Legislature(1995 - 1996)
03/21/1996 01:50 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE JOINT RESOLUTION 49 Proposing amendments to the Constitution of the State of Alaska creating a highway fund. REPRESENTATIVE JEANNETTE JAMES testified in support of HJR 49. She stated that HJR 49 proposes amendments to the Alaska State Constitution creating a dedicated transportation fund. The amendments would be placed before the voters of Alaska at the next general election. The legislation would not address an amount of motor fuel tax increase. It would provide a mechanism for allocating the proceeds from the collection of fuel taxes. Representative James stated that the resolution has received wide support relative to the current level of fuel taxes, and that Alaska citizens will be much more likely to accept a necessary increase in their motor fuel taxes if they know the money would be utilized to address the need for improved maintenance of roads and highways. Co-Chair Hanley stated that the committee substitute would remove the portion which dedicated the marine fuel tax, leaving the gas tax portion to be dedicated to highways. Representative James voiced support for the committee substitute. Representative Parnell MOVED work draft #9-LS1178\o, Chenoweth, 3/20/96, be the version before the Committee. There being NO OBJECTION, it was so ordered. Co-Chair Hanley pointed out an additional change of the vote number from 3/5ths to 4/5ths. He stressed that a dedicated fund should not be easily entered into. JOE PERKINS, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (DOTPF), advised that transportation is different from many government services in that the use of 2 that system generates a distinct stream of revenue. The fuel used by motor vehicles as they travel throughout the system is taxed where it is sold. The distinct "user fee" can be dedicated for specific services, thereby, linking the services received to the cost of doing business. He provided the example of the Federal Highway Trust Fund, primarily funded by a national gas fuel tax, and the Airport Improvement Program, funded by an aircraft fuel tax and taxes on airline tickets. Commissioner Perkins noted that Alaska is the only state that does not have some sort of dedicated fund for transportation. Our program is entirely based on federal funding. Managing transportation facilities and keeping them maintained to include winter maintenance requires stable and predictable funding. He stated that the best way to guarantee stable and predictable funding would be by dedicating revenue from public use of the transportation system. Commissioner Perkins added, for a short period of time, Alaska did have dedicated revenue for transportation, which was amended in 1961 by the Legislature eliminating that fund. He pointed out that the State of Alaska does not have a State harbor program. Unfortunately, the feds do not have a dedicated fund for ports and harbors either. Consequently, the State relies on the "hit" or "miss" Corps of Engineers Program which requires specific congressional action for each project. Commissioner Perkins added that approximately $8 million dollars per year is collected by the State via a watercraft fuel tax. Of that amount, a little over $4 million dollars per year has been returned to the coastal communities for harbor work. The Corps of Engineers program is on the down turn and future funding is questionable. The Department recommends that the Committee consider dedicating the watercraft fuel tax for construction and operation of Alaskan harbors. Commissioner Perkins offered to provide Representative Parnell information regarding the 1961 legislative decision to discontinue the transportation dedicated fund. Representative Martin noted that he would not advocate road use taxes being used for boats and harbors. Co-Chair Hanley clarified that the legislation before the Committee would dedicate motor fuel tax to highways. Representative Martin pointed out language on Page 2, Line 2: "maintenance costs of roads and highways and of marine highways by the State..." 3 He suggested that language be deleted. Representative James noted that the statute definition of "highway" includes "marine highways". She pointed out that marine highways were different from ports and harbors. Commissioner Perkins added that the Alaska Marine Highway System is a portion of the national highway system as passed by Congress. Maintenance of some ferry facilities could be considered a legitimate use of the proposed dedicated fund. Representative Martin objected. He thought that issue had been addressed separately in the front section of the budget and should not be included in this fund. Discussion followed among Committee members regarding the use of the dedicated fund for the marine highway system. Representative Martin thought that when the resolution comes before the Alaska voters, that probably over 80% of the voters would not support the idea of the marine highway being included. He suggested inclusion of that portion would defeat the resolution. Representative Grussendorf countered that the State of Alaska receives a sizeable amount of revenue from the marine highway "miles". Co-Chair Hanley pointed out that a 2/3rds vote would be required to pass a resolution in order for it to be on the ballot. He thought that his constituents would be skeptical using a gasoline tax for the marine highway. Voters are willing to pay an increased tax if they believe that it will be going for the purposes that they think it should be used for. That direct link is essential. He suggested a possibility of using program receipts out of the Alaska Marine Highway System for a dedicated fund for the operation and maintenance of the marine highway system. Commissioner Perkins responded to Representative Brown's question regarding the definition of "maintenance" use in the fund. "Maintenance" would be sustaining existing facilities to a useable order. Representative Brown referenced Page 2, Line 7, suggesting that the word "balance" was not appropriate, and recommended that it be deleted. Representative Brown referenced Page 1, Line 15 - 16, inquiring how much additional money would be needed to be added to the $20 million dollars collected by the State. BOB BARTHOLOMEW, DEPUTY DIRECTOR, INCOME AND EXCISE AUDIT DIVISION, DEPARTMENT OF REVENUE, replied that the largest refunds would relate to the off highway tax. Currently, equipment or generators that operate based on motor fuel, but do not operate on the highway, pay eight cents motor fuel tax, claiming a refund from the Department of Revenue 4 (DOR) of six cents a gallon. DOR currently refunds $6.5 million dollars a year. Representative Brown asked if the language in the bill would provide for new refunds or credits on that tax. Mr. Bartholomew stated that DOR understands that language would allow what currently exists. Representative Brown pointed out another concern on Page 2, Line 10, suggesting a change to a 3/4th vote versus a 4/5th vote. She questioned the need to create a higher threshold of accessibility to this fund than that used for the Constitutional Budget Reserve (CBR). Co-Chair Hanley advised that if the fund was to be "dedicated", it should not be accessible. Discussion followed regarding the accessibility to the fund. (Tape Change HFC 96-83, Side 2). In response to a question by Representative Therriault, Commissioner Perkins replied that under the federal rules, there exists certain classification of designated roads and highways. He offered to provide that information to the Committee. KEVIN RITCHIE, STAFF, ALASKA MUNICIPAL LEAGUE (AML), ALASKA CONFERENCE OF MAYORS, JUNEAU, testified that the AML policy statement has voiced support for the increased fuel tax. AML supports HJR 49, and thinks that it would be a "good start" in establishing basic services throughout the State. The legislation recognizes the comprehensive nature of the Alaska highway system. Representative Brown pointed out that there was nothing within the contents of the legislation which would insure support to local activities or roads. Mr. Ritchie agreed that was a concern. He added that AML was interested in any supporting bill which would define how the fuel taxes could be shared. BOB JUETTNER, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE, testified in support of deleting the provision in the legislation which reference the marine fuel tax. FRANK DILLON, (TESTIFIED VIA TELECONFERENCE), EXECUTIVE VICE-PRESIDENT, ALASKA TRUCKING ASSOCIATION, ANCHORAGE, spoke in support of the legislation before the Committee, although questioned inclusion of the marine highway. He commented that taxpayers would prefer that the intent be clearly outlined. He echoed the concerns of Representative Martin in inclusion of that language. Co-Chair Hanley responded to Representative Brown's concern, pointing out that the bill before the Committee strictly 5 dedicates the fuels that are currently flowing. It would not increase taxes. Representative Navarre questioned if an increase in fuel tax would displace general funds or would it be used to improve maintenance to the highway system. He maintained that there will be public pressure to provide for the defined use of that fund. Co-Chair Hanley agreed. Representative Martin MOVED to amend the resolution on Page 2, Line 2, deleting "and of marine highways". Representative Grussendorf OBJECTED. Representative Parnell pointed out that the definition of highways includes the definition of a ferry system. Co-Chair Hanley stated that a specific section would need to be inserted which indicates "not including the marine highway". Representative Martin suggested changing the amended language by deleting "and of" and inserting "except the". Representative Grussendorf reminded Committee members that the marine highway system is an intricate portion of the entire Alaska highway system. There are many visitors who come to Alaska via the ferry system and then move upward to Interior Alaska. This funding would only be used to help maintain the vessels. Representative Martin argued that all highways should be treated equal. The front section of the budget allocates $75 million dollars specifically for the ferry system. He reminded Committee members that all communities in Southeast Alaska would also be able to use the fund for their road systems, not their waterway systems. Representative Grussendorf reminded members that the marine ferry system is a commerce carrier between the communities in those waters. Discussion followed between Representative Grussendorf and Representative Martin regarding the proposed amendment. Representative Parnell suggested finding an agreement which would not pit the two regions of Alaska against one another. Co-Chair Hanley suggested considering the addition of a section to another resolution, which could create a dedicated fund for use of current marine highway receipts specific to that system. Co-Chair Hanley advised that this bill would be before the Committee at a later date, following a more in-depth analysis. Representative Martin WITHDREW the MOTION to AMEND. There being NO OBJECTION, it was withdrawn. HJR 49 was HELD in Committee for further consideration.