HB 443 - INCREASE MOTOR FUEL TAX The next order of business to come before the House State Affairs Committee was HB 443. CHAIR JAMES called on Sam Kito III, Department of Transportation and Public Facilities, to present the committee substitute. Number 1062 SAM S. KITO III, Legislative Liaison/Special Assistant, Office of the Commissioner, Department of Transportation and Public Facilities, explained a brief summary of the harbor situation in the state of Alaska was before the committee members for review. It showed historical funding from 1989 to the present. He further explained the revised fiscal note tied the increase in tax to the dedicated fund allowing the Department to receive the revenue from the taxes. It was reflected under "maintenance" for the Department of Transportation and Public Facilities. Number 1124 CHAIR JAMES wondered how that related to the constitutional amendment in the House Finance Committee. Did the constitutional amendment allow the money to be spent on the maintenance of public facilities? Number 1132 MR. KITO III replied the constitutional amendment allowed the spending of revenue from the dedicated fund for maintenance of a highway system. A definition was offered recently in the House Finance Committee that stated "maintenance" included any associated facilities with the highway system. Number 1168 CHAIR JAMES announced she did not have a written amendment prepared today. Nonetheless, she suggested an amendment to divide the 14 cents of gas tax into two year implementations - 7 cents one year, 7 cents the next. She called on a committee member to support and move her amendment. Number 1218 REPRESENTATIVE PORTER stated previous testimony indicated there was concern about the jump to 14 cents. The amendment was one approach to "soften the blow." Number 1261 REPRESENTATIVE ROBINSON also supported the amendment. It was a major increase. She believed it was needed, however. She was confused about the constitutional amendment in the House Finance Committee and asked for an explanation. CHAIR JAMES replied the House Finance Committee was working on the constitutional amendment passed from the House State Affairs Committee earlier. It was amended to include a marine fuel tax in the House Transportation Committee. There was concern because the motor fuel tax would not cover the current cost ($75 million spent, $21 million brought in), while the marine fuel tax would cover the current cost ($1 million spent, $7 million brought in). Therefore, $6 million of existing taxes would be taken from the general fund to be used for harbors and docks. There was also discussion of transferring harbors and docks to the local municipalities for future maintenance. Consequently, CSHB 443(STA) was subject to the passage of the constitutional amendment. Number 1426 REPRESENTATIVE PORTER wondered what the mechanism would be to channel the tax money to the municipalities to maintain the ports. Number 1455 MR. KITO III replied the increase in the marine motor fuel tax would be used to offer capital appropriations to upgrade and transfer facilities. The Department was planning to implement a sharing program with the localities. The revenue collected by the legislature into the dedicated fund could be appropriated directly to the communities. If, at the end of the transfer program the state decided it was no longer interested in collecting taxes for the harbors, the tax rate could be lowered by a future legislature. The intent was to transfer state facilities out-of-state hands. Number 1525 REPRESENTATIVE PORTER wondered if the immediate intent was to upgrade the facilities so that they could not be transferred. Number 1530 MR. KITO III replied, "yes." Number 1535 CHAIR JAMES wondered if the purpose of the marine fuel tax was to only fix docks and harbors, or did it also have a general fund implication. Currently, it did have a general fund implication. Moreover, she aired her concern of the issue of the fishing vessels that did not buy their marine fuel tax from Alaska because it could be bought cheaper from Seattle. She suggested a use tax to help solve this issue. She announced it was possible to attach language to address the issue in CSHB 443(STA). She explained to the committee members that she was going in that direction. Number 1646 REPRESENTATIVE PORTER moved to adopt the conceptual amendment to include a two year implementation of the 14 cents gas tax of 7 cents the first year and 7 cents the next year. Hearing no objection, it was so adopted. Number 1660 REPRESENTATIVE ROBINSON commented the amendment would change the fiscal note. Number 1677 CHAIR JAMES also commented it would change the fiscal note. Number 1677 CHAIR JAMES suggested deleting Section 5, "TAX REFUND ADJUSTMENT." The legislature needed to follow the issue further to determine if more taxes or less taxes were needed. Number 1726 REPRESENTATIVE OGAN moved to delete Section 5, "TAX AND REFUND ADJUSTMENT." Hearing no objection, it was so deleted. CHAIR JAMES announced she was willing to move the bill forward to the next committee of referral before including the use tax amendment. Number 1780 REPRESENTATIVE WILLIS moved that CSHB 443(STA) move from the committee with individual recommendations and attached fiscal notes. Hearing no objection, it was so moved from the House State Affairs Committee. Number 1832 REPRESENTATIVE OGAN stated he did not object to moving the bill forward. It was tied to the constitutional amendment and to the people. He believed every chance should be given to the people to vote directly on tax issues.