The Senate Community & Regional Affairs Committee was called to order by Chairman Randy Phillips at 9:05 a.m. He brought SB 261 (NO MUNICIPAL SALES TAXES ON AIR CARRIERS) before the committee as the first order of business. Number 015 SENATOR BERT SHARP, prime sponsor of SB 261, said in response to the concern over the prohibition of "use taxes" in the Transportation CS, a new committee substitute has been drafted for the committee's consideration. The municipalities fear that "use taxes" is so vague that it may interfere with the collection of landing fees, fuel flowage fees, etc. The new language in the committee substitute, which is supported by the air carriers and the City & Borough of Juneau, eliminates "uses taxes" altogether and clearly prohibits taxation only of the transportation of individuals or goods. Senator Sharp stated that he opposes narrowly defining "federally certificated air carrier" as suggested by some of the municipalities. The federal preemption provision applies to all air carriers regulated by the FAA. Since it is the intent of the legislation to restate federal law, it would be unwise to include only those air carriers certified under Section 401 of the Federal Aviation Act, he said. Senator Sharp directed attention to a proposed amendment to the draft committee substitute. On page 1, line 11, after the word "carrier" it adds the phrase "other than a fee authorized under 49 U.S.C. Alp. 1513(e)", which is a passenger facility charge that is authorized by the federal government on local airports. He stressed that it is not a tax on passengers, it is allowable. Number 080 SENATOR TAYLOR asked if the committee substitute includes sufficient definition so as to give people the confidence that their landing fees and other incidental airport fees that have been routinely charged for years will not be impacted by this legislation. SENATOR SHARP answered that the legislation gives a higher degree of comfort to the municipalities in that it does not interfere with the collection of landing fees, fuel flowage charges, etc. Number 110 SENATOR TAYLOR asked if the words "federally certificated air carrier" include air taxis. SENATOR SHARP responded that the federal preemption provision applies to all air carriers regulated by the FAA. Number 155 JOHN HARTLE, Assistant City Attorney, City & Borough of Juneau, stated the committee substitute is an improvement in that it narrows the language, but there is still some concern with the legislation. The municipality opposes the bill as a matter of policy because they consider it to be an unfunded mandate and, if federal law is clear, it is not needed. Number 195 PAUL BOWERS, Airport Manager, City & Borough of Juneau, stated the committee substitute satisfies some of his concerns, but there is still concern with the word "fee" on line 10 and if it would encompass landing fees. SENATOR SHARP clarified that the intent of the legislation is that fee applies only to fees on individuals being transported or on shipments of goods being transported. Number 235 SHARON MACKLIN, representing the City of Bethel, stated their opposition to SB 261. She said the Bethel City Council recently reintroduced an ordinance that would, in fact, put an issue on the ballot for the local community to raise revenues by a sales tax on liquor that would be coming into the community. Because Bethel does not have liquor stores but liquor can be shipped in, the most reasonable way to levy to any kind of sales tax is through the air carriers. She urged the committee to consider the ramifications of local jurisdiction and allowing communities to have the ability to raise revenues in these declining state revenue days. Number 295 CRYSTAL SMITH, representing the Alaska Municipal League, stated Senator Sharp's proposed committee substitute is an improvement, but the League is still in opposition to the legislation. The League believes that the prohibition on putting a sales tax on freight is an expansion of the intent of the federal law. She also voiced opposition to the retroactivity clause, noting the question of taxation on flight seeing is still in court, and though it may not preclude the situation of what happens where the Kenai-Homer air case is, it will cut out that option without allowing the court to make the decision on it. Number 358 ROBERT JACOBSEN, representing Wings of Alaska, said from the air carriers' perspective, they don't believe the legislation expands the focus of the federal law. He said they believe it is just helping to clarify it, and that there is a lot of case law to back up that claim. Number 368 REED STOOPS, representing the Alaska Air Carriers Association, agreed with Mr. Jacobsen that the legislation does not expand federal law, and he noted he has provided opinions and case law to back up their contention. He added that the air carriers would prefer to have the retroactivity provision in the bill, but feel that should be left up to the committee. Number 400 SENATOR RANDY PHILLIPS asked for the pleasure of the committee. Number 405 SENATOR TAYLOR moved that CSSB 261(CRA) dated 2/23/94 be adopted. Hearing no objection, the motion carried. SENATOR TAYLOR moved the following amendment be adopted and incorporated into the committee substitute. Hearing no objection the motion carried. AMENDMENT NO. 1 Page 1, line 11: After the word "carrier" insert "other than a fee authorized under 49 U.S.C. App. 1513(e)" Number 415 SENATOR TAYLOR moved that CSSB 261(CRA) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered.