SB 22-MOTOR VEHICLE REG. TAX: COLLECTION COSTS  3:47:19 PM CHAIR BISHOP announced that the next of order of business will be the consideration of SB 22. 3:47:28 PM SENATOR CATHY GIESSEL, Alaska State Legislature, Juneau, Alaska, provided a sponsor's statement as follows: SB 22 would update the Division of Motor Vehicle's registration tax that charges to the municipalities. The way this works is citizens renew their vehicle registration and we do that through the State of Alaska. Part of the fee that we pay is a Municipal Motor Vehicle Registration Tax (MVRT); State of Alaska collects that for the municipalities and in doing so they charge an 8 percent user-fee, a charge to recuperate the cost for the Division of Motor Vehicles (DMV) for collecting this for the municipalities. DMV passes the tax itself on to the municipalities, but they charge this 8 percent fee. This fee was set in 1993 and it hasn't been updated since then despite a reduction in the cost of collecting this fee. DMV has become much more computerized, we can now renew our registrations online and it takes less staff on the part of DMV. In your packet you have a statement from the Municipality of Anchorage which points out the ramifications of this. In 2012 the municipality chose to nearly double its auto registration fee; they did this to reduce the amount of property tax for local residents. As a result of that, with that 8 percent collection fee, it doubled the fee collection that DMV did for the very same amount of work, no increased work, but once the registration fee had gone up and the 8 percent was calculated off of that, then DMV ended up collecting over $500,000 in excess fees and that's just from the municipality of Anchorage. There are actually 16 municipalities that the DMV collects this user fee from, this 8 percent fee. What the bill proposes to do is to lower that collection percentage to 5.5 percent, so from 8 percent down to 5.5 percent. In looking at the breakeven cost in 2010, a breakeven would have been 5.1 percent for DMV; so this actually would still give them a bit of a buffer, it's lowering to 5.5, 5.1 they would still be collecting the same amount of fee as they did in 2010. So it is not taking it all away, it's still going to be collecting some cost for their administration, but it would essentially be moving money from DMV into the communities where it actually belongs, so it would still help reduce property taxes on the local level. 3:51:11 PM FORREST WOLFE, Staff to Senator Giessel, Alaska State Legislature, Juneau, Alaska. 3:51:45 PM DANIEL MOORE, Municipal Treasurer, Treasury Division, Municipality of Anchorage, Anchorage, Alaska, confirmed that the Municipality of Anchorage did write a letter of support for SB 22. He specified that SB 22 corrects an inequity that surfaced several years ago when the city of Anchorage increased its fee schedule and basically DMV started to receive a windfall of revenues based upon the 8 percent statutory rate. He continued to confirm Senator Giessel's information on MVRT. He pointed out that DMV has received $500,000 per year for the last 3 years from Anchorage in additional windfall revenues. He noted that he disagreed with DMV's assessment in the fiscal note that the reduced percent was characterized as a loss to the division. He asserted that DMV's user-fee change should be specified as a reduction in DMV's windfall. 3:56:04 PM MR. MOORE summarized that SB 22 represents a win-win for all 16 Alaska communities by reasonably adjusting the MVRT revenues retained by DMV and corrects the inequity that was never intended when the city of Anchorage increased its rate base. SENATOR STEDMAN noted that there are multiple communities listed and he asked that an impact breakdown be provided on each community. SENATOR MACKINNON noted that the expenses that the state incurs for each community may differ because some communities may be more labor intensive. She pointed out that Anchorage may have a consolidation of services from the perspective of electronic services. She asked that DMV share what their costs are associated with each of the communities' expenses and variances. 3:58:01 PM KATHIE WASSERMAN, Executive Director, Alaska Municipal League (AML), Juneau, Alaska, noted that last year AML dealt with a bill where DMV provided tax collection breakdowns for 16 communities' license fees. She opined that DMV can assist with providing the committee with the tax collection breakdowns. She asserted that AML will be helpful during the current deficit situation to offer revenue stream assistance. 4:00:16 PM CHAIR BISHOP announced that SB 22 will be held in committee.