HOUSE BILL NO. 104 "An Act relating to vehicle registration and registration fees; relating to the motor fuel tax; and providing for an effective date." 9:06:49 AM Co-Chair Merrick RE-OPENED public testimony. 9:07:05 AM DENISE KOCH, SELF, JUNEAU (via teleconference), was the former director of the Division of Spill Prevention and Response (SPAR) within the Department of Environmental Conservation (DEC). She strongly supported HB 104. She urged members to pass the bill out immediately. She supported the entire bill but wanted to speak specifically to the refined fuel surcharge provision. It would increase the revenue for SPAR. She explained that SPAR was unique at DEC because the division did not receive undesignated general funds. Rather, it was a user fee program. The refined fuel surcharge was originally passed to provide SPAR with sustainable funding. Unfortunately, at the time, the Department of Revenue (DOR) underestimated collections and did not identify exclusions. She thought the effect of passing HB 104 would be the facilitation of SPAR's original purpose. Ms. Koch continued that SPAR had a serious revenue problem. However, it was not a result of uncontrolled spending. The Division of Spill Prevention and Response currently had the lowest amount of staff in over 25 years. She had worked at DEC over the course of many years within three different divisions. There had always been a pressure to stay lean. She recalled frequent conversations about streamlining and efficiencies. She agreed that it was good to apply a critical eye to a program making changes and cuts when needed. However, at the heart of the work of SPAR was its people. Since 2015 SPAR had eliminated 17 positions. She urged members to pass HB 104, a sustainable refined fuel surcharge bill which would help SPAR fulfill its mission. 9:09:16 AM MIKE COONS, PRESIDENT, ASSOCIATION OF MATURE AMERICAN CITIZENS, PALMER (AMAC) (via teleconference), spoke in opposition to HB 104. He pointed to a letter sent to Speaker Stutes, Representative Tuck, and Representative Tilton opposing HB 104 from AMAC. The letter strongly opposed the motor fuel tax provisions of HB 104. Sections 5, 6, 7, and 8 contained the the fossil fuel tax increases. The letter indicated that the taxes were significant and punitive to Alaskans on fixed and limited incomes, such as seniors. He suggested that imposing more taxes at a time when the nation and Alaska were struggling to recover from the economic adversity resulting from Covid-19 was not a good idea. He relayed that such taxes would further hurt Alaska's economy. He also noted that energy taxes would increase the state and local government costs adding to the tax payer's burden. He reiterated noted many of the rising costs in the nation. He reiterated his opposition to the bill. 9:11:37 AM BERT HOUGHTALING, SELF, BIG LAKE (via teleconference), strongly opposed HB 104. He spoke of Alaska's economy being decimated by Draconian lockdowns due to the COVID-19 pandemic. He reported many businesses losing everything. He suggested that folks such as himself put many miles on their vehicles and would see their bills increase by the thousands. If the bill were to pass, he would personally experience a loss of more than $1500 per year to cover the gap increase. He would be forced to pass the increase on to his customers. He queried the response by the trucking industry. He thought it was the wrong action at the wrong time. He suggested that legislators would not use the money raised by the tax for its intended purpose. He implored members to reject HB 104. 9:13:44 AM Representative Josephson commented that his office had looked at the claims made by the testifier. The testifier would have to drive 180,000 miles per year consuming 18,000 gallons of fuel to have an increase in taxes of $1500. He thought the testifier had overstated the issue. Representative Carpenter requested an at ease. 9:14:27 AM AT EASE 9:16:19 AM RECONVENNED CHRIS EICHENLAUB, SELF, WASILLA (via teleconference), opposed HB 104. He agreed with the previous testifier. He noted in the prior year an exact match bill was offered and failed to pass. He recalled contacting his legislator to speak in opposition of the bill. At the time, the legislator did not support the bill. He hoped they would continue to oppose a motor fuel tax bill. He argued that Alaska paid the second highest gas prices in the nation. All he heard was that Alaska paid the lowest tax on motor fuel. He suggested that if Alaskans paid more in fuel prices, they should pay less in taxes. He thought it was easier to cut $60 million from the budget, rather than putting the burden on Alaskans. The legislature was already taking their Permanent Fund Dividends (PFD) away. 9:18:33 AM Representative Rasmussen asked how many miles he drove per year. Mr. Eichenlaub was retired but sympathized with commuters. He estimated that a round trip from the Mat-Su to Anchorage was about 100 miles. 9:19:21 AM MARCY SOWERS, SELF, WASILLA (via teleconference), opposed the motor fuel tax legislation. She mentioned the high price for fuel presently. She thought increasing the gas tax would compound financial issues due to the economic crisis the state was in. She opposed the bill. She asked members to support the voice of the people. 9:21:29 AM Representative Rasmussen asked how many miles her husband drove per year. Ms. Sowers was uncertain. However, she drove to Anchorage for medical appointments frequently. She did not want things more difficult for Alaskans. 9:22:42 AM Co-Chair Merrick CLOSED public testimony. Co-Chair Merrick asked Ms. Larson from the Department of Environmental Conservation (DEC) to review one of the two fiscal notes from the department (control code: MEOOQH). 9:23:21 AM TIFFANY LARSON, DIRECTOR, DIVISION OF SPILL PREVENTION AND RESPONSE, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, FAIRBANKS (via teleconference), indicated DEC's fiscal note was zero. 9:23:42 AM Co-Chair Merrick directed Ms. Reynolds from the Tax Division to review the department's fiscal note (control code: KLFPY). 9:24:01 AM NICOLE REYNOLDS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE (via teleconference), relayed the department estimated that the increase in the fuel surcharge would generate about $1.5 million of new revenue in FY 22. The department estimated an increase in revenue of $3.7 million in FY 23. The amount of revenue would reduce to about $3.4 million by FY 27. The surcharge revenue would be deposited into the unrestricted general fund. However, the proceeds would be set aside for the oil and hazardous substance release prevention account. Ms. Reynolds continued that as for the tax and refund provisions of the bill, the department estimated for FY 22 there would be an increase in designated general fund revenues in the amount of $12.2 million. In FY 23 the amount would increase to about $31.35 million. By FY 27 the amount would reduce to approximately $29.7 million. 9:25:42 AM Representative Carpenter asked why the revenue was doubling between FY 22 and FY 23. Ms. Reynolds explained that the bill had an effective date of January 1, 2022 which was halfway through the fiscal year. The numbers for FY 22 represented half of a fiscal year. 9:26:35 AM Co-Chair Merrick asked Mr. Schmitz from the Division of Motor Vehicles to review the department's fiscal note (control code: JLZKL). JEFFREY SCHMITZ, DIRECTOR, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF REVENUE (via teleconference), explained that the fiscal note, related to section 3 of the bill, dealt with registration fees for electric vehicles. It reflected programming costs necessary to alter the DMV's system and anticipated revenues resulting from the increase in registration fees for electric vehicles. Co-Chair Merrick asked Mr. Mills from the Department of Transportation and Public Facilities (DOT) to review the department's fiscal note (control code: RBASY). 9:28:05 AM ANDY MILLS, SPECIAL ASSISTANT TO THE COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (via teleconference), reported the fiscal note reflected a decline in motor fuel tax over several years that impacted the two results delivery units (RDU's) within the department. He indicated the Highways, Aviation, and Facilities RDU had experienced a shortfall. Motor fuel tax constituted about one-fourth of the funding for the RDU that was further appropriated to the three regional highway and aviation components for DOT: Northern Region, Central Region, and South Coast Region. The receipts the department received for the Alaska Marine Highway System (AMHS) constituted about 3 percent of funding for AMHS. Receipts had declined over the years due to hybrid and electric vehicle promulgating on the streets. Also, in the prior year because of Covid-19 there were not as many cars on the road. There was approximately $4.4 million less in FY 21 with an estimated shortfall in FY 22 of $600,000. He pointed to the list on the bottom of the fiscal note showing what things might be accomplished with increased motor fuel tax receipts. The list was first seen in a slide presentation on the committee's first hearing of the bill. 9:30:19 AM Co-Chair Merrick directed Ms. Kostik to review the department's fiscal note (control code: MEOQH). RUTH KOSTIK, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT OF ENVIRONMENTAL CONSERVATION (via teleconference), reported that the fiscal note reflected the funds transfer of the refined fuel surcharge from the general fund into the prevention account of the oil and hazardous substance release prevention and response fund. 9:31:00 AM AT EASE 9:32:58 AM RECONVENNED Co-Chair Merrick relayed that she would provide an amendment deadline at the afternoon's meeting. HB 104 was HEARD and HELD in committee for further consideration.