SB 41-REPEAL STUDDED TIRE FEE  CHAIR KOOKESH announced SB 41 to be up for consideration. 1:36:35 PM SENATOR WIELECHOWSKI, sponsor of SB 41, explained that it would repeal the $5 retail fee on the sale of studded tires. The fee has had a damaging impact on small businesses selling tires, and working families. Research shows that studded tires positively impact the Alaskan economy, and the tax defers people from buying them. 1:39:03 PM SENATOR COWDERY asked for the cost associated with collecting the fee. SENATOR WIELECHOWSKI deferred the question to the administration. The state does pay for one full time position, but he didn't know that it would be eliminated. SENATOR OLSON said that studded tires increase road maintenance fees. SENATOR WIELECHOWSKI said he would provide a copy of a study that showed that costs are incurred by studded tires, and said that technology has significantly minimized studded-tire damage, which is mostly done when people use them in the summer. He said repealing the tax is a way to give back to working families in Alaska. SENATOR OLSON asked if the state is paying the tax as well. SENATOR WIELECHOWSKI didn't have the answer. 1:43:33 PM SENATOR COWDERY commented that he doesn't use studded tires. SENATOR WIELECHOWSKI reiterated that there are a number of studies indicating that accidents drop when studded tires are allowed. In fact studs break up the ice and make the roads safer for non stud users. SENATOR COWDERY stated his belief that lightweight studs are just as damaging as heavy ones. 1:46:21 PM JOANNA BALES, Supervisor for the Excise Auto Group, confirmed Senator Wielechowski's testimony and said the primary complaint about the tax is that this is the only one levied at the retail level. She said that one tax technician was hired to deal with the tire tax, but that they wouldn't necessarily lose their job if the tax was repealed, and there would be a savings of $56,000 to the state. Also, the state is exempt from the tax, although it is using heavyweight studs on its DOT and state vehicles. Complaints have been made about this disparity. SENATOR OLSON asked if federal or commercial vehicles are exempt as well. MS. BALES replied that federal vehicles are exempt but not commercial ones. She confirmed that the administration is in favor of repealing the fee, which earned $1.5 million in the first full year of its implementation. SENATOR OLSON remarked that the governor's announced reduction in the state budget would bring about cuts in other departments, and asked for plans to make up for the shortfall. MS. BALES said she didn't have that information. SENATOR OLSON said that the state won't be saving any money if the tax technician is kept on the payroll, and asked if any other taxes are being proposed. MS. BALES answered that the cruise ship passenger tax will bring in more money, and that the tire tax technician would take a position working for that project. SENATOR COWDERY commented on tire damage to asphalt and said the problem lies with the mix used in making asphalt. SENATOR OLSON said that the problem may be that projects are going to the lowest bidder. SENATOR COWDERY said that it is not the fault of the contractors, because the DOT provides the specifications. 1:54:05 PM GREG WICHICH, an Anchorage small business owner, said that he has been collecting the fee from his customers and submitting it to the state. The system has been difficult to administer, and the state online payment system is burdensome to his staff and his customers. The tax penalizes people who try to be safe on the state's roads, which doesn't make sense. SENATOR OLSON asked about the difference between a retail level tax and a sales tax. MR. WITCHICH said he couldn't answer that question. SENATOR OLSON asked if Mr. Witchich has been subject to penalties as a result of the difficulty of paying this tax. MR. WICHICH replied yes and explained his particular situation. SENATOR COWDERY asked if he received a fee for collecting the tax. MR. WITCHICH answered yes if it is timely. He reiterated he doesn't understand why the public should want to tax itself in this way. 1:59:47 PM SENATOR WIELECHOWSKI commented that the governor hasn't included the tax receipts in her current budget. SENATOR COWDERY made a motion to move SB 41 from committee with individual recommendations and attached fiscal note(s). There being no objection, CSSB 41(L&C) moved from committee.