SB 22-MOTOR VEHICLE REG. TAX: COLLECTION COSTS  3:44:02 PM CHAIR BISHOP announced the consideration of SB 22. He asked that Mr. Wolfe address questions posed at the previous committee meeting that included costs to the communities and to the Division of Motor Vehicles (DMV). 3:44:24 PM FORREST WOLFE, Staff, Senator Giessel, Alaska State Legislature, Juneau, Alaska, read the following statement: Since the inception of the motor vehicle registration and tax system in 1983, the cost to the state in collecting municipality taxes has been reduced considerably while the rate taken off the top by the state has not. The Motor Vehicle Registration Fees & Taxes (MVRT) Program was created not as a revenue sharing program, but was intended to piggyback in a sense on the activities the state was already conducting in order to produce revenue for the municipalities; with this understanding in mind, the state should only be collecting the added cost it incurs from the operating the program and not sharing in the revenues the municipalities receive from their citizens. SB 22 proposes to reduce the amount that the state collects from 8 percent to 5.5 percent in order to more accurately reflect the amount of work and resources the state provides to the municipality for performing this service. This does not impose any new costs or fees on the state or citizens, it simply reallocates the collected funds to the cities themselves. By allowing local governments to keep more of their own taxes, this revenue is kept closer to the citizens it was enacted to serve and therefore serves the people better. With revenue sharing posed to be reduced in these difficult fiscal times, allowing the municipalities to retain more of their revenue makes sense. 3:45:56 PM CHAIR BISHOP welcomed Senator Cathy Giessel, bill sponsor, to the committee meeting. 3:47:58 PM DANIEL MOORE, City Treasurer, Municipality of Anchorage, Anchorage, Alaska, stated that Anchorage has been losing $500,000 per year in tax revenue. He said when Anchorage increased its auto tax rates in 2012, DMV's statutory 8 percent fixed rate for administering the MVRT Program provided DMV with an additional $500,000. He detailed that Anchorage accounts for 45 percent of all the vehicles in the state, but since the change in 2012, Anchorage is paying 59 percent of all of the costs. He declared that changing DMV's fixed rate to 5.1 percent would put DMV's administrative charge back to parity. He noted that Senator Giessel's proposal in SB 22 provides for a 5.5 percent fixed rate, a rate that takes into account wage increases that DMV may have encountered. He remarked that DMV has noted in their fiscal note that a 5.5 percent rate will have no impact on their operational costs. He added that not just Anchorage, but 16 other communities that have MVRT will benefit by an additional 3 percent in revenue. 3:52:09 PM SENATOR MACKINNON asked to confirm that Anchorage accounts for 45 percent of the state's transactions. MR. MOORE answered correct. He noted that the rate is a percentage that DMV recently quoted. SENATOR MACKINNON called upon Amy Erickson and asked if she agreed with Mr. Moore's assertion that Anchorage accounts for 45 percent of DMV's transactions. She also inquired if the proposed rate reduction to 5.5 percent would fairly allocate costs across the state. 3:53:20 PM AMY ERICKSON, Director, Division of Motor Vehicles (DMV), Department of Administration, Anchorage, Alaska, replied that based on DMV's statistics, 45 percent of all of the vehicles in the state are registered in the Municipality of Anchorage. She commented that she cannot speak to effects on the other communities. SENATOR EGAN noted previous discussions regarding the contract collectors for DMV licensing. He asked if the contract collectors are being figured into the licensing fee equation. MS. ERICKSON replied that strictly DMV and commissioned agents were taken into account. SENATOR EGAN asked if the Alaska Trucking Association (ATA) is a commissioned agent. MS. ERICKSON answered no. She explained that ATA is considered a contracting processor. SENATOR EGAN noted previous legislation for ATA and other organizations that were trying to collect some kind of revenue and the bill did not pass. He asked if Ms. Erickson is interesting in talking with ATA and other organizations. He conceded that the previous bill was different, but remarked that the bill was trying to get to the same end result. 3:55:07 PM MS. ERICKSON replied that the legislation Senator Egan referred to was slightly different. She detailed that ATA was trying achieve a commission for DMV processing fees. She specified that SB 22 relates to the MVRT which DMV collects on behalf of 17 municipalities and then redistributes the fees after retaining 8 percent. SENATOR EGAN asked to verify that DMV retains 8 percent. MS. ERICKSON replied that DMV retains 8 percent. SENATOR EGAN asked how much ATA would retain. MS. ERICKSON answered that ATA charges a service fee and does not receive 8 percent of the Motor Vehicle Registration Tax. SENATOR EGAN asked if ATA's service charge is market driven. 3:56:14 PM CHAIR BISHOP announced that public testimony is closed. 3:56:26 PM SENATOR STEDMAN moved to report SB 22, [29-LS0315\A], from committee with individual recommendations and attached fiscal note(s). 3:56:34 PM CHAIR BISHOP announced that without objection, SB 22 moved out of the Senate Community and Regional Affairs Standing Committee.