HOUSE STATE AFFAIRS STANDING COMMITTEE February 15, 1994 8:00 a.m. MEMBERS PRESENT Representative Al Vezey, Chairman Representative Pete Kott, Vice Chairman Representative Gary Davis Representative Harley Olberg Representative Jerry Sanders MEMBERS ABSENT Representative Bettye Davis Representative Fran Ulmer COMMITTEE CALENDAR *HB 406: "An Act relating to municipal sales and use taxes involving air carriers; and providing for an effective date." PASSED OUT OF COMMITTEE *HB 368: "An Act relating to reapplication for the 1993 permanent fund dividend when the United States Postal Service documents the loss of mail during the 1993 application period; and providing for an effective date." PASSED OUT OF COMMITTEE HB 363: "An Act repealing an additional fee for motor vehicle registration not conducted by mail." PASSED OUT OF COMMITTEE SB 128: "An Act relating to legislative audits." HELD OVER (* First public hearing) WITNESS REGISTER REPRESENTATIVE RICHARD FOSTER Alaska State Legislature Alaska State Capitol, Room 420 Juneau, AK 99811 Phone: 465-3789 POSITION STATEMENT: Sponsor of HB 406 REED STOOPS Alaska Air Carriers Association 240 Main St. Suite #600 Juneau, AK 99801 Phone: 463-3223 POSITION STATEMENT: Testified in favor of HB 406 DEBORAH ALSTROM Interim City Manager of St. Mary's P.O. Box 163 St. Mary's, AK 99658 Phone: 438-2515 POSITION STATEMENT: Testified against HB 406 ROBERT HALLFORD Northern Air Cargo 3900 W. International Airport Rd. Anchorage, AK 99502 Phone: 243-3545 POSITION STATEMENT: Testified in favor of HB 406 REPRESENTATIVE GENE THERRIAULT Alaska State Legislature Alaska State Capitol, Room 421 Juneau, AK 99811 Phone: 465-4797 POSITION STATEMENT: Sponsor of HB 368 TOM WILLIAMS, Director Permanent Fund Dividend Division Department of Revenue P.O. Box 110460 Juneau, AK 99811-0460 Phone: 465-2323 POSITION STATEMENT: Testified a neutral position for the Department of Revenue REPRESENTATIVE PETE KOTT Alaska State Legislature Alaska State Capitol, Room 409 Juneau, AK 99811 Phone: 465-3777 POSITION STATEMENT: Sponsor of HB 363 JUANITA HENSLEY Division of Motor Vehicles Department of Public Safety P.O. Box 20020 Juneau, AK 99802 Phone: 465-2650 POSITION STATEMENT: Testified a neutral position for the Department of Public Safety PREVIOUS ACTION BILL: HB 406 SHORT TITLE: NO MUNICIPAL SALES TAXES ON AIR CARRIERS SPONSOR(S): REPRESENTATIVE(S) FOSTER JRN-DATE JRN-PG ACTION 01/27/94 2166 (H) READ THE FIRST TIME/REFERRAL(S) 01/27/94 2166 (H) STATE AFFAIRS, FINANCE 02/15/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 368 SHORT TITLE: REAPPLICATION PERIOD FOR 1993 PF DIVIDEND SPONSOR(S): REPRESENTATIVE(S) THERRIAULT,James,Parnell,Vezey JRN-DATE JRN-PG ACTION 01/13/94 2052 (H) READ THE FIRST TIME/REFERRAL(S) 01/13/94 2053 (H) STATE AFFAIRS 02/15/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 363 SHORT TITLE: NO FEE FOR CAR REGISTRATION IN PERSON SPONSOR(S): REPRESENTATIVE(S) KOTT,B.Davis JRN-DATE JRN-PG ACTION 01/11/94 2033 (H) READ THE FIRST TIME/REFERRAL(S) 01/11/94 2033 (H) STATE AFFAIRS, FINANCE 01/13/94 2056 (H) COSPONSOR(S): B. DAVIS 01/29/94 (H) STA AT 08:00 AM CAPITOL 102 01/29/94 (H) MINUTE(STA) 01/29/94 (H) MINUTE(STA) 01/29/94 (H) MINUTE(STA) 02/08/94 (H) STA AT 08:00 AM CAPITOL 102 02/08/94 (H) MINUTE(STA) 02/15/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: SB 128 SHORT TITLE: LEGISLATIVE AUDITS SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT JRN-DATE JRN-PG ACTION 02/22/93 440 (S) READ THE FIRST TIME/REFERRAL(S) 02/22/93 440 (S) STATE AFFAIRS, FINANCE 03/10/93 (S) STA AT 09:00 AM BUTRVICH RM 205 03/10/93 (S) MINUTE(STA) 03/17/93 (S) STA AT 09:00 AM BUTRVICH RM 205 03/17/93 (S) MINUTE(STA) 03/18/93 845 (S) STA RPT CS 1DP 3NR SAME TITLE 03/18/93 846 (S) ZERO FISCAL NOTE TO SB & CS (S.STA/GOV) 04/12/93 (S) FIN AT 09:00 AM SENATE FIN 518 04/12/93 (S) MINUTE(FIN) 04/14/93 1353 (S) FIN RPT 6DP 1NR (STA)CS 04/14/93 1354 (S) PREVIOUS ZERO FN (S.STA/GOV) 04/14/93 1353 (S) LTR OF INTENT WITH FIN REPORT 04/13/93 (S) MINUTE(FIN) 04/14/93 (S) FIN AT 08:30 AM SENATE FIN 518 04/14/93 (S) MINUTE(FIN) 04/14/93 (S) MINUTE(RLS) 04/17/93 (S) MINUTE(SSA) 04/23/93 1693 (S) RULES 3 CAL 1NR 4/23/93 04/23/93 1694 (S) READ THE SECOND TIME 04/23/93 1694 (S) STA CS ADOPTED UNAN CONSENT 04/23/93 1695 (S) ADVANCE TO THIRD READING FAILED Y12 N8 04/23/93 1695 (S) THIRD READING 4/24 CALENDAR 04/24/93 1741 (S) READ THE THIRD TIME CSSB 128(STA) 04/24/93 1741 (S) (S) ADOPTED FIN LTR OF INTENT 04/24/93 1741 (S) PASSED Y20 N- 04/24/93 1746 (S) TRANSMITTED TO (H) 04/27/93 1552 (H) READ THE FIRST TIME/REFERRAL(S) 04/27/93 1552 (H) STATE AFFAIRS, FINANCE 01/29/94 (H) STA AT 08:00 AM CAPITOL 102 01/29/94 (H) MINUTE(STA) 02/15/94 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 94-14, SIDE A Number 000 CHAIR AL VEZEY called the meeting to order at 8:00 a.m. Members present were REPRESENTATIVE PETE KOTT, HARLEY OLBERG, JERRY SANDERS, and GARY DAVIS. Members absent were REPRESENTATIVES BETTYE DAVIS and FRAN ULMER. HB 406 was opened for discussion. HB 406 - NO MUNICIPAL SALES TAXES ON AIR CARRIERS Number 042 REPRESENTATIVE RICHARD FOSTER, SPONSOR OF HB 406, began with an overview. HB 406 relates to municipal sales and use taxes involving air carriers. HB 406 adds a new subsection to current statutes which prohibits a borough, home rule, or general law municipality from levying or collecting a sales or use tax on an activity directly involved with the carriage of individuals or goods for hire by an air carrier. This is consistent with the Federal Aviation Administration (FAA) Act of 1958, which provides the federal government reserves for itself the power to regulate and tax air carriers. REPRESENTATIVE FOSTER cited from the Act of 1958, "No state or political subdivision may enact any laws that affect the rates, routes, or services of an air carrier." Several bush areas, of late, have composed proposals to tax air carriers, passages of freight, or passengers and will reserve the receipts for itself. HB 406 will ensure taxation will be strictly reserved to the federal government. The constant litigation between the aviation industry and various cities will be avoided with HB 406. Number 082 CHAIR VEZEY asked for questions from the committee and reviewed the witnesses who would like to testify. Number 092 REPRESENTATIVE G. DAVIS asked REPRESENTATIVE FOSTER if HB 406 coordinates with the FAA Act of 1958 in reserving the right for only the federal government to tax. He believed certain areas had already been taxing air carriers. Number 101 REPRESENTATIVE FOSTER said there have only been attempts to tax. He stated Nome and St. Mary's as examples of cities trying to pass ordinances to tax. Number 107 REPRESENTATIVE SANDERS stated the FAA Act of 1958 refers to "federally certified air carriers." He then asked if this statement refers to all air carriers. Number 111 REPRESENTATIVE FOSTER responded the FAA Act of 1958 is all inclusive. Private air carriers cannot charge for passengers or freight and do not apply. CHAIR VEZEY commented he is vaguely familiar with the FAA Act of 1958 and the substantial amount of taxes the federal government imposes on the aviation industry. He suggested REPRESENTATIVE FOSTER include copies of the pertinent pages of the FAA Act of 1958. REPRESENTATIVE FOSTER agreed. CHAIR VEZEY introduced REED STOOPS as the next witness. Number 133 REED STOOPS, testified in favor of HB 406 on behalf of the ALASKA AIR CARRIERS ASSOCIATION, To his knowledge, there are no municipalities currently collecting a tax, therefore, they will not incur a tax loss. There has been frequent litigation to find loopholes in the FAA Act of 1958, all unsuccessful. Litigation is expensive for the Alaska Air Carriers Association and they feel the FAA Act of 1958 is quite clear. He noted the Senate has a memorandum from Bogle & Gates which describes the Act. Number 156 REPRESENTATIVE G. DAVIS asked, with municipalities attempting to gain revenue from airport operations and if HB 406 passes, would they possibly raise their landing taxes in response. Secondly, he wondered what other revenues they derive from carrier operations. Number 170 MR. STOOPS explained the municipally-owned airports do collect landing taxes and HB 406 would not affect them. State-owned airports are not currently charging landing taxes, but they do have a fuel tax, which is proposed to increase in 1994. HB 406 only affects sales tax on air cargo operations. Number 180 CHAIR VEZEY asked MR. STOOPS if it is the Department of Transportation's (DOT) position to cease collecting landing taxes instead of working on an adjustment to the fuel tax. Number 183 MR. STOOPS responded that DOT ceased collecting landing taxes a year and half ago. The Alaska Air Carriers Association made an agreement with Commissioner Campbell, whereby, if there were additional taxes, a fuel tax rather than a landing tax increase would be preferred. The landing tax is inequitable and not very efficient to collect. CHAIR VEZEY clarified the intent of HB 406 is to recognize the priority of federal law and to avoid unnecessary litigation. MR. STOOPS agreed. CHAIR VEZEY moved to the offnet St. Mary's teleconference site. DEBORAH ALSTROM, INTERIM CITY MANAGER FOR ST. MARY'S, testified against HB 406. At one time, St. Mary's was a fish processing hub and used to be able to collect a raw fish sales tax. St. Mary's can no longer collect this tax, so the city has lost out on several thousand dollars every summer. Large fish buyers ship and charter their air fish freight from St. Mary's to Kenai or the Peninsula to be processed. The sales tax in very important to their community and the loss of revenues is very large. Number 248 CHAIR VEZEY clarified MS. ALSTROM was testifying in opposition for HB 406. Number 250 MS. ALSTROM answered CHAIR VEZEY was correct. Number 252 CHAIR VEZEY asked if MS. ALSTROM would like to comment on the apparent conflict between the municipal and federal regulations. Number 254 MS. ALSTROM stated she entered late and has had a hard time hearing the testimony because of a bad telephone connection. Number 258 CHAIR VEZEY summarized, the FAA Act of 1958 reserves for the federal government the right to tax certified air carriers. There have been numerous attempts to circumvent it in the past. After litigation, they have all been dropped, but there is considerable expense involved in litigation. He paraphrased REPRESENTATIVE FOSTER's intent as being to clarify that (we) are subservient to federal law and to avoid unnecessary litigation. Number 277 MS. ALSTROM asked if written testimony would be accepted on HB 406 to a certain date. Number 279 CHAIR VEZEY intended to take action on HB 406, and noted HB 406 would be referred to House Finance Committee depending upon the will of the meeting. MS. ALSTROM may submit testimony to either committee. Number 289 REPRESENTATIVE SANDERS asked MS. ALSTROM if there was a possibility St. Mary's could have a fish landing tax, taxing the fish as it came off the boat. Number 303 MS. ALSTROM answered there is already a tax similar to REPRESENTATIVE SANDERS's suggestion in place. Number 309 REPRESENTATIVE SANDERS inquired if the tax could be increased to make up for the other lost tax revenues. Number 312 MS. ALSTROM felt an increase would cause St. Mary's to lose business with the competition of another lower-Yukon village, which ships and processes fish. Number 324 CHAIR VEZEY clarified additional landing taxes would make St. Mary's lose their commerce to another community. CHAIR VEZEY moved to the Anchorage teleconference site. Number 325 ROBERT HALLFORD, NORTHERN AIR CARGO, testified in favor of HB 406. Northern Air Cargo's and the Alaska Air Carriers Association desire is to avoid continued litigation and confrontation with municipalities. He cited a letter from the City and Borough of Juneau which relates to HB 406. "The City and Borough of Juneau has been exploring the possibility of imposing a sales tax on the flight-seeing business conducted within the borough. Within the borough, it is estimated there are 19 air transport companies,... There are four major companies and we estimate they produced a gross flight-seeing revenue of $7 million. This represents a tax revenue to the City and Borough of Juneau of over $300,000." He also quoted a letter by the United States DOT to Ms. D. Elizabeth Cuadra an attorney for the City of Juneau in 1986, "Accordingly in response to the specific situations you ranged in your letter of February 20th, local sales taxes would not be permissible with regard to: a) sightseeing tours by helicopter or light plane; b) air taxi or charter fishing trips; c) nonscheduled air taxi operators; d) scheduled interstate commuter airline trips regardless of the passengers ultimate destination; and e) airline tickets sold regardless of the passengers routing. This is because the preemption extends to all carriers regulated by the FAA, including helicopters, etc., as well as to all passenger transportation involving air commerce." MR. HALLFORD pointed out the City of Juneau is attempting to enact this tax again, and HB 406 is needed to prevent it. The FAA Act of 1958 refers to both air transportation and air commerce. Air transportation involves operating as a certified air carrier. Air commerce means any time an airplane goes into federal airspace and money changes hands. Directly taxing air transportation is straightforward by definition. Number 405 CHAIR VEZEY asked if MR. HALLFORD knew of any case law regarding these tax cases. Number 408 MS. HALFORD cited Air Jamaica v. Florida State Department of Revenue and Ward Air Canada v. Florida State Department of Revenue. CHAIR VEZEY asked MR. HALLFORD to mail a copy of the U.S. Department of Transportation letter he cited in his testimony. Number 415 MR. HALLFORD replied he would. Number 421 REPRESENTATIVE G. DAVIS moved to pass HB 406 from committee with individual recommendations. Number 424 CHAIR VEZEY recognized the motion by REPRESENTATIVE G. DAVIS. The committee secretary called the roll and HB 406 passed from House State Affairs Committee with individual recommendations. HB 406 will be referred to House Finance Committee. HB 368 - REAPPLICATION PERIOD FOR 1993 PF DIVIDEND Number 433 CHAIR VEZEY opened HB 368 for discussion. Number 441 REPRESENTATIVE GENE THERRIAULT, SPONSOR OF HB 368, referred to his sponsor statement. "HB 368 is designed to address a problem that has come to light regarding 1993 Permanent Fund Dividend applications that were lost by the U.S. Postal Service. In October of 1993 my office was contacted by numerous constituents regarding loss of their Permanent Fund Dividend (PFD) applications. The PFD Division did not have record of receiving their applications, however the individuals noted mailing their applications early in January through the North Pole Post Office. After looking into this situation, my staff learned that the Postal Service had received calls in January 1993 from customers whose payments had not reached creditors. These complaints led to a U.S. Postal Inspection Service investigation which determined that an apparent loss of mail took place on January 8, 9, or 11, 1993, affecting residents in the North Pole area. A letter documenting the loss was supplied to customers for the notification of creditors. (on file) "HB 368 would open a narrow window for PFD applicants by extending the reapplication period for the 1993 dividend year from September 1, 1993 to September 1, 1994. The applicant would be required to provide a sworn statement that the application was originally mailed in the postal area during the time mail from that area was lost. A sworn statement from another individual who witnessed the mailing or signed the residency verification of the original application before the 1993 deadline, and documentation from the U.S. Postal Service acknowledging the loss of mail entered into the mail stream during the 1993 PFD application period. "The PFD division currently allows an applicant who timely filed an application that was not received by the PFD Division to reapply before September 1 of the dividend year (15 AAC 23.103(h)). The Division has traditionally allowed reapplication, however 1993 was the first year the deadline was established. Although PFD applicants receive batch cards that verify receipt of their application, a number of individuals did not expect to receive a batch card last year due to the new direct deposit method of payment and therefore did not get notice of a problem until in was too late. "An extension to this deadline is needed for the 1993 reapplication period due to this loss of mail in the North Pole Post Office and the new deadline for reapplying for the dividend. My staff and I have worked with the PFD Division within the Department of Revenue to draft the language of HB 368 to solve this problem without throwing the reapplication period wide open." HB 368 has a zero fiscal note. Because of the narrow window HB 368 provides, the PFD division has stated a neutral opinion of the bill. CHAIR VEZEY asked why there is a zero fiscal note when an estimated 30 PFDs would be issued under HB 368. Number 489 REPRESENTATIVE THERRIAULT corrected the amount of PFDs issued would be approximately 50-60. The PFD Division sets aside an amount of money for people going through the appeal process. All of these people have already filed in the appeal process, but without HB 368, they will likely be denied. Number 500 TOM WILLIAMS, DIRECTOR, PERMANENT FUND DIVISION, DEPARTMENT OF REVENUE, stated because of the narrow construction of HB 368, his department has a neutral position. Because the people have already filed in the appeal process, the Division does not expect a significant impact on the administration, therefore there is a zero fiscal note. Number 510 CHAIR VEZEY questioned if the individuals had used the certified mail service and still failed to meet the reapplication deadline, would they still be determined ineligible. Number 515 MR. WILLIAMS reiterated the reapplication deadline is September 1 and they will have until that date to provide the required evidence of mailing. The September 1 deadline is set so the Division can calculate the number of eligible applicants by the statutory deadline of October 1. He encouraged people to locate their batch receipt cards. Number 522 CHAIR VEZEY commented HB 368 is incumbent upon all persons applying for a PFD to verify prior to September 1 that their application has been received. REPRESENTATIVE KOTT inquired if there had been any past legislative attempts to address a small group of people for PFD reapplication. Number 530 MR. WILLIAMS was unaware of any legislation as narrow as HB 328. Early in the PFD program, there was a broad based reapplication period which caused a plethora of problems. Number 536 REPRESENTATIVE THERRIAULT commented the early problems were due to notification problems in rural Alaska. Since then, the program has not been "opened up." The U.S. Postal Service has only documented one loss of mail in the entire state during the application period. Proof of loss of mail is required for HB 368. Individuals in North Pole and one individual visiting from Anchorage will be primarily affected by HB 368. Number 548 REPRESENTATIVE KOTT asked if the reapplication REPRESENTATIVE THERRIAULT referred to was conducted through a statute or by regulation. Number 550 REPRESENTATIVE THERRIAULT believed it was statutory. MR. WILLIAMS confirmed it was statutory. Number 553 REPRESENTATIVE KOTT inquired if HB 368 was not passed, would there be discretion for those individuals involved in the appeal process. Number 558 MR. WILLIAMS responded as current statute stands, the 50-60 people would not be eligible for a dividend. HB 368 would not be codified, it would be a temporary statute. Number 562 CHAIR VEZEY clarified HB 368, if passed, would become part of the session laws of Alaska. (REPRESENTATIVE OLBERG left the meeting at 8:35 a.m.) Number 567 REPRESENTATIVE KOTT was concerned with the amount of time taken to discuss HB 368 and wondered if the Department of Revenue could just take care of it. He felt, however, if HB 368 was the only way these individuals could be dealt with fairly, then he understood. CHAIR VEZEY clarified under current statute these individuals could not receive a dividend. MR. WILLIAMS confirmed CHAIR VEZEY. REPRESENTATIVE KOTT saw HB 368 as the only way to resolve the unjust situation, therefore, he moved to pass HB 368 from committee with unanimous consent. Number 583 CHAIR VEZEY commented HB 368 deals with a "gray area" mitigated by a number of circumstances. The five and a half month reapplication period is a reasonable time frame. Hearing no further comments, CHAIR VEZEY recognized the motion by REPRESENTATIVE KOTT. The committee secretary called the roll and HB 368 passed House State Affairs Committee with a unanimous "do pass" recommendation. CSHB 363 - AN ACT RELATING TO MOTOR VEHICLE REGISTRATION FEES Number 602 CHAIR VEZEY recognized the Committee Substitute draft to HB 363 and asked if the committee would like to move to adopt it. Number 606 REPRESENTATIVE SANDERS moved to adopt the Committee Substitute (CS) draft to HB 363. CHAIR VEZEY recognized REPRESENTATIVE SANDERS' motion, hearing no objections, the CS draft to HB 363 was adopted and for discussion. Number 614 REPRESENTATIVE KOTT noted the two changes to the original HB 363. Section 1, the amount is reduced by $5 if a person applies through the mail. Section 2-4, $5 is added to all the vehicle registrations throughout the state of Alaska. Number 623 CHAIR VEZEY asked REPRESENTATIVE KOTT if a fiscal note was available. REPRESENTATIVE KOTT did not have a fiscal note, because the Department of Motor Vehicles (DMV) and Public Safety need to have the CS adopted by the committee before the fiscal note could be provided, per Juanita Hensley. Ms. Hensley conveyed to REPRESENTATIVE KOTT that revenue would be generated for the DMV at a minimum of $55,000. He felt this was underestimated, and that it should be closer to $400,000, based on the DMV's numbers and "no speculation". Number 638 JUANITA HENSLEY, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF PUBLIC SAFETY (DPS), testified her department remained neutral on the CS draft of HB 363. She noted the Governor's Office would supply a fiscal note for the members' packets now that the CS has been adopted. She stated, DMV estimates $55,000 net revenue for the state. "To give you a little background as to why we estimate that, is that this raises all annual registration fees by $5 and it provides a $5 reduction if the registration renewal is conducted by mail. The current $10 fee for registration renewals not conducted by mail is eliminated. In 1993, the Division processed 114,000 new registrations and 417,000 renewal registrations. Prior to FY 94, 30 percent of all vehicle owners used the mail to renew their registrations. And the remainder renewed in-person at the DMV offices. With implementation of the $10 fee for in-person renewals, the use of the mail increased to the point that by the end of the first year, July 1994, the Division estimates 60 percent of the renewals will be conducted by mail. Those 166,000 owners who did not use the mail generate $1.6 million in revenue, which will be eliminated with this bill. This revenue will be replaced by raising all registration fees by $5. The total annual number of registrations (531,000) would generate $2.655 million in additional revenue. This amount would be reduced by $5 for each renewal conducted by mail. It is assumed that those 30 percent of the owners who use the mail, before the fee, will continue to do so. The original $10 fee was picked because the Division felt that it was enough of an incentive without being overly burdensome. The $5 reduction will not be as much of an incentive as the $10 fee, and some owners who used the mail will revert to the in-person office visits. The Division estimates that with the $5 fee, only 45 percent of the vehicle owners will use the mail. The 45 percent, or 188,000 vehicle owners who use the mail, will result in the reduction of $940,000. The summary of all these actions is as follows: Revenue loss at the $10 fee, 166,00 registrations x 10 is $1.6 million; revenue gained from the $5 increase, 531,000 x $5 is $2.655 million; revenue loss from the $5 reduction, 188,00 x $5 is $940,000; leaving a net revenue gain of $55,000. While this bill does not show a net revenue gain, while it does show a revenue gain, it also has the effect of adding 15 percent of vehicle owners, or almost 80,000 customers, to the already long lines at DMV offices. This erases the efficiency initiative originally intended by having the $10 fee. The Department basically with this $5 would be neutral; however, we do expect more people in the lines." Number 681 REPRESENTATIVE KOTT thought the DPS was making assumptions in their fiscal analysis. He believed $5 decrease in fees would be enough incentive to use the mail system and people would fear, even more, the possibility of long lines. REPRESENTATIVE KOTT cited a letter from the DMV January 13, 1994, which states it doesn't cost anymore to process applications behind the scene as in front of the counter. He commented in essence, there should be a greater positive revenue from the counter activity, because it's not costing anymore. . MS. HENSLEY responded processing an application is the same amount of work wherever it is done, however, when a person is in front of the counter there is "chit chat", and checks take time to write. DMV estimates it takes two more minutes to process an application at the counter than it does by mail. TAPE 94-14, SIDE B Number 000 REPRESENTATIVE KOTT reiterated the information he received January 13, 1994, from Jay Dulany, DMV, which stated the "time saved by not exchanging pleasantries in a face to face setting is offset by the additional time in handling the mail." (On file.) Number 010 REPRESENTATIVE G. DAVIS indicated almost all fiscal notes have assumptions in them. Number 019 CHAIR VEZEY commented anyone is welcome to submit written or oral testimony refuting the DMV fiscal note. He speculated the mail use rate after the $5 decrease, MS. HENSLEY assumed, was too generous, feeling the public would instinctively respond to higher fees. Number 056 MS. HENSLEY responded the DMV has no way of estimating how many people will continue to use the mail system. Human nature is to procrastinate. Number 066 CHAIR VEZEY repeated he thought the DMV's assumption was generous, while REPRESENTATIVE KOTT's was a little harsh. Number 071 REPRESENTATIVE KOTT felt the DMV has a great deal of latitude and discretion in determining whether or not they should apply the $10 fee to those individuals that perhaps come to the state for the first time. He felt the department could probably make some allowances for the face to face fee in those situations. There are a number of military members and other individuals in the Anchorage "bowl area" that are involved in that circumstance. He felt these individuals should be a consideration in the fiscal note. REPRESENTATIVE KOTT noted an instance where he was standing in the DMV line and the front counter clerk took five to ten minutes to talk with the supervisor to decide if the $10 fee should be waived or not. Number 100 CHAIR VEZEY understood the fiscal note would be transmitted from MS. HENSLEY soon after the meeting. CSHB 363 could not be transferred to the Clerk's Office without a fiscal note. However, if the committee wanted to take action on it, CHAIR VEZEY would allow it. He also mentioned to the committee that CSHB 363 could be held over. Number 115 MS. HENSLEY interjected the fiscal note would be to the committee within an hour. Number 117 REPRESENTATIVE G. DAVIS clarified the fiscal note would read $55,000. REPRESENTATIVE KOTT moved to pass CSHB 363 with fiscal note attached, per MS. HENSLEY'S testimony, under the next committee referral. Number 126 CHAIR VEZEY asked the committee secretary to call role. Having done so, CSHB 363 passed from the House State Affairs Committee with individual recommendations. SB 128 - LEGISLATIVE AUDITS Number 140 CHAIR VEZEY opened SB 128 for discussion and asked if anyone was present to testify. There were no teleconference site witnesses. He asked if the committee wished to take action on SB 128, noting it had been held over to allow the Director of the Office of Management and Budget (OMB) to provide testimony. Number 156 REPRESENTATIVE KOTT was reluctant to pass SB 128 on without having heard from the sponsor; however, if there was proper notification made, and there has been no communication from the Department, perhaps that is an indication they are in concurrence with SB 128 and the fiscal note. Number 167 CHAIR VEZEY understood the administration does not support SB 128 and they asked for it to be held over for Mr. Stastny to testify. The Senate State Affairs Committee has prepared a zero fiscal for SB 128. The House State Affairs Committee has prepared a zero fiscal note for SB 128. The Office of the Governor has prepared a fiscal note which reads $206,000 the first year and increases at about three-four percent each year thereafter. (REPRESENTATIVE OLBERG reentered the meeting at 8:55 a.m.) Number 190 REPRESENTATIVE KOTT felt another hearing would be in order for SB 128. He would like the OMB to challenge the fiscal notes. Number 199 Hearing no further comments, CHAIR VEZEY held SB 128 in committee for an additional hearing. REPRESENTATIVE KOTT urged for SB 128 to be rescheduled at the earliest convenience. Number 210 CHAIR VEZEY announced the Subcommittee on the Alaska Railroad will meet February 16, 1994, at 8:00 a.m., teleconferencing to Anchorage to hear from Bill Reeves. Having no more business before the committee, CHAIR VEZEY adjourned the House State Affairs Committee at 8:58 a.m.