Legislature(1995 - 1996)

03/21/1996 01:50 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                 
  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.                                      
  PUBLIC  FACILITIES (DOTPF),  advised that  transportation is                 
  different from many government  services in that the  use of                 
  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..."                                        
  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                 
  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.                     
  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                 
  (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                 
  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.                                                                   
  testified  in  support  of  deleting  the provision  in  the                 
  legislation which reference the marine fuel tax.                             
  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                 
  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.                      

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