2:10:48 PM SB 41-REPEAL STUDDED TIRE FEE  CHAIR ELLIS announced that he would interrupt testimony on SB 24 and SB 39 so the committee would take testimony on SB 41 from Mr. Waitschick, Alaska Tire World, because of his time constraints. MR. WAITSCHICK asked, "Why does the State of Alaska need to tax the safety of our families during our winter months?" He said that studded tires add safety to everybody on the road. The $440,000 raised by the tax is a very small amount considering the training curve and frustration it takes to use the online system. A percentage of his customers couldn't afford the added tax. He next commented on the point-of-sale tire tax, or paying a tax when you purchase tires. He couldn't see why people would want to tax themselves more with the rising cost of energy and materials. CHAIR ELLIS thanked him for his comments and indicated there were no questions from the committee. SB 41-REPEAL STUDDED TIRE FEE  2:16:30 PM CHAIR ELLIS announced SB 41 to be up for consideration. SENATOR WIELECHOWSKI, sponsor of SB 41, explained that this bill was proposed in 2003 at the request of Governor Murkowski. It proposed a new fee of $5 per tire for the sale of studded tires with an effective date of July 1, 2004. In FY 2005, this tax generated $436,440; in FY 2006, it generated $446,771. After this bill was enacted, the legislature commissioned the University of Alaska to prepare a report; it was entitled "Socio-Economic Effects of Studded Tire Use in Alaska." The report found that studded tires do cause some rutting in the roads, but that they also create a significant increase in traction, braking and acceleration, which ultimately results in fewer accidents. An older Minnesota study also found a 100 percent increase in accidents when studded tires were banned over a two-year period. With the current budget surplus he said it was time to put peoples' safety first. JOHANNA BALES, Supervisor, Excise Audit, Department of Revenue (DOR), said she oversees the tire fee program and unlike other excise tax programs that are levied at the wholesale level, the tire fee is levied at the retail level and it affects a significant number of small businesses. Over the life of the tire fee, she has received numerous complaints from the small businesses about how onerous the record keeping is. In 2006 about 606,000 tires, both studded and plain, were sold in the state. Small businesses had to account for every single one of the tires; they are also required to make the determination as to whether or not that tire sale is taxable since the state has some exemptions. She said, "The program is confusing and burdensome for them." She concluded saying the department supports repealing the studded tire fee and the tire fee program as a whole. 2:22:09 PM DANA OWEN, Committee Aide to the Labor and Commerce Committee, explained that CSSB 41(L&C), version 25-LS0355\C, removes the studded tire fee as the original bill does, but goes a step further and removes the entire program including the $2.50 fee on regular tires. SENATOR WIELECHOWSKI supported that change. 2:23:37 PM SENATOR STEVENS asked if there is a cost associated with collecting the fee. MS. BALES replied that this program has one full-time employee and the cost incurred is about $56,000 per year. CHAIR ELLIS asked if she had prepared her budget as if this bill had become law and she replied yes. CHAIR ELLIS thanked her for her testimony said he would hold this bill over until Tuesday. There being no further business to come before the committee, he adjourned the meeting at 2:25:42 PM.