Legislature(1995 - 1996)

02/07/1996 01:40 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HOUSE BILL 272                                                               
                                                                               
       "An  Act  relating  to   municipal  taxation  of  motor                 
       vehicles; and providing for an effective date."                         
                                                                               
  Co-Chair   Hanley  explained   that  HB   272   would  allow                 
  municipalities that impose a motor vehicle  registration tax                 
  to  increase  or  decrease  the  schedule currently  set  in                 
  statute.   Currently,  there is  no provision  to change  or                 
  update  the  fee schedule.    The change  would  relieve the                 
  Legislature of the burden of adjusting rates by legislation.                 
                                                                               
  He continued, a  municipality electing  to change its  rates                 
  would be required  to pass  an ordinance in  support of  the                 
  change,  and provide  written notice  of  the change  to the                 
  Department  of Public Safety (DPS)  at least one year before                 
  it would take  place.  The  opportunity for change would  be                 
  available once every two years.                                              
                                                                               
  Co-Chair Hanley pointed out that  the municipality would pay                 
  the one time programming cost for the change incurred by the                 
  Department. The Department would collect 8%  of the gross as                 
                                                                               
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  a collection fee; a  rate increase would result in  a larger                 
  base for collection.                                                         
                                                                               
  Co-Chair  Hanley  emphasized  that  HB  272  would  put  the                 
  responsibility  for  change  where   it  belongs,  with  the                 
  municipality.  Each  municipality should  be able to  choose                 
  reasonable tax rates suited to its needs and situation.  The                 
  local ordinance provision and  the democratic process  would                 
  sufficiently protect the public from unreasonable tax rates.                 
                                                                               
  SCOTT  STERLING,  (TESTIFIED  VIA   TELECONFERENCE),  MAT-SU                 
  ASSEMBLY  BOROUGH,  MAT-SU,  testified  in  support  of  the                 
  legislation.  He noted that HB 272 would provide a good tool                 
  for the municipalities to reform taxes at a local level.  He                 
  pointed out that roads,  transportation and vehicles  impose                 
  major costs both  individually and legislatively.   He urged                 
  Committee  members to  give favorable  consideration to  the                 
  legislation.                                                                 
                                                                               
  Representative   Martin  mentioned  that  he  was  a  strong                 
  advocate of  local government  having the  freedom to  raise                 
  taxes.    He  thought  that  the  municipalities  should  be                 
  responsible  for  the  tax  collection.     Co-Chair  Hanley                 
  explained that would  not be  an incentive to  the State  to                 
  increase  taxes; the  municipality  would determine  the tax                 
  level.   The  fees  are  set  in  statute  at  8%  which  is                 
  determined  by  the  Legislature.    Representative  Navarre                 
  pointed out that the  fees had been raised from 5%  to 8% in                 
  order  to  reflect  the  true  costs  of  administering  the                 
  program.  He informed members that for the municipalities to                 
  administer the program would cost 30%.                                       
                                                                               
  JAY  DULANY,  (TESTIFIED   VIA  TELECONFERENCE),   DIRECTOR,                 
  DIVISION OF  MOTOR VEHICLES,  DEPARTMENT  OF PUBLIC  SAFETY,                 
  testified  in  support  of the  legislation  and  offered to                 
  answer any questions of the Committee.                                       
                                                                               
  PATRICK  POURCHOT,  LEGISLATIVE  DIRECTOR,  OFFICE  OF   THE                 
  GOVERNOR,  clarified the  Knowles Administration  support of                 
  the proposed legislation.   He emphasized the  importance of                 
  the fiscal note.  Mr. Pourchot  stated that the Governor has                 
  encouraged municipalities to raise revenues  on their own in                 
  order to pay  for more  services.  The  Governor has  agreed                 
  that  the legislation  would  be the  most efficient  way to                 
  provide an enhanced revenue source.                                          
                                                                               
  TIM  ROGERS,  (TESTIFIED  VIA  TELECONFERENCE),  LEGISLATIVE                 
  PROGRAM COORDINATOR, MUNICIPALITY  OF ANCHORAGE,  ANCHORAGE,                 
  echoed the municipalities support for HB 272.  He noted that                 
  this legislation has  been a  municipality priority for  the                 
  past couple years.  Currently,  the cost of road maintenance                 
  for the municipality is primarily covered by property taxes.                 
                                                                               
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  The municipality believes if they  can adjust the automobile                 
  tax, some of  the burden will  be shifted from the  property                 
  owner to the user.                                                           
                                                                               
  Mr. Rogers commented that Anchorage has a serious "junk" and                 
  abandoned  vehicle problem which costs the municipality $100                 
  thousand dollars  a year  to control.   He  stated that  the                 
  proposed legislation would provide the municipalities a more                 
  effective tool to address that concern.                                      
                                                                               
  Representative Martin asked how the legislation would effect                 
  the tax cap and  if that decision would be presented  to the                 
  voters.  Mr. Rogers thought that shift would stay within the                 
  tax cap; instead, there would be a shift to the tax  burden.                 
  The  changes would  not require  support of  the voters  but                 
  rather approval of the Assembly.                                             
                                                                               
  RICHARD  WOODIN,  (TESTIFIED  VIA   TELECONFERENCE),  ALASKA                 
  AIRMEN  ASSOCIATION,   KENAI,  spoke   in  support   of  the                 
  legislation which would  provide a means to  reduce personal                 
  property  taxes  inclusive  of  boats  and  airplanes.    He                 
  remarked that solution would be "more equitable".                            
                                                                               
  Representative Navarre pointed out that a municipality would                 
  be precluded from  implementing the taxes  until 1998.   Co-                 
  Chair  Hanley  advised current  language  in the  bill would                 
  provide the Department  time to  make the necessary  changes                 
  for the smooth operation of fee schedules.                                   
                                                                               
  BONNIE   GOLDEN,   (TESTIFIED  VIA   TELECONFERENCE),  KENAI                 
  PENINSULA  BOROUGH, KENAI,  noted that  the Kenai  Peninsula                 
  Borough Assembly  and administration  support HB  272.   She                 
  advised that  the bill  would amend  the Alaska  Statutes by                 
  adding a new subsection to A.S.  28.10.431.  If amended, the                 
  Statutes would provide municipalities the option of revising                 
  the tax  schedule as  it applies to  motor vehicle  taxation                 
  within their jurisdiction.  Revisions could not be made more                 
  that once every two years.  [Copy of testimony on file].                     
                                                                               
  KEVIN RITCHIE, ALASKA MUNICIPAL LEAGUE, ALASKA CONFERENCE OF                 
  MAYORS, JUNEAU, voiced  support of the  proposed legislation                 
  noting  that  it was  a  high  priority for  both  groups he                 
  represented.  He  offered to  answer questions of  Committee                 
  members.                                                                     
                                                                               
  Representative   Martin  asked   why   the  people   of  the                 
  municipality were not  given the opportunity to  discuss the                 
  impact of the new taxes.  Mr. Ritchie stated that any change                 
  would be  made by "ordinance".  The  ordinance process makes                 
  it difficult to pass  a tax which would require  receiving a                 
  community  consensus  on how  to  best allocate  the burden.                 
  Strict  allocation  of revenue  is not  usually done  on the                 
                                                                               
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  municipal level, although  the intent  is honored in  almost                 
  all cases.                                                                   
                                                                               
  In    response    to   Representative    Martin's   comment,                 
  Representative Navarre  clarified that  fees were  raised to                 
  reflect the  Department's true  costs  of administering  the                 
  program.  The service provides a "win/win" situation for all                 
  parties  involved   and  has  been  negotiated  between  the                 
  Department  and  the municipalities  for  the fair  costs of                 
  running the program.   Representative Martin argued  that it                 
  would  be  a  win/win  situation  for  everyone  except  the                 
  taxpayer.     Representative   Navarre  stressed   that  the                 
  Department should set the fee by regulation.                                 
                                                                               
  Co-Chair Hanley pointed  out the program would  be optional.                 
  The   language  of  the   legislation  would   provide  that                 
  flexibility if desired by the municipality.                                  
                                                                               
  (Tape Change, HFC 96-28, Side 2).                                            
                                                                               
  DOYLE  HOLMES,  (TESTIFIED  VIA TELECONFERENCE),  ANCHORAGE,                 
  testified in support of passage of HB 272.  He remarked that                 
  it would  result in  increased revenue  to the  State.   Mr.                 
  Holmes noted that the flat tax passed last year, allowed the                 
  municipality to make  that tax  a portion  of their  revenue                 
  source.  With passage of the legislation, the Assembly would                 
  then be able to implement the  flat tax on automobiles which                 
  would also increase State revenues.                                          
                                                                               
  Representative Navarre  MOVED that work  draft, #9-LS0841\F,                 
  Ford, 1/26/96,  be the version before the  Committee.  There                 
  being NO OBJECTION, it was adopted.                                          
                                                                               
  Representative Navarre MOVED to  report CS HB 272  (FIN) out                 
  of Committee with  individual recommendations  and with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CS HB  272 (FIN) was  reported out  of Committee with  a "do                 
  pass"  recommendation  and   with  a  fiscal  note   by  the                 
  Department of Public  Safety and a  zero fiscal note by  the                 
  Department of Community and Regional Affairs.                                

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