HB 173-REGISTRATION OF LEASED VEHICLES  8:10:48 AM CHAIR LYNN announced that the next order of business was HOUSE BILL NO. 173, "An Act relating to the registration of leased motor vehicles; and providing for an effective date." 8:11:12 AM REPRESENTATIVE KREISS-TOMKINS, as prime sponsor, introduced HB 173. He said the proposed legislation would address a loophole related to leasing certain vehicles. The issue was brought to the sponsor's attention by one of his constituents. He said a person who leases a vehicle ends up paying commercial registration fees, which are substantially higher than the registration fees a vehicle owner pays. He said in the last few weeks, he realized that the extent of the proposed changes under HB 173 would be dramatic, and he ventured that consideration of the fiscal note may result in the committee's taking its "foot off the accelerator." 8:13:19 AM BERETT WILBER, Staff, Representative Kreiss-Tomkins, Alaska State Legislature, answered questions during the hearing on HB 173, on behalf of Representative Kreiss-Tomkins, prime sponsor. In response to Chair Lynn, she explained that when a person leases a vehicle, the DMV considers it a commercial vehicle, irrespective of how the person leasing the vehicle uses it. For example, if a person leases a truck to use as a family vehicle, the DMV would require the person to pay commercial registration fees on the truck because it was being leased. CHAIR LYNN said he thought when he leased a vehicle 12-15 years ago, the [registration] fee had been the same as it was for a privately owned vehicle. 8:14:48 AM AMY ERICKSON, Director, Division of Motor Vehicles (DMV), Department of Administration (DOA), explained that under statute, a vehicle that is owned by a company pays commercial fees, and vehicles that are leased are owned by a company. In response to Representative Stutes, she confirmed that the company name was the name of the firm from which the person was leasing the vehicle. 8:15:49 AM MS. WILBER offered her understanding that a typical lease length ranges from two to five years. She said new to the discussion between sponsor and staff was figuring out what to do for shorter lease periods or rentals, and she deferred to Ms. Erickson to address that question. In response to a question from Representative Vazquez, she clarified that HB 173 did not list any specific lease periods; therefore, she said she did not feel comfortable stating how long a specific lease would be. REPRESENTATIVE VAZQUEZ concluded that hypothetically a person could lease a vehicle for just a week and [be charged commercial registration fees]. 8:17:52 AM REPRESENTATIVE STUTES asked if a person required to pay commercial registration fees would also be required to pay to insure the vehicle at the commercial level. REPRESENTATIVE KELLER noted that the property taxes on a house may not be visible in the rent payment. He said he observed while reading the proposed legislation that the person paying the tax would be the person leasing the vehicle. He said he assumed the company who owned the vehicles could design the lease contract "to emphasize the tax or not." He stated, "... It's not necessarily that we are currently taxing individuals who happen to lease; we tax ... commercial companies that lease cars." He noted there are different variations of risks for the company and the person leasing. 8:19:34 AM MS. ERICKSON stated the following: With a rental car, ... they're commercial vehicles and they pay commercial fees. Whereas, if you lease a vehicle, ... presumably the company would be paying the higher fee for the commercial rate, because they are the ones who are leasing the vehicle, but they pass it on to the consumer. So, I agree with Representative Keller, who said you could apply that to your contract; I think that's probably the most appropriate way to handle it." MS. ERICKSON told Representative Vazquez that DMV registrations are for two years or could be one year for a commercial vehicle. CHAIR LYNN closed public testimony on HB 173. He noted that the bill sponsor had requested that the committee hold HB 173. REPRESENTATIVE KELLER indicated that the issue that HB 173 would address was a valid one. 8:21:22 AM REPRESENTATIVE KREISS-TOMKINS said he introduced HB 173 to close a loophole, but had realized in the process that the loophole was larger than he originally had thought, applied to many people, and there were many ways to look at the issue. CHAIR LYNN remarked on the variety of issues that are heard by the legislature. 8:22:44 AM CHAIR LYNN announced that HB 173 was held over.