. He referred to the aforementioned written statement and emphasized that none of this is even necessary, because, again, the manufacturer time guides are still the only ones that actually measure the amount of time that's necessary to complete a repair. 6:19:28 PM MR. BRIGHT commented on a discussion of an economic study that the Alexa Automobile Dealers pointed to that came from Illinois, looking at the statute that Illinois passed recently. He said that study does, in fact, not support the assertion that HB 233 helps jobs. He highlighted two things. First, figure four [of the report from Illinois], which looks at the change in employment for applicable number of employees at dealers in Illinois which, again, passed the law, compared to neighboring states which did not. He pointed out that after two years, the difference in employment is only 0.3 percent. He opined that was not much of a jobs bill. He referred to figure seven [of the report from Illinois], which looked at the change in earnings for dealer employees in Illinois, which passed the bill, compared to earnings for dealer employees in neighboring states that did not pass [a bill like HB 233]. He noted both groups enjoyed wage increases. He said the [Indisc.] was only 2.9 percent and given that the bill called for a 50 percent increase in the amount that manufacturers pay for warranty labor and given the amount of such labor that dealers do, one would expect that quite a bit more than 2.9 percent would have been the amount of wage increases for dealers working in Illinois. 6:21:11 PM NICOLINA HERNANDEZ, Regional Director, Government Affairs, Toyota Motors NA, Sacramento, California, testified with concerns on HB 233. She said Toyota would always value their Toyota and Lexus dealers in Alaska. She said the Toyota and Lexus dealers in Alaska seemed satisfied with Toyota's [warranty repair] time allowances. She reported that in 2022 and 2023 zero Alaska dealers requested flat time adjustments. Nationally, she said, Toyota did receive 24 requests in 2022 and about 50 percent of that last year. She said it was with this feedback that Toyota makes adjustments to increase the [warranty repair] time allowances. She said that last year, 11 states reviewed warranty rate legislation, and all but one were rejected. She said that now, only four states total in the US have third party time guides in the books. She said Toyota had come to understand that technician pay specifically had not increased commensurate with the increases in the rates charged. She sought to emphasize that it was in Toyota's best interest to make sure that dealers are profitable, that they're fully reimbursed in a timely manner, and if for any reason they need additional compensation, Toyota works with their field technicians hand in hand to make sure that they're paid that additional time. She said Toyota continues to have concerns, however, with the HB 233, even with the third-party time guide language. She said third party time guides were not intended for franchise dealers. Third Party time guides use multipliers on Toyota's time allowances to determine their rates, which meant they would inherently be higher. She said that meant it would cost more when customers service their cars and trucks [through third parties]. She said third party time guides would also affect the cost of selling vehicles, and importantly, the cost of ownership and the cost of long-term loyalty to Toyota's Alaska dealers. 6:23:15 PM MS. HERNANDEZ concluded that Toyota remained sympathetic to the workforce challenges. She emphasized that nothing explicitly linked the additional charges to technician pay. She said Toyota wanted all dealers to have the best [employees] selling and servicing their cars; and wanted folks to drive away happy and feel good about coming back to them. She said Toyota was engaged on this issue and wanted to continue the discussion to find a solution that would put customers first. 6:23:54 PM CHAIR BJORKMAN [closed public testimony on HB 233.] 6:24:15 PM CHAIR BJORKMAN solicited the will of the committee. 6:24:16 PM SENATOR GRAY-JACKSON moved to report CSHB 233(TRA) am from committee with individual recommendations and attached fiscal note(s). 6:24:34 PM CHAIR BJORKMAN found no objection and CSHB 233(TRA) am was reported from the Senate Labor and Commerce Standing Committee.