Legislature(2003 - 2004)

05/15/2003 08:39 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 106(FIN)                                                                                               
     An  Act   relating  to  tires;  and  providing   for  an                                                                   
     effective date.                                                                                                            
LANDA   BAILY,  SPECIAL   ASSISTANT   TO  THE   COMMISSIONER,                                                                   
DEPARTMENT OF  REVENUE, explained the  bill.  According  to a                                                                   
1996  report by  the Department  of  Transportation &  Public                                                                   
Facilities,  the  use  of  studded  tires  in  Alaska  causes                                                                   
approximately  $5 million  dollars  damage to  the roads  per                                                                   
year.  Most  of the damage  occurs in the high  traffic urban                                                                   
centers  where  rutting is  often  severe and  causes  unsafe                                                                   
driving conditions.                                                                                                             
The Department of Transportation  & Public Facilities repairs                                                                   
the  worst  of  the  damage.    Due  to  limited  maintenance                                                                   
funding,  much  of  it  is  added  to  the  State's  deferred                                                                   
maintenance  backlog.   The bill  would impose  a fee of  $10                                                                   
dollars for each  studded tire sold, resulting  in $2 million                                                                   
dollars in increased revenue.                                                                                                   
Ms. Baily continued,  new tire technology has  been developed                                                                   
in  the last  ten  years to  create stud-less  winter  tires.                                                                   
Those tires  use softer rubber  compounds and  specific tread                                                                   
patterns  to  improve  their  performance  in  snow  and  ice                                                                   
conditions.  The  technology has continued to  improve and is                                                                   
widely available as an alternative to studded winter tire.                                                                      
Representative Berkowitz questioned  why a flat rate had been                                                                   
established  rather  than  a percentage  cost.    Ms.  Bailey                                                                   
replied  that it was  easier to  access a  flat rate  for the                                                                   
retailer than a percentage tire cost.                                                                                           
Co-Chair Harris inquired if the  sales tax becomes law, would                                                                   
the sales  tax be charged  on the cost  of the tire  or would                                                                   
the fee  be added to  that number.   Ms. Bailey did  not know                                                                   
how that would work but offered  to find out the answer.  She                                                                   
recommended that the Department be consulted.                                                                                   
Representative  Kerttula asked what  percentage of  the money                                                                   
raised would actually be used for maintaining the highways.                                                                     
JOHN   MACKINNON,   DEPUTY   COMMISSIONER,    DEPARTMENT   OF                                                                   
TRANSPORTATION  &  PUBLIC  FACILITIES,   responded  that  the                                                                   
Department currently  spends $60  millions dollars a  year to                                                                   
maintain the highways  and that studded tires  alone cause an                                                                   
estimated $5 million dollars damage per year.                                                                                   
Representative  Stoltze  MOVED  to ADOPT  Amendment  #1,  23-                                                                   
GS1127\WA.1,  Crawford/Kurtz,  5/14/03.    Co-Chair  Williams                                                                   
Representative  Stoltze explained  that  the amendment  would                                                                   
guarantee that the tax was not being taxed.                                                                                     
Ms. Bailey  noted that there is  no formal opposition  to the                                                                   
amendment.  She cautioned that  it could cause some confusion                                                                   
for  businesses.   Representative  Stoltze  pointed out  that                                                                   
Subsection  ©  indicates  that  the fees  would  be  itemized                                                                   
separately  on   the  sales  receipt.     He   proposed  that                                                                   
Subsection  © be  removed.   Mr.  MacKinnon interjected  that                                                                   
sometimes when there  are fees, the other fees  and sales tax                                                                   
is not cumulative.                                                                                                              
Representative  Hawker did not  believe that as  written, the                                                                   
current sales  tax proposal  would be  cumulative.   He added                                                                   
that  he  supported  the amendment  as  a  clarification  for                                                                   
anyone reading the bill.                                                                                                        
Representative   Berkowitz   voiced   his  support   of   the                                                                   
amendment, advising that it is  not a good public policy when                                                                   
government "boot straps" a tax on the top of a fee.  Co-                                                                        
Chair Williams  agreed.   Co-Chair Harris  added his  support                                                                   
for the amendment.                                                                                                              
A roll call vote was taken on the motion.                                                                                       
IN FAVOR:      Whitaker,    Chenault,   Berkowitz,    Foster,                                                                   
               Hawker, Kerttula, Stoltze, Harris, Williams                                                                      
OPPOSED:       none                                                                                                             
Vice Chair  Meyer and Representative  Moses were  not present                                                                   
for the vote.                                                                                                                   
The MOTION PASSED (9-0).                                                                                                        
Representative  Kerttula MOVED  to ADOPT  Amendment #2.   Co-                                                                   
Chair Harris OBJECTED.                                                                                                          
Representative  Kerttula explained  that  Amendment #2  would                                                                   
add a new section to repeal of  the prohibition for dedicated                                                                   
funds  and then  dedicate these  funds for  road and  highway                                                                   
Co-Chair  Harris spoke  to his  objection,  claiming that  it                                                                   
would eliminate the fee.  Representative  Kerttula apologized                                                                   
that she had misstated the information  and that it would not                                                                   
take effect until passage of the dedicated fund.                                                                                
Ms. Bailey  stressed that  the proposed  legislation  was one                                                                   
element put  forward by the  Governor to address  the current                                                                   
fiscal problems of  the State.  If the amendment  is adopted,                                                                   
those elements could "fall out" of the overall plan.                                                                            
Representative Stoltze  pointed out that the  amendment fails                                                                   
to change the title and the effective date.                                                                                     
A roll call vote was taken on the motion.                                                                                       
IN FAVOR:      Moses                                                                                                            
OPPOSED:       Chenault,    Berkowitz,     Foster,    Hawker,                                                                   
               Kerttula, Stoltze, Whitaker, Harris, Williams                                                                    
Vice Chair Meyer was not present for the vote.                                                                                  
The MOTION FAILED (1-9).                                                                                                        
Representative  Foster MOVED to  report HCS  CS SB  106 (FIN)                                                                   
out  of Committee  with individual  recommendations and  with                                                                   
the  accompanying  fiscal  note.    Representative  Berkowitz                                                                   
A roll call vote was taken on the motion.                                                                                       
IN FAVOR:      Foster, Hawker, Meyer, Stoltze, Whitaker,                                                                        
               Chenault, Williams, Harris                                                                                       
OPPOSED:       Berkowitz, Kerttula, Moses                                                                                       
The MOTION PASSED (8-3).                                                                                                        
HCS CS SB 106 (FIN) was reported out of Committee with a "do                                                                    
pass" recommendation and with fiscal note #2 by the                                                                             
Department of Revenue.                                                                                                          

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