HOUSE BILL NO. 143 "An Act relating to the distribution of the revenue obtained from imposition of the state tax on motor fuel used in watercraft of all descriptions; and providing for an effective date." Representative Mackie noted that the Department of Revenue has issued a new fiscal note based on amendments adopted by the House Finance Committee, Work Draft for SSHB 143 (FIN). The new fiscal note deletes a $112.1 thousand dollar request in new positions. Changes made by the House Finance Committee will require that municipalities eliminate the need for the additional positions. He noted that an estimated $9 - $10 million dollars is collected from the program. An estimated 5 - 7 percent of the harbors are municipally owned. Therefore 5 - 7 percent of the Fund will be affected. Members were presented with Amendment 1 by Representative Mackie (Attachment 1). Representative Mackie noted that rural areas that do not have boat harbors would be impacted by the amendment. He emphasized that communities on river systems pay fuel taxes and have needs due to erosion or haul out facilities. The amendment attempts to address the needs of these communities. He added that urban municipalities such as Anchorage or Fairbanks could receive funding of up to 50 percent if they apply and qualify. They would be mandated to use the money for construction and maintenance of public boat landing areas used by residents of the municipality or or for local efforts initiated to prevent or repair the effects of erosion along shorelines used as public boat landing areas. Co-Chair MacLean MOVED to ADOPT AMENDMENT NO. 1. Representative Hanley OBJECTED for purpose of discussion. Representative Mackie clarified that the Department of Revenue would be responsible for the funds. The Department of Transportation and Public Facilities will certify the amount. The Department of Revenue will disperse the funds after the Department of Transportation and Public Facilities certify the amount each municipality receives. Co-Chair MacLean asked if the Department of Transportation and Public Facilities will publish a list of the municipalities that have applied. FRANK TURPIN, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES stated that the Department could publish a 5 list of the municipalities that apply. Representative Hanley express the concern that there is a potential fiscal loss to the State of Alaska. He noted that the definition of eligibility has been expanded. Representative Mackie observed that the legislation is designed to offset the impacts of fuel use and to take care of harbors and boat launch facilities. Representative Martin agreed that the amendment would broaden eligibility. Representative Grussendorf stressed that municipalities would address their priorities through the Fund. Representative Navarre stressed the need to raise new revenues to offset the additional burden on the State's treasury. Representative Brown asked if the Committee could consider a small increase to offset the additional municipal appropriation. Representative Brown questioned if the use of "operating" on page 1, line 13 is consistent with the use of "owned" on page 2, line 5. She noted that the Department of Transportation and Public Facilities owns the Anchorage harbor facility but it is operated by the municipality. Representative Mackie explained that the intent is that funding will be allocated only for the portion owned by the municipality. Members discussed the drafting language. Representative Brown asked the definition of "municipality". Co-Chair MacLean noted that "municipality" refers to first and second class cities and municipalities of the state. Representative Brown asked if fuel is sold outside of municipalities. Co-Chair MacLean assured her that fuel is sold in villages. LARRY MEYERS, DIRECTOR, INCOME AND EXCISE AUDIT DIVISION, DEPARTMENT OF REVENUE discussed the Department's fiscal notes. He clarified that there are approximately 61 major wholesale fuel distributors. 6 Representative Grussendorf emphasized that the intent of the amendment is to get operation and maintenance money to municipalities for harbors or boat landing facilities. He stressed that the cost of maintenance is cheaper than the cost of repair. (Tape Change, HFC 93-84, Side 2) Co-Chair Larson asked if Title 28 would allow municipalities to levy the tax. Mr. Meyers could not answer. Representative Mackie noted that funding is subject to appropriation. Representative Grussendorf did not think municipalities could discriminate in taxing a single commodity. Representative Hanley reiterated his concerns that the legislation would divert money from the State. Co-Chair MacLean pointed out that the fuel tax is collected from all users of motor fuels. Representative Hanley asserted that a revenue sharing program is being developed. He asked that the legislation be held until the Department of Revenue presents a new fiscal note. Representative Martin agreed. Co-Chair MacLean WITHDREW her amendment. Co-Chair Larson expressed concern that revenues will be withdrawn from the State. Representative Brown reiterated her concerns regarding the use of "operating" on page 1, line 13 and of "owned" on page 2, line 5. Representative Mackie noted that reimbursement is only provided to municipalities that own a portion of the facility. Representative Brown asked if Anchorage would be reimbursed under the legislation. Members further discussed the criteria for reimbursement. Representative Martin asked that HB 143 be held. Co-Chair Larson announced that HB 143 would be held in a subcommittee consisting of Representatives Hanley, Parnell and Brown. Representative Grussendorf emphasized that the intention of HB 143 is to encourage municipalities to own and operate harbor facilities. Representative Mackie expressed concern that HB 143 would not meet the deadline for passage of legislation from committee. Co-Chair Larson MOVED to report HB 143 out of Committee with individual recommendations and with the accompanying fiscal notes. Representative Martin OBJECTED. A roll call vote was taken on the motion. 7 IN FAVOR: Brown, Grussendorf OPPOSED: Hanley, Martin, Parnell, Larson, MacLean Representatives Hoffman, Navarre, Foster and Therriault were absent from the vote. The MOTION FAILED (2-5). Representative Hanley detailed issues that need to be resolved. He stressed the need for a fiscal note by the Department of Revenue addressing the amendment. He wanted to know how much water fuel taxes are collected. How much fuel tas is collected in municipalities that operate harbors. How much is collected in municipalities that do not have state owned docks. He noted that the issue identified by Representative Brown regarding "operated" and "owned" also needs to be resolved. HB 143 was HELD in Committee.