9:06:17 AM SENATE BILL NO. 174 "An Act excluding certain trucks from the definition of 'passenger vehicle' for purposes of the passenger vehicle rental tax; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. SENATOR CHARLIE HUGGINS, Sponsor of the bill, testified that in 2003, a consequence of the rental vehicle passenger tax legislation imposed the tax to rental vehicles used to move personal property. He was told this was not the intent of the bill and concluded it reasonable that U-Haul type vehicles are not in the same category as rental cars. He detailed the types of vehicles used for hauling. This legislation would repeal the tax for moving vehicles and would have a fiscal impact of approximately $275,000. 9:08:26 AM Senator Dyson served in the legislature when the original tax legislation was considered. He agreed with the sponsor of this bill's characterization that the intent was that the rental tax would apply to visitors and would not penalize Alaska residents. 9:08:55 AM DEBORAH GRUNDMANN, Staff to Senator Huggins was available for questions. 9:09:02 AM SYDNEY SWENSON, MJ Rentals, testified via teleconference from an offnet location, as a dealer of U Haul vehicles, in support of this bill. Most customers of her business are military families. This tax has caused a hardship for dealers because members of the military determine that the rental costs are too high and opt to have their belongings moved by the military. 9:10:14 AM Senator Huggins added that statistically the rental truck industry has experienced a reduction in business as a result of this tax. 9:10:50 AM JOHN NORRIS, President, U-Haul Company of Alaska testified that the intent of the tax was to only apply to visitors and rental cars. Passage of HB 271 had unintended consequences of taxing Alaska businesses and citizens using trucks for transporting personal property. Year to date, 17 percent fewer customers are using the company's services, and the company has experienced a 29 percent reduction in March 2005. Over one half of the customers are Alaskan residents. Moving is a stressful time and additional tax adds to that stress. Municipal taxes and other charges significantly increase the rental costs. This bill would provide the same "relief" granted to taxi cabs in previously adopted legislation. Consumer has other options. Industry associations support this legislation and no associations oppose this legislation. This is the first year his company has experienced decreased sales and he surmised that the additional burden of this tax is a factor. 9:14:58 AM Senator Olson asked the number of U Haul operators in Alaska. 9:15:05 AM Mr. Norris replied that the company has 49 locations in the State. 9:15:10 AM Senator Olson asked if the same decline has been experienced in all locations. 9:15:15 AM Mr. Norris responded that the severity of the decline varies by region: a higher decline has occurred in Sitka, and Anchorage and Fairbanks dealers have had the most significant decline. He noted that the company also has services in the Yukon Territory and that no declines have occurred in the Canadian location. 9:15:48 AM Senator Olson commented that this tax has had an impact. 9:16:04 AM Senator Dyson offered a motion to report the bill from Committee with individual recommendations and accompanying fiscal note. There was no objection and SB 174 MOVED from Committee with a zero fiscal note #1 from the Department of Revenue indicating a negative $275,000 change in revenues.