SB 26-FEE/TAX EXEMPTION FOR CERTAIN VEHICLES    9:40:04 AM CHAIR WIELECHOWSKI announced consideration of SB 26. GENEVEIVE WOJTUSIK, aide to Senator Lesil McGuire, explained that SB 26 would exempt from motor vehicle registration fees and taxes those vehicles fueled solely by alternative fuels. She stated this is a progressive approach to presenting incentives to the public for using vehicles that utilize new technology. Other benefits are improving air quality, and the potential for new jobs. She stated that the availability of plug-in vehicles will be expanding rapidly, and Alaska should be in the forefront. 9:42:03 AM SENATOR PASKVAN moved to adopt work draft committee substitute (CS) for SB 26, labeled 27-LS0291\B, as the working document. 9:43:23 AM CHAIR WIELECHOWSKI objected for purposes of discussion. MS. WOJTUSIK explained the changes in the CS, which include a change in the title and a definition of alternative fuels. CHAIR WIELECHOWSKI asked about the fiscal note. 9:44:13 AM WHITNEY BREWSTER, Director, Division of Motor Vehicles, Department of Administration, Anchorage, AK, spoke to the fiscal note, which requests $20,000 for programming to modify the DMV database to capture information regarding fuel type. She stated they are not able to determine what the loss of revenue would be to the state, because the information on type of fuel used is not currently captured. She believes that the loss of revenue will be small at first, but will increase as alternative fueled cars gain popularity. She noted that DMV does collect motor vehicle registration tax, which is currently $100 per vehicle. Beyond that, the DMV also collects motor vehicle registration tax on behalf of local municipalities. They are currently collecting for 16 municipalities. The DMV does retain eight percent of the motor vehicle registration tax collected on behalf of municipalities, but the rest of those fees go to the municipalities. CHAIR WIELECHOWSKI asked if municipal tax is collected in addition to state tax. MS. BREWSTER responded that municipalities set their own tax through ordinance, and that the $100 registration fee goes directly to the general fund. SENATOR PASKVAN asked if the DMV does collect sales tax on auto sales. MS BREWSTER responded that the DMV does not currently collect sales tax. Municipalities set fees based on the year of vehicle. The basic $100 registration fee goes to the state general fund, and the tax collected based on year of the vehicle goes to the municipality. 9:50:06 AM CHAIR WIELECHOWSKI asked if the department has a position on SB 18. MS. BREWSTER responded that the department is neutral. SENATOR WIELECHOWSKI removed his objection and announced that version B was before the committee. SENATOR MEYER asked if hybrid cars could be added. MS. BREWSTER replied that they could. CHAIR WIELECHOWSKI expressed a desire to identify the 16 communities that would be affected to see what the impact would be. SENATOR MEYER asked how many hybrid vehicles are currently in use in Alaska. MS. BREWSTER responded that there are presently 1,560 Ford Fusions registered with the DMV. Since there are two types of Ford Fusions and only one type is a hybrid, it is impossible for the DMV to know how many hybrid vehicles are in use. SENATOR PASKVAN asked if passing this just for vehicles that are on the road today, would result in a $200,000 loss to the state. MS. WOJTUSIK responded that SB 26 applies only to cars purchased after October 1, 2010. CHAIR WIELECHOWSKI noted that very few cars would be eligible right now, and stated that he would like to see a cost-benefit analysis. 9:55:08 AM CHAIR WIELECHOWSKI opened public testimony. DANIEL R. FRAKES, Manager, General Motors, stated that GM supports SB 26. He noted that hybrid and plug-in tax incentives have played a key role in the development and acceptance of alternative technology vehicles. As with any new technology, the first generation tends to be expensive, and consumers are wary of anything unfamiliar, so incentives help them overcome this anxiety. Once subsequent generations are developed, economies of scale take effect, and incentives can be phased out. Current incentives include incentives towards the purchase price, waivers for state income tax, license and registration fee exemptions, and infrastructure incentives for the installation of new technology. 9:58:11 AM CHAIR WIELECHOWSKI asked if Alaska is one of only three states that don't have incentives. MR. FRAKES said that is true. This takes into account hybrids as well as electric vehicles. He noted that the Chevrolet Volt was launched in Dec 2010 to selected markets, and GM announced today that it will be available nationally by the end of 2011, ahead of the original schedule. He said that incentives on the federal, state, and local level are a win-win across the board, and that they help customers adapt to new technology, help our country, states and cities get plug-in ready, and help lower costs to industry. SENATOR PASKVAN asked what phase-out criteria might apply to incentives. MR. FRAKES responded that they have seen programs starting to phase out in 2014 - 2015. SENATOR MEYER asked if incentives are offered because alternative fuel cars cost more. For instance, what is the cost of a Volt? MR. FRAKES stated that cars with hybrid systems, such as the Volt, are about three to four thousand above a comparably equipped vehicle. The base price of a volt is about $41,000, and with the federal incentives that are available the price goes down to about $33,000. 10:05:08 AM SENATOR MEYER asked how electric cars hold up in cold weather. MR. FRAKES responded that both hot and cold temperature extremes affect batteries, and that both range and driving conditions are affected. GM does offer an 8-year warranty on the battery pack. CHAIR WIELECHOWSKI asked if the range diminishes over time. MR. FRAKES answered that as a battery is used, its life diminishes, which is why the 8-year warranty period exists. CHAIR WIELECHOWSKI asked why an insurance discount is offered in forty-seven states, with Alaska being one of three where it is not offered. MR. FRAKES said he didn't know why, but would try to provide the information. CHAIR WIELECHOWSKI closed public testimony and held SB 26 in committee.