Legislature(1995 - 1996)

04/18/1995 01:03 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HB 272 - MUNICIPAL MOTOR VEHICLE TAX                                        
 Number 036                                                                    
 CO-CHAIR IVAN said the first bill to be heard was HB 272, sponsored           
 by Representative Hanley.  Packets included a proposed amendment,             
 fiscal notes, sponsor statement and supporting documents.  He                 
 invited Representative Hanley to introduce HB 272                             
 REPRESENTATIVE MARK HANLEY, sponsor, indicated that he had                    
 introduced the bill to allow municipalities to increase or decrease           
 the municipal tax schedule currently set in statute.  There is an             
 8 percent administrative fee that is taken out for the Department             
 of Public Safety (DPS) to handle the collections, and the rest of             
 the municipal fee is passed to the municipality.  This is an option           
 for municipalities to increase or decrease the tax every two years            
 on motor vehicles.  The Division of Motor Vehicles would collect              
 the tax at the time of registration of the vehicle and pass on the            
 tax to the municipalities, less the 8 percent administrative fee.             
 It is estimated that the additional fees would produced                       
 approximately $500,000 to the state.  Costs for the program include           
 changes to the computer program.  The proposed amendment would                
 allow DPS to collect a one-time fee for any changes to the computer           
 system caused by a municipality's increased fee schedule.  The                
 department anticipated it will require an additional minute of time           
 per transaction to handle this tax.  The intent of the bill is to             
 give the municipalities the flexibility to get away from the                  
 legislature's having to raise taxes for municipalities and allows             
 the DPS to collect a one-time charge to cover programming changes             
 to set up the fee.                                                            
 Number 164                                                                    
 CO-CHAIR ALAN AUSTERMAN asked if in addition to the monies retained           
 under (e) of this section, which was the administrative fee, the              
 monies incurred and implemented referred to the one-time fee.                 
 Number 180                                                                    
 REPRESENTATIVE HANLEY indicated the reason for the amendment was to           
 clarify the intent of the legislature which was to provide for a              
 one-time fee to cover the programming changes in the tax schedule             
 in addition to the 8 percent fee.  He noted that the 8 percent                
 administrative fee could not be changed.                                      
 Number 194                                                                    
 CO-CHAIR AUSTERMAN moved to adopt the amendment.                              
 Number 196                                                                    
 CO-CHAIR IVAN asked if there were objections; hearing none, the               
 amendment was adopted.  He then indicated there were people on                
 teleconference to testify on the bill.  He recognized Mr. Jim                 
 Colberg of the Mat-Su Borough.                                                
 Number 210                                                                    
 JIM COLBERG, Mat-Su Assembly member, testified via teleconference             
 in support of HB 272.  He believed it was an extremely important              
 bill for Mat-Su.  The borough is in need of taxes that spread the             
 burden fairly throughout the borough.  They currently collect an              
 average of $11.40 each year per vehicle on 68,000 vehicles, which             
 is roughly $775,000.  The state keeps $62,000 under the 8 percent.            
 Under the proposed legislation, if the borough could average $50              
 per vehicle, the borough could bring in $3.4 million and would net            
 the state $272,000.  He didn't anticipate there would be a                    
 substantial cost to the state to collect the increased amount.  He            
 felt a tax like this would allow the borough to do away with an               
 onerous personal property tax and fairly tax vehicles at a                    
 reasonable rate.  He emphasized he felt this legislation was very             
 Number 260                                                                    
 CO-CHAIR AUSTERMAN asked if part of the increased fee would go to             
 road maintenance.                                                             
 Number 270                                                                    
 MR. COLBERG indicated that he could not indicate where the                    
 additional funds would go, but with a $4 million increase in                  
 taxation for schools alone, it wouldn't begin to cover the costs              
 the borough foresees.                                                         
 Number 276                                                                    
 REPRESENTATIVE VEZEY asked for an explanation of the math involved            
 in increasing the motor vehicle tax again.                                    
 Number 283                                                                    
 MR. COLBERG reiterated that there were 68,000 motor vehicles in               
 Mat-Su.  Out of the $35 registration fee paid, Mat-Su collects                
 $11.40 per vehicle, which results in $775,000; of that, $62,000               
 went to the state.  At $50 per vehicle, Mat-Su would collect $3.4             
 million and the state would receive approximately $272,000.                   
 Number 306                                                                    
 JAY DELANEY, Director, Division of Motor Vehicles, Department of              
 Public Safety (DPS), stated his concerns were that the single table           
 tax schedule was easy to administer.  With 13 different local                 
 governments now participating, and a potential for others to                  
 participate, he expressed reservation about a system that could               
 handle so many different tax rates.  Another concern was that the             
 customers believe this is a state tax since the DPS collects it,              
 and as a result would get numerous complaints, comments and                   
 questions which would increase the amount of time a counter person            
 would have to spend with each person registering a vehicle.  In its           
 fiscal note, the DPS estimated an increase of one minute per                  
 transaction as a result of this legislation.  This would require an           
 additional seven positions in the budget, one accounting clerk, one           
 accounting technician and five counter people.   The one accounting           
 technician would be required for FY 96; the others would not be               
 needed until FY 97.  He anticipated the revenues generated would              
 more than offset the cost of changes required by the DPS.  He                 
 believed that many municipalities would take advantage of this tax.           
 Mr. Delaney indicated that of the 8 percent collected, the division           
 only received a portion of it.  The rest goes into the general                
 Number 383                                                                    
 CO-CHAIR AUSTERMAN inquired whether the fees and the taxes are the            
 same for each municipality that the state collects.                           
 Number 393                                                                    
 MR. DELANEY indicated that currently the tax was the same in each             
 Number 397                                                                    
 CO-CHAIR AUSTERMAN then asked if the same dollar figure was                   
 collected at each one of the locations.                                       
 Number 403                                                                    
 MR. DELANEY clarified that the tax table was the same.  It varies             
 for the different year of the vehicle, but is the same for each of            
 the locations.                                                                
 Number 407                                                                    
 CO-CHAIR AUSTERMAN asked if the revised bill required a computer              
 update to accomplish.                                                         
 Number 414                                                                    
 MR. DELANEY indicated the computer system would make the                      
 calculation, resulting in substantial changes to the program to               
 enter the different tax tables for the different locations.  The              
 one-time cost would cover this.                                               
 Number 427                                                                    
 CO-CHAIR AUSTERMAN asked if in FY 96 and FY 97 seven new people               
 would be required.                                                            
 Number 429                                                                    
 MR. DELANEY stated that one of the seven people was the accounting            
 technician that would be required in FY 96 to get the programs                
 going.  The other positions were to handle the impact at the                  
 counter.  The department anticipates that each transaction would              
 require one extra minute to handle because of the customer                    
 frustration at an increased tax.  This equated to over 9,000 person           
 hours a year, resulting in the additional 6 positions.                        
 Number 440                                                                    
 CO-CHAIR AUSTERMAN asked if that was the total transactions                   
 conducted and had the recent changes to get people to mail in their           
 registration worked.                                                          
 Number 444                                                                    
 MR. DELANEY indicated that was the primary reason for using one               
 minute.  They have reduced the number of individuals that come in             
 for the registration with the mailout program; however, only about            
 60 percent are using it.                                                      
 Number 447                                                                    
 REPRESENTATIVE ELTON asked why on the fiscal note the biggest                 
 impact was going to be in FY 97 when the legislation wouldn't take            
 effect until January 1997.  Didn't that mean that only half of FY             
 97 would be affected.                                                         
 Number 458                                                                    
 MR. DELANEY indicated that approximately six months was required to           
 train people for these counter positions.  The funds for FY 97                
 would be considered in the FY 97 budget.                                      
 Number 470                                                                    
 REPRESENTATIVE ELTON indicated that he was bothered by the fact               
 that not all the receipts from the 8 percent fee were not going to            
 the DPS.  He inquired how much of the 8 percent was actually going            
 back to the department.                                                       
 Number 490                                                                    
 MR. DELANEY stated that the department was currently collecting a             
 little over $500,000.  It is difficult to say how much of that                
 particular program receipt goes back to the department because they           
 are all lumped into one.  In the past, when it was broken out, the            
 department was authorized to use approximately $250,000, which goes           
 to fund the accounting section.  However, the department has                  
 additional costs in the collection areas.  Two hundred fifty                  
 thousand dollars was appropriated but it costs substantially more             
 to collect the motor vehicle tax.                                             
 Number 512                                                                    
 REPRESENTATIVE ELTON stated he continued to be bothered by the fact           
 that the state general fund gets the receipts because a                       
 municipality has passed a tax.                                                
 Number 515                                                                    
 CO-CHAIR AUSTERMAN noted that there were a lot of taxes similar to            
 that.  About 50 percent of the fisheries tax goes into the general            
 fund.  He then asked Mr. Delaney where the seven positions would              
 Number 522                                                                    
 MR. DELANEY noted that the positions would be in the higher traffic           
 areas, probably Anchorage, Fairbanks, Soldotna, Palmer, Juneau and            
 Ketchikan.  It was dependant on how they could be moved around.               
 Number 525                                                                    
 CO-CHAIR AUSTERMAN asked how many field offices the department had.           
 Number 528                                                                    
 MR. DELANEY indicated the department currently had 21 field offices           
 with 13 commissioned agents.                                                  
 Number 530                                                                    
 CO-CHAIR AUSTERMAN asked if this was going to affect all offices.             
 Number 535                                                                    
 MR. DELANEY indicated that the impact would be throughout the                 
 state, but they had to place the individuals where the impact was             
 the greatest.                                                                 
 Number 538                                                                    
 REPRESENTATIVE ELTON asked why Juneau would get additional help.              
 Number 540                                                                    
 MR. DELANEY stated that the high traffic offices would be looked at           
 based on size.                                                                
 Number 542                                                                    
 CO-CHAIR IVAN indicated the next people to testify would be from              
 Anchorage.  The first would be Mr. Charles McKee.                             
 Number 550                                                                    
 CHARLES MCKEE, Anchorage, testified via teleconference and said he            
 was sleeping in a van that he could not change title to because he            
 did not have a driver's license.  He opposed the municipality and             
 the department receiving more funds through taxation.                         
 Number 578                                                                    
 TIM ROGERS, Legislative Program Coordinator, Municipality of                  
 Anchorage (MOA), stated that the municipality supported HB 272 and            
 it was one of the highest legislative priorities.  A $2 surcharge             
 would generate $350,000 and go a long way toward solving the                  
 problem of abandoned cars in the MOA.  He supported that tax as one           
 borne by the user and supported the idea that the municipality                
 should set its own tax rate.                                                  
 Number 610                                                                    
 KEVIN RITCHIE, Executive Director, Alaska Municipal League (AML),             
 explained that this bill had been adopted by the AML as part of its           
 platform and does create more flexibility on the part of                      
 municipalities to take care of the problems in their communities by           
 spreading the cost fairly.                                                    
 Number 630                                                                    
 CO-CHAIR AUSTERMAN moved that CSHB 272(CRA) with individual                   
 recommendations and fiscal notes be passed out of the Community and           
 Regional Affairs Standing Committee.                                          
 CO-CHAIR IVAN asked if there were objections.  Hearing none, the              
 bill moved from committee.                                                    

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