SB 127-VEHICLE TRANSACTION AGENTS  9:50:20 AM CHAIR DYSON called the committee back to order. He announced that SB 127 will be the next order of business. He noted that SB 127 was previously heard. 9:50:24 AM FORREST WOLFE, Staff, Senator Giessel, Alaska State Legislature, Juneau, Alaska, said at the previous hearing it may have come across that the Division of Motor Vehicles (DMV) was being unfairly criticized. He set forth that the intent was to demonstrate the volume of work that is done by the private sector though its partnership with DMV. He said DMV has made great strides in the past two years to increase their efficiency through former Director Duane Bannock's advanced business partnership program and current Director Amy Erickson. He noted DMV's use of webcams for viewing waiting lines as well as a more efficient ticket system. He called attention to a criticism that businesses are already receiving income from the state and why should the businesses receive even more income from the state in addition to charging fees above and beyond what the state is charging. He asserted that the issue is not how much businesses are charging for transactions and added that fees charged by businesses should be dictated by the free market. He said the issue is that there is a large volume of work being done by the private sector for the state for which they are receiving no compensation from the state at this time. He set forth that SB 127 is about fairness and noted similar programs in other departments where the state directly compensates businesses. He said SB 127 addresses fairness due to the work volume done by businesses that partner with DMV. CHAIR DYSON stated that what Mr. Wolfe said did not make sense to him. He asked if Mr. Wolfe meant the business surcharge being placed on the delivery of service. MR. WOLFE replied that businesses are not receiving any compensation from the state. CHAIR DYSON asked to verify that businesses receive the surcharge that they place on delivery of service. MR. WOLFE answered correct. 9:53:22 AM AMY ERICKSON, Director, Division of Motor Vehicles (DMV), Alaska Department of Administration, Anchorage, Alaska, set forth that DMV supports making official its practices of partnering with private businesses to conduct title and registration services. She continued to read the following statement: DMV provides the business partners with all of the supplies needed to conduct title and registration services including: license plates, month and year tabs, forms, driver manuals, and handicapped placards all free of charge. The DMV also provides free training to process transactions and free access to all of the agents to access the DMV data base. The business partners charge a fee to customers that are not regulated or even disclosed to DMV and some even benefit from the supplies that are free at a DMV office, including handicap placards and driving manuals. While the business partners make up approximately 26 percent of DMV revenues, these businesses do not function autonomously. DMV staff touches each and every transaction conducted by a business partner and we have a staff of seven to oversee and support their everyday operations. Even with DMV support, they too make errors that DMV must resolve and they are still paid by the customer regardless of the mistake or the accuracy of their transactions. We serve as a de facto helpdesk for the business partners and spend hours reviewing documents and correcting documents. Some of the errors can be serious and time consuming to correct. Some of the business partners have even registered a golf cart and a dune buggy for highway use which has resulted in litigation for the DMV. MS. ERICKSON said her previous statement is not meant to say that DMV does not also make mistakes. She summarized that DMV supports the business partners in many ways. She said the business partnerships are comprised of storefronts that provide the services, car dealerships, financial institutions, commissioned agents that serve the smaller communities, driving school bus contractors, tour companies that administer road tests, and medical facilities that issue disabled parking permits. She said DMV's original fiscal note only addressed for- profit determined store fronts, but noted a letter from the auto dealers that the bill may also apply to car dealerships and financial institutions that conducts the same transactions. She stated that the clarification would affect the bill's fiscal note and DMV will be submitting a new fiscal note at the next committee meeting if the bill's implication is clarified. 9:56:23 AM CHAIR DYSON asked Ms. Erickson to repeat her last sentence. MS. ERICKSON responded that DMV would need to submit a new fiscal note if SB 127 really does include the car dealerships that do their own title and registration transactions in addition to financial institutions. She explained that DMV did not include car dealerships and financial institutions in their original fiscal note. She said the business partners would also benefit from the added 15 percent from proceeds if they are included in SB 127. She noted that auto dealers support SB 127. CHAIR DYSON asked at what point DMV realizes labor savings when business partners perform part of the division's work. MS. ERICKSON answered that she did not know and would attempt to find out. CHAIR DYSON suggested basing the cost savings on how many transactions a DMV employee does in a day and compare the amount of transactions done by the business partners to calculate the amount of hours and benefits saved by DMV. MS. ERICKSON replied that she would get back to Chair Dyson with the information. CHAIR DYSON noted that a fiscal note ought to reflect both the revenue DMV does not leave and perhaps at some point expenses that DMV does not have to incur. He asked if DMV supports SB 127. MS. ERICKSON answered that DMV absolutely supports the idea of putting into statute the business contracts. She said the fees the state pays is really a policy call that she cannot comment on. 9:59:12 AM SENATOR GIESSEL noted that the Department of Fish and Game contracts with businesses. She addressed DMV's business partnership as a larger reach with auto dealerships. She pointed out that auto dealerships are considering dropping extended DMV services due to their added personnel costs. She noted that personnel costs are a private business's highest operational liability. She pointed out AS 28.10.431(e) allows DMV to collect local government taxes for license plate renewal. She pointed out that the statute allows DMV to retain 8 percent of the local tax fees as administrative costs for tax collection. She said while DMV may be saying it is inappropriate for private businesses to be retaining some of the motor vehicle fees, DMV is retaining money for collecting tax fees for local governments. CHAIR DYSON noted that the bill's sponsor has expressed approval for the committee's recommendation for a Senate Finance Committee referral. He remarked that the Finance Committee may want the very kind of information that the committee asked about. 10:01:53 AM DUANE BANNOCK, representing himself, Kenai, Alaska, announced being available to answer questions. CHAIR DYSON asked if anyone would like to speak to the bill. He stated that seeing and hearing none, [public testimony is closed.] 10:02:12 AM CHAIR DYSON moved SB 127 [labeled 28-LS1263\A] from Senate State Affairs with individual recommendations with attached fiscal note/s. Seeing no objection, [SB 127] moved out of committee.