SB 14-EXTEND MOTOR FUEL TAX SUSPENSION  2:25:55 PM CHAIR PASKVAN announced SB 14 to be up for consideration. TOM OBERMEYER, staff to Senator Davis, sponsor of SB 14, said it extends the motor fuel tax suspension period. The governor originally suspended the tax to help stimulate the economy in Alaska. However, Alaska continues to pay some of the highest motor fuel prices in the nation; it affects the price of all goods that have to be shipped here. Air and cruise travel to Alaska is also declining because of the current recession. Extending the suspension of the motor fuel tax will have a major impact on the enormous quantities of fuel consumed in the transport of goods and people in Alaska. It will encourage cargo carriers to maintain flights and cargo hubs in Alaska, and it will encourage air and cruise lines to reduce fares to stimulate demand. 2:28:39 PM SENATOR MEYER asked if the gist of the bill is to give some relief to their constituents who are suffering with the recession and to help tourists come to the state, which helps the economy. Last year the gist was that the state had plenty of money, but constituents were still suffering because they were paying high prices for motor fuel. He is perfectly okay with helping constituents, and, "Folks do need every break that they can get." He wanted to know if the suspension affects the state's ability to receive any federal highway funds. MR. OBERMEYER answered that the tax affects not just to the average consumer, but also to people in the Bush. It affects aviation and water craft fuel prices, as well. These are very substantial amounts of money; they have just heard that 28 pilots are being transferred from FedEx and fuel usage in Alaska is being reduced due to the current recession. This measure will help maintain the economy as well as helping the average consumer. 2:31:36 PM JOHANNA BALES, Deputy Director, Tax Division, Department of Revenue (DOR), said the previous legislation required motor fuel dealers to continue to report the amount of fuel used to the department so it could provide the information required by the U.S. Division of Highways. Some of the information is estimated, but the federal Department of Highways is fine with that, and said the state does not have to impose a fuel tax, but it still has to provide them with the amounts of fuel used on the road. SENATOR MEYER said last year this was the administration's proposal and asked if the governor still supports it. MS. BALES answered yes. 2:33:56 PM SENATOR BUNDE said the sponsor statement talks about cruise lines and asked if they pay a gas tax on their bunker fuel. MS. BALES answered that it's possible for the ships to have enough fuel if they take it on in Washington. The state doesn't have actual data that shows the end users; they only get information from the qualified dealers. SENATOR BUNDE asked if the highway tax is imposed on bunker fuel. MS. BALES answered no. SENATOR BUNDE said, then, that if a cruise line bought fuel in Alaska, they wouldn't pay the tax because they use bunker fuel. He wanted to know how this would change the state's revenues. CHAIR PASKVAN said he just got the fiscal note, and he didn't intend to pass the bill today. SENATOR BUNDE asked how the fuel tax impacts the state's budget for upgrading roads. 2:36:30 PM MS. BALES said the fuel tax doesn't cover the total amount needed to upgrade the state's roads. SENATOR BUNDE said he saw how this bill would reduce income, and asked how the cost of maintaining roads would be funded without the motor fuel tax. CHAIR PASKVAN also asked if the proceeds of the motor fuel tax are a "pass through" from the Department of Revenue directly to the Department of Transportation and Public Facilities for road maintenance and repair. MS. BALES answered that tax revenue is deposited into the general fund. 2:37:59 PM CHAIR PASKVAN asked if the money is identified for road maintenance and repair. MS. BALES replied, "Not that I'm aware of." MR. OBERMEYER inserted that AS 43.40.010 indicates that the proceeds of the taxes go into a specific highway fuel tax account in the state's general fund. SENATOR THOMAS asked if the change in revenue between 2010 and 2011 in the fiscal note were based on the expectation the state will have fewer travelers in 2011 than 2010. MS. BALES answered that the department already prepared a fiscal note that addressed the first two months of 2010. So, the new fiscal note represents just this piece of legislation. The total change in revenues would be approximately $40 million if you add the amount from the previous fiscal note for FY2010. SENATOR THOMAS asked if she knew the per capita impact this has on the driving public. MS. BALES answered that it is a savings of approximately $50/year for a normal commuter. 2:41:00 PM CHAIR PASKVAN asked the sponsor if AS 43.40.010(f)(g)(h)(j) allocates tax money to the account for water and harbor facilities for direct expenditure by DOTPF or is it matched by available federal aide highway money. So, if there is no money in that fund, is there a potential risk for losing matching federal dollars? MR. OBERMEYER responded that someone else could better answer that question. He also said the governor's office indicated support of this bill. 2:43:05 PM SENATOR MEYER asked if they thought about not putting an end date on it. How did they come up with two years? SENATOR DAVIS said she came up with two years as an arbitrary time for reviewing how the missing revenues are affecting the state. CHAIR PASKVAN said he would hold SB 14 for another meeting.