HOUSE BILL NO. 73 "An Act relating to commercial vehicle registration fees and taxes; and providing for an effective date." Co-Chair Therriault explained that HB 73 revisits legislation that was passed by the Twentieth Legislature. Second Session, CSHB 404(RLS). TED DEATS, STAFF, REPRESENTATIVE MASEK testified in support of HB 73. He explained that CSHB 404 (RLS) raised temporary registration fees for out-of-state trucks to fund size, weight, and safety inspections statewide. This bill eliminated the requirement of annual registration of commercial trailers with DMV, saving the state $100,000 thousand dollars by eliminating 10,000 yearly transactions. It also saved trucking companies the chore of hunting down hundreds of trailers statewide. In the final days of passage, it was noted that some municipalities lost tax revenues by eliminating trailer registrations. The Division of Motor Vehicles collects taxes for some municipalities when it registers vehicles. The bill was amended to include a 'sunset' date of March 30, 1999. The 'sunset' was added to allow the trucking industry, municipalities, and DMV time to agree on a plan to replace the lost revenues or go back to yearly registration of trailers. After several recent teleconferences and meetings, the affected parties reached agreement. HB 73 fulfills the agreement by: * Making permanent the new registration fees for commercial vehicles; * Raising the municipal tax schedule by $75 dollars per year on trucks over 12,000 pounds, to restore lost revenue to affected municipalities; and * Tightening the 'situs' language so that trucks are registered where they are normally used. Co-Chair Therriault pointed out that the new registration fees were passed in the prior session. The fees were adjusted up to replace the lost revenue from trailer registration. Representative Austerman noted that trailers were set at a one-time $10 dollar fee. He questioned why the $10 dollar fee was not raised to offset the loss of revenue. Mr. Deats explained that the lost state revenue was replaced by raising commercial vehicle registration fees for all commercial vehicles. An agreement was made to replace the lost municipal revenue by charging an additional $75 dollars per truck on trucks over 12,000 pounds, in the 13 communities that collected local tax. Representative Austerman reiterated concerns that the burden was placed on the truckers. Co-Chair Therriault pointed out that trucks and trailers are a package. Since it is difficult to keep track of trailers the decision was made to shift the fee to the trucks. The companies agreed to shift the fee because it results in an administrative savings. Representative Austerman noted that a company can have a few trucks and hundreds of trailers. Mr. Deats reiterated that all commercial vehicles over 12,000 pounds in municipalities that collect a tax pay an additional $75 dollars per truck. JUANITA HENSLEY, ADMINISTRATOR, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF ADMINISTRATION provided information on HB 73. She explained that the legislation was proposed at the request of the trucking industry, including the Alaska Trucking Association, Teamsters Local 959 and the Independent Truckers Association. They felt it made good business sense to shift the tax. All the fees associated with registering trailers were transferred to the sizes of power units that pull the trailers. It was discovered while the legislation was in the Senate that the legislation had not taken into account the fact that the Division of Motor Vehicles collects taxes for 13 communities. The tax revenue for those communities was lost with the passage of CSHB 404 (RLS). The Senate placed a temporary date on the legislation to allow the industry, municipalities and state to come up with a solution. House Bill 73 incorporates the solution agreed upon by all parties. Co-Chair Therriault observed that the fee is shared back to the municipalities minus an eight-percent charge for collection. In response to a question by Representative J. Davies, Ms. Hensley reviewed the legislation. She noted that sections 1, 2 and 3 were part of HB 404 and restate current practice. The municipal tax increase is contained in sections 4 and 6. Biennial registration is increased by $150 dollars in section 4 on page 3, lines 12 and 14. Annual registration is increased by $75 dollars in section 6 on page 4, lines 19 and 21. If a truck is registered for one year the owner would pay an additional $75 dollars in municipal tax per truck, per year. If the truck is registered for two years the owner would pay an additional $150 dollars in municipal tax per truck, every two years. Section 5 is a new section that addresses the location of the vehicle at the time that it is registered. Section 7 sets up a transition period to allow communities to pass ordinances to increase their taxing ability. The tax was calculated by spreading the number of registered trailers across the number of registered commercial vehicles in the state. She noted that the bill was widely supported. In response to a question by Representative Austerman, Ms. Hensley noted that small utility trailers can be used for a lifetime. The $10 dollar fee represents the administrative cost of trailer registration. The Division of Motor vehicles attempted to set a fee that would be revenue neutral. Representative Austerman expressed concern that the cost is being born by the larger power units. FRANK DILLON, EXECUTIVE VICE-PRESIDENT, ALASKA TRUCKING ASSOCIATION, ANCHORAGE testified via teleconference in support of the legislation. He explained that the industry recommended that the municipal tax be assessed on vehicles above 12,000 pounds because these are the vehicles that reap the most benefit from eliminating the trailer fee. The trucking industry felt that the concept was fair because the heavier trucks pull most of the trailers in the state. Most companies operate on margins of only a few cents return on a dollar. He emphasized that efficiencies benefit everyone. He noted that they did not anticipate that the tax stream for municipalities would be disrupted when HB 404 was negotiated. The additional $75 dollar fee only applies to the 13 jurisdictions that collect the fee and on trucks over 12,000 pounds. The bill only codifies in statute current practice. Fees have been paid for January - March 1999. He acknowledged that there have been some complaints from truck operators that do not pull trailers. He stressed that this number is small. He pointed out that it is difficult to please everyone. He emphasized that the legislation is in the interest of the Division of Motor Vehicles and the trucking industry. He referred to the "situs" provision. He noted that some areas were not getting any local revenue because companies were not registering their trailers in the area of use. Although there are hundreds of trailers in the Unalaska/Dutch Harbor area they were only collecting on 16 trailers because the majority of trailers were registered in other locations. He noted that under the loophole trailers engaged in ocean trade would not have to be registered because they are usually located in international waters. The legislation closes the loophole. He stressed that the legislation is also supported by independent truckers. HARRY MCDONALD, PRESIDENT, CARLILE TRUCKING COMPANY, ANCHORAGE testified via teleconference in support of the legislation. He pointed out that the legislation is revenue neutral. He noted that there is a $100 thousand dollar transaction savings for DMV. There are also transaction savings for the trucking industry. He explained the difficulty of keeping track of trailers for registration and tags. PAUL FUHS, LOBBYIST SEALAND SERVIES testified in support of the legislation. He stressed that the legislation reduces needless paper work. He noted that California is the only other state that continues to have trailer registration. He noted that the legislation has wide support and a zero fiscal note. He emphasized that Sealand Service has a relationship with independent truckers. Their trailers are hauled by independent truckers. MIKE FORD, ATTORNEY, LEGISLATIVE LEGAL SERVICES, LEGISLATIVE AFFAIRS AGENCY testified that the title needs to be changed because of the application of section 5. Section 5 could also affect noncommercial vehicles. The title change would not change the substance of the bill. He recommended that the legislation be amended on page 1, line 1, after "taxes" insert "relating to determining the taxable location of a vehicle for purposes of municipal registration taxes." Representative Foster MOVED to ADOPT Amendment 1, on page 1, line 1, after "taxes" insert "relating to determining the taxable location of a vehicle for purposes of municipal registration taxes." There being NO OBJECTION, it was so ordered. BARBARA HUFF-TUCKNESS, GENERAL TEAMSTERS LOCAL 959 testified via teleconference in support of the legislation. She observed that the Teamsters Local 959 expressed their support in a letter dated 2/10/99 (copy on file). In response to a question by Representative Kohring, Ms. Hensley explained that revenues go back to the municipalities minus 8 percent. The 8 percent paid to the state for the tax collection is deposited into the general fund. The legislation does not raise or lower revenues. Co-Chair Therriault asked how much the municipalities would lose without the legislation. Ms. Hensley clarified that approximately $249 thousand dollars would be lost to municipalities without the legislation. Representative Kohring did not think that the tax was justified by holding municipalities harmless. Mr. Dillon noted that the intent is not to lose money, but to have the same tax base. He noted that the additional $75 dollar tax was not meant to increase the revenue base. Representative Kohring stressed that he has not seen evidence that small trucking operations support the legislation. Co-Chair Therriault observed that member's packets included a letter by the Alaska Independent Truckers Association, dated 2/15/99. (Tape Change, HFC 99 - 26, Side 2) Representative Kohring expressed concern that the tax increase would not benefit the trucking industry. Representative J. Davies stressed that the purpose of the bill is to reduce cost for the trucking industry by shifting the way in which the tax is collected. The intent is not to increase revenues. In response to a question by Representative Kohring, Mr. Dillon noted that 90 percent of the operators in the over 12,000 pound class operate trailers. They will break even if they have two trailers. He noted that the majority of members of the Alaska Trucking Association own 1 - 3 trucks and have 3 - 6 trailers. He stressed that it is not a major economic issue. Mr. McDonald pointed out that his company employs an average of 40 owner/operators around the state. He emphasized that his company creates a business opportunity for independent truckers. He maintained that everyone benefits from the legislation. Representative Williams MOVED to report HB 73 out of Committee with the accompanying fiscal note. Representative Kohring OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Bunde, Davies, Davis, Foster, Grussendorf, Moses, Williams, Therriault OPPOSED: Kohring, Austerman Co-Chair Mulder absent from the vote. The MOTION PASSED (8-2). HB 73 was REPORTED OUT of Committee with a "do pass" recommendation and a zero fiscal note by the Department of Administration.