Legislature(1995 - 1996)
04/18/1995 01:03 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 important. 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 fund. 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 municipality. 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 be. 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.