CHAIRMAN SHARP brings up SB 327 (TAX ON RESIDUAL MARINE FUEL OIL)             
 as the first order of business before the Senate Transportation               
 Committee and notes the presence of a proposed committee                      
 substitute.                                                                   
                                                                               
 Number 021                                                                    
                                                                               
 SENATOR KERTTULA makes a motion to adopt the CSSB 237(TRA) in lieu            
 of the original bill.                                                         
                                                                               
 Number 023                                                                    
                                                                               
 CHAIRMAN SHARP acknowledges the motion and says it will be approved           
 when the committee has a quorum.  The chairman calls Mr. Paxton to            
 testify and asks Mr. Paxton if he has the committee substitute in             
 front of him.                                                                 
                                                                               
 Number 030                                                                    
                                                                               
 GARY PAXTON, City Administrator for the City & Borough of Sitka,              
 testifying from Sitka, replies he does have the cs in front of him.           
 Mr. Paxton states he submitted a letter to the committee on behalf            
 of the City & Borough of Sitka.  Mr. Paxton highlights several                
 aspects of that letter.                                                       
                                                                               
 SENATOR KERTTULA asks Mr. Paxton how much local tax the City &                
 Borough of Sitka will add if the legislature reduces the state tax.           
                                                                               
 Number 078                                                                    
                                                                               
 MR. PAXTON replies the intention of the City & Borough of Sitka is            
 not to add a local tax, except for the local sales tax.  There is             
 a cap on the local sales tax of 1,000$.                                       
                                                                               
 Number 085                                                                    
                                                                               
 CHAIRMAN SHARP thanks Mr. Paxton for his testimony and calls the              
 next witness.                                                                 
                                                                               
 Number 088                                                                    
                                                                               
 JIM BURNS, Senior Vice President for Marketing, Petro Marine                  
 Service (PMS), testifying from Anchorage, states he has testified             
 previously on SB 327 and supports the committee substitute.  Mr.              
 Burns says he would be happy to answer any questions committee                
 members might have.                                                           
                                                                               
 Number 095                                                                    
                                                                               
 CHAIRMAN SHARP asks if there are any questions for Mr. Burns.                 
 Hearing none, the chairman refers people to the sectional analysis            
 of the cs for explanation of the changes to the bill.  The cs                 
 guarantees that the state will continue to receive the present                
 amount of revenue of 205,000$ before the tax is reduced from 5                
 cents to 1 cent.  It would be done on a refundable basis by the               
 Department of Revenue.  The bill defines passenger watercraft and             
 residual fuel oil.  It also establishes an immediate effective date           
 and a sunset date of June 30, 1998.  Those are the primary changes            
 that were desired by the committee at the last meeting.   The                 
 chairman asks if anyone else wishes to testify.                               
                                                                               
 SENATOR KERTTULA makes a motion to discharge CSSB 327(TRA) from the           
 Senate Transportation Committee.                                              
                                                                               
 CHAIRMAN SHARP says the bill will be moved when the committee gets            
 a quorum.  In the meantime, the bill will be set aside.                       
 CHAIRMAN SHARP brings SB 327 (TAX ON RESIDUAL MARINE FUEL OIL) back           
 up before the Senate Transportation Committee and notes there is a            
 motion pending for adoption of the committee substitute (cs).                 
                                                                               
 CHAIRMAN SHARP, hearing no objection to the adoption of the cs,               
 notes it has been adopted in lieu of the original bill.                       
                                                                               
 CHAIRMAN SHARP calls Mr. Smith to testify.                                    
                                                                               
 Number 447                                                                    
                                                                               
 BERNIE SMITH, Tesoro Alaska Petroleum Company, testifying from                
 Soldotna, states Tesoro does support SB 327.  It will be good for             
 the economy of the Kenai Peninsula.  That concludes Mr. Smith's               
 testimony; he would be happy to answer any questions.                         
                                                                               
 Number 452                                                                    
                                                                               
 CHAIRMAN SHARP thanks Mr. Smith.  The chairman comments he thinks             
 the bill will do two things: open the door for selling more                   
 residual fuel, and still guarantee the state revenue.                         
                                                                               
 SENATOR KERTTULA makes a motion to discharge SB 327 from the Senate           
 Transportation Committee with individual recommendations.                     
                                                                               
 Number 458                                                                    
                                                                               
 CHAIRMAN SHARP, hearing no objection, orders SB 327 released from             
 committee with individual recommendations.