Legislature(1995 - 1996)
02/21/1996 01:42 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HJR-49 DEDICATED HIGHWAY FUND CHAIRMAN GARY DAVIS said a subcommittee met last week to discuss the language of HJR 49. He apologized for the oversight of not including a member of the minority in those discussions. He said this discussion led to a work draft form of CSHJR 49(TRA), version 9-LS1178\K. REPRESENTATIVE BILL WILLIAMS made a motion to adopt CSHJR 49(TRA) as the working document. Hearing no objection, CSHJR(TRA) was adopted as the working document for the House Standing Committee on Transportation. CHAIRMAN GARY DAVIS said the essence of the change made and incorporated in CSHJR 49(TRA) is a change from a highway to a transportation fund. The transportation fund creates a fund for the revenues derived from the propulsion of motor vehicles for the operation and maintenance of roads and highways and also sets up a fund for revenues derived from marine fuel taxes to be used for the construction and improvement of harbor facilities. Number 151 REPRESENTATIVE JAMES expressed concern relating to the inclusion of marine taxes within CSHJR 49(TRA). She said she had kept the original HJR 49 narrow in order to get the two-thirds vote needed to put the resolution on the ballot, and to get the votes necessary to make it a constitutional amendment. Number 213 REPRESENTATIVE JAMES said the fiscal note, she believed, would prevent the passage of CSHJR 49(TRA). She said the fiscal note identifies that marine fuel taxes go for construction and improvement, of which only 37 percent have been utilized in the past. She said the remaining 63 percent of the taxes had gone into the general fund used for ordinary expenses. She said, as a result, a huge fiscal note would be required for CSHJR 49(TRA). Number 295 CHAIRMAN GARY DAVIS, "you yourself have addressed the fiscal note with the three-fifths vote to spend outside of the dedication area, so that is the only answer or area we could go to, to address that, whether that is enough to satisfy that concern or not, I'm not sure." He believed that the inclusion of the marine component would improve its chances of passing because of gaining support from the coastal communities in the state of Alaska. Number 420 REPRESENTATIVE BRICE asked how the two funds would be segregated in the fiscal note. He mentioned that only a minimal amount of money should be spent on administrative costs, leaving as much as possible for use on construction and development of transportation needs in the state. Number 506 BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division, Department of Revenue, responded to the question regarding the fiscal note. He said currently the marine fuel taxes are deposited into the general fund with appropriations coming out of the fund. He said research would need to be done to determine whether the amount spent on harbor facilities, in the capital or operating budget, is equal to the amount of the taxes. He said information from Office of Management and Budget (OMB) would need to be received to make that determination and whether a fiscal note is needed. Number 596 CHAIRMAN GARY DAVIS commented that it might be possible that we are spending all the marine fuel tax revenues collected. MR. BARTHOLOMEW said that it might be possible. Number 621 REPRESENTATIVE JAMES said according to testimony from the Department of Transportation and Public Facilities (DOT/PF), currently, only 37 percent of the marine fuel tax is being spent on maintenance of harbor facilities. She said the rest of the money is remaining in the general fund. She requested that Mr. Kito comment on this information. Number 676 SAM S. KITO III, Special Assistant, Office of the Commissioner, Department of Transportation and Public Facilities, commented that the reference to 37 percent was an average taken over five years. The 37 percent, of the marine fuel tax, included revenue that went to the DOT/PF for harbor construction projects. The maintenance dollars that the state or department expends on the harbors is an unknown amount at this time. CHAIRMAN GARY DAVIS remarked that this might be a negligible fee and commented that operation costs and basic maintenance costs come from local slippage and moorage fees. Number 715 MR. KITO said many of these harbors are managed by the municipalities. Number 726 REPRESENTATIVE JAMES pointed out that 63 percent of the marine fuel tax goes into the general fund to pay for other things. She said a vacancy of 63 percent, from the general fund, would need an attached fiscal note. She said either the general budget would have to be cut by that amount or the capital budget would need to be increased by this amount. She added that the inclusion of a legislative four-fifths vote to use any additional funds for other purposes would be difficult. REPRESENTATIVE JAMES said it is in this area where the difference between a fund for highway and marine fuel taxes differ. Currently the revenue derived from the highway fuel tax is less than the amount expended, whereas there is money derived from the marine fuel tax being used for other things. Number 835 REPRESENTATIVE DON LONG mentioned the 37 percent of the marine fuel tax and said he hadn't seen anything in the constitution that dedicated that marine fuel tax to a marine fund. Number 855 MR. KITO said the 37 percent of the marine fuel tax is an estimate based on what DOT/PF has spent on capital expenditures on marine or harbor systems, averaged out, compared to the amount collected in taxes. Number 871 REPRESENTATIVE LONG clarified that everything goes into the general fund, but this 37 percent has been identified as the amount of money expended. Number 880 REPRESENTATIVE BRICE said approximately three times as much is being spent on highway maintenance out of the general fund than what is being brought in from the highway fuel tax. Number 925 FRANK DILLON, Executive Director, Alaska Trucking Association, Incorporated, was next to testify via teleconference from Anchorage. He was in support of a dedicated fund as specified in CSHJR 49(TRA). He said in 1990, his company suggested a dedicated fund derived from highway money collected from highway users to be put back for the maintenance of the highway. Number 969 MR. DILLON said the language contained, on page two, line two, "or operating costs", is of concern. He said his company would not support CSHJR 49(TRA) if that language is included. He said this fund should be established for maintenance only in a manner that is clear and narrowly defined. He said the language of this definition should indicate that it is for maintenance of the existing transportation infrastructure with current vehicle rights- of-way. Number 1015 MR. DILLON said his industry does not envision that the DOT/PF's budget should be covered by what is collected in a maintenance fund. He said the community of Alaska highway users is small and cannot fund DOT/PF's budget. He said the fund should collect taxes, that are reasonable, to maintain the highways and desist from the practice of deferred maintenance. He said this policy of deferred maintenance means that the job is done later at a greater expense. He said the situation now, is that the maintenance has been deferred to the point where the DOT/PF is, in some areas, uncertain about the longevity baseline of their highways. He said money will need to be expended to bring the highways and roads up to par. Number 1093 MR. DILLON said the industry looks at the DOT/PF's budget with trepidation. He said the average tractor-trailer currently pays a little bit in excess of $7,000 in state, local and federal taxes and fees, to operate in the state of Alaska. The combined contribution, by truck users within the state and truck users outside the state, is approximately $90 million per year to the treasury of the state of Alaska. He said this figure was derived from the fact that the industry gets back approximately seven to one on highway truck fund dollars, and approximately 40 percent of the federal highway trust fund is money that comes directly out of the trucking industry's pocket. This money is paid by truck users within and outside of the state. He said his industry makes a significant contribution for highway maintenance and new construction. He hoped that the reauthorization of the highway bill in 1997 will free up money for general highway maintenance purposes so that more maintenance can occur then has in the past. MR. DILLON said by establishing a dedicated fund, with a clear understanding that this fund is going to be used to improve the situation for Alaska highway users, is a marketable device in getting people to accept a higher highway fuel tax. The polling done by his industry indicates that without some sort of dedication to funding, people don't trust that paying a higher fuel tax will result in better roads. He cautioned that if a higher fuel tax merely results in higher spending at DOT/PF, the state gains nothing and the public feels they are paying an even greater subsidy to the general fund and other uses than they do now. Number 1205 CHAIRMAN GARY DAVIS said, from committee discussions, there is agreement concerning the language, "or operating costs". He said the definition suggested by Mr. Dillon would put everyone agreement. He said, in discussions by the subcommittee relating to operating costs, the proposals included maintenance of the roads and facilities. He said the discussion of facility maintenance included the fencing around the DOT maintenance facility, the buildings, the occasional need of new fuel pumps, painting of the buildings, as well as other things. He said you could get as detailed as the operating expenses, operators, superintendents and supervisors. He said these are the things the committee is addressing when maintenance and operating cost is included and are found in statutory definitions. He asked if Mr. Dillon had the same understanding in his definition of maintenance. Number 1289 MR. DILLON said his perception of maintenance included more than simply maintaining the highway features such as ditches and drainage, but he wanted to see the language confined as narrowly as possible to the actual maintenance of the roadway itself. He mentioned the confusion surrounding the marine highway system and exactly what things would be eligible, in terms of maintenance expenses. He mentioned that the Alaska Marine Highway System is defined as a highway. He said, even with a tax of 50 cents a gallon, the fund would probably not have enough money to take care of the DOT/PF's maintenance desires. He said the DOT/PF has been inadequately funded for some period of time as seen in their budget over the past ten years. The DOT/PF has been asked to do more, in terms of added lane miles and meeting federal requirements, without receiving adequate funding. He said the state is behind, in terms of bridge maintenance and pavement maintenance, to the point that it will cripple the state's economy. He said without an investment in the infrastructure, a steady and ongoing quality maintenance program, economic development won't occur because people will not locate in such an area. Number 1385 CHAIRMAN GARY DAVIS said the committee would consider all of his concerns and would address them in the legislation. Number 1413 MARLA ATKINS testified via teleconference from Cordova. She asked for clarification of whether the state cross- uses funds for maintenance of roads, harbors and new construction or whether they are separated individually by mode. Number 1441 CHAIRMAN GARY DAVIS said the tax revenues are all put into the general fund and, as needed and approved by the legislature, they are distributed to different accounts. Number 1446 MS. ATKINS referred to page one, Section 7, discussing dedicated funds, she read "the proceeds of any state tax or license shall not be dedicated to any special purpose. This provision shall not prohibit the continuation of any dedication existing prior to 1956", and asked if this meant that there were dedicated taxes from gas taxes. Number 1474 CHAIRMAN GARY DAVIS said there are dedicated funds, not specifically fuel taxes, but that Section 7 relates to any dedicated funds in the state and mentioned the Fisherman Fund as an example. Number 1499 MS. ATKINS referred to Section 18, on page one, regarding the transportation fund and asked if the taxes from the various modes would be placed into one account or whether it would be segregated into specific accounts relating to the specific taxes. Number 1524 CHAIRMAN GARY DAVIS said the fund is broken down by subparagraph one and two, which separated the highway funds from the marine funds. Number 1539 MS. ATKINS asked how this was going to work if there was not currently enough money for the highways. CHAIRMAN GARY DAVIS said hopefully funds would be established for highway maintenance. He said, currently, only $24 million is being generated and $75 million is being spent. He said CSHJR 49(TRA) is only a first step. MS. ATKINS clarified that currently the funds can be crossed over, but under CSHJR 49(TRA) this couldn't happen. Number 1569 CHAIRMAN GARY DAVIS said money could be utilized for other purposes with a three-fifths vote of the legislature. Number 1580 MS. ATKINS said she supports the concept of the dedicated gas fuel tax. She felt the gas tax would need to be raised in order to maintain the highways. She said the highway infrastructure is badly in need of work throughout the state. She said, if we are going to develop tourism and economic development in Alaska, we need to provide an infrastructure. She said the state gets a higher return on the gas tax than states back in the East Coast receive. MS. ATKINS said she supports a gas tax and would want a dedication of the fuel taxes to improve the road system, bring maintenance up to standard and for new roads. She mentioned that Alaska has fewer line miles than any state in the union which is difficult in terms of tourism. MS. ATKINS expressed concern over administrative costs versus maintenance costs. She referred to the former Lieutenant Governor Coghill (indiscernible) "understood that they were going to revamp everything down there if they could and try to leave more people in the field and less people in the Administration, instead, it turned out we're back to cutting in the field." She referred to Cordova and mentioned the states cutback of eleven to six men for maintenance. She said they cannot keep up with the maintenance in Cordova. MS. ATKINS concluded that she wanted to see a raised gas tax that is dedicated to a specific fund in order to get the public to vote for it. Number 1704 BARBARA HUFF TUCKNESS, Teamsters Local 959, testified via teleconference from Anchorage. She said her organization represent truckers and various people who use the highway infrastructure. She said truckers deal with the infrastructure when they are going up mountain passes with double loaders and de-booting them in order to take one trailer at a time through some of those areas. She said this is less of a problem then it has been in the past. She said Teamsters Local 959 supports CSHJR 49(TRA). She said a focus needs to be placed on the maintenance of the highways. Number 1782 REPRESENTATIVE LONG asked how the motor fuel and water taxes are separated, especially in areas where there is only one pump station. Number 1803 MR. BARTHOLOMEW said, currently, the identification is made by the qualified fuel dealer or wholesaler who is paying the taxes upstream from a central spot. When the fuel is sold a determination is made regarding how the fuel will be used. He said there is some inevitable crossover, but the Department of Revenue (DOR) records the type of fuel tax according to how it is placed in the tax returns. Number 1850 CHAIRMAN GARY DAVIS clarified that it is up to the wholesale dealer to record it and hopefully they are doing this to the best of their ability. Number 1862 MR. BARTHOLOMEW said there would need to be some sort of education process put on by the DOT/PF and the DOR. Number 1872 REPRESENTATIVE BRICE questioned how the different types of tax, associated with different fuel use, was going to be differentiated, especially in rural Alaska. He also questioned the staff turnover and whether or not that would impact this process. Number 1958 MR. BARTHOLOMEW said the DOR would set up some guidelines when the wholesalers are dispatching it to the rural retailers, so they can try to come up with an average, periodically reviewed and altered. Number 1976 REPRESENTATIVE BRICE said this system should not be too precise. MR. BARTHOLOMEW said the concern would be one of creating more paperwork. He said the DOR and the industry could develop some guidelines to allow the industry to do some fuel tax determinations. REPRESENTATIVE BRICE said fuel used for marine purposes "probably runs 35, 40, up to 50 percent of gas sales." REPRESENTATIVE LONG said it would also depend on the time of the year. REPRESENTATIVE JAMES clarified that unleaded gas could be put in boat motors. Number 2035 REPRESENTATIVE LONG asked if these taxes included snow machines and all terrain vehicles. MR. BARTHOLOMEW said there is a separate tax called the off-highway use tax. He said if a vehicle was used off-highway there is a 2 cent tax. He explained that the 8 cent per gallon tax is paid, but an exemption can be filed to receive a 6 cent per gallon rebate. He said the rebate allows the DOR to track how much off highway use there is in the state. Number 2082 MR. DILLON interjected that there is some strict accounting by the federal government for fuel tax purposes in order to prevent people from paying the tax. He mentioned that because marine fuel tax was a lesser amount than the highway fuel tax, he wouldn't be surprised if trucks in Southeast were running around using boat fuel. Number 2125 RAY GILLESPIE, Lobbyist representing the City of UnAlaska, Gillespie and Associates, was next to testify. He said the city of UnAlaska supports CSHJR 49(TRA) with the inclusion of the marine fuel as they believe it is a good first step to addressing some of the funding inadequacies for ports and harbors. He mentioned the inclusion of marine fuel tax in the CSHJR 49(TRA) will have a broader appeal statewide. Number 2154 REPRESENTATIVE JAMES asked what the total amount of revenues collected from marine fuels was. MR. KITO said this information was passed out and available in the committee packet. REPRESENTATIVE JAMES said a fiscal note, prepared for the highway use fund, changing $21 million from general fund to the highway fund, should incorporate the total amount being received from marine fuels from the general fund to the transportation fund. Number 2200 CHAIRMAN GARY DAVIS said he would like to pass CSHJR 49(TRA) with the understanding that an updated fiscal note is requested. He then asked Mr. Kito if the definition of maintenance and operating cost was clearly understood in CSHJR 49(TRA). Number 2222 MR. KITO felt it was clearly understood, but added the definition of items, funded by this dedicated fund, could be clarified under statute. Number 2234 REPRESENTATIVE BRICE said, as he understood Mr. Dillon's concern, that a statute could be developed allowing CSHJR 49(TRA) more expenditures to be used for the administrative costs of DOT/PF versus direct maintenance. Number 2258 MR. KITO said the language, as worded in CSHJR 49(TRA), would have to include some direct relationship to maintenance of the highway system. Number 2271 REPRESENTATIVE BRICE said by definition, Mr. Kito's and the commissioners salary can be attributable to maintenance costs. He suggested tightening the language of CSHJR 49(TRA). Number 2298 CHAIRMAN GARY DAVIS asked if the administration could allocate a portion of their time under the language of CSHJR 49(TRA). Number 2309 MR. KITO said the only place the DOT/PF has any type of cost allocation is in the federal highway funding. He said DOT/PF tries to build a federal highway department for whatever costs the department can, so within the DOT/PF a figure is made and incorporated into that budget. In regards to maintenance, the realistic approach would not include DOT/PF administrate costs within that budget. He said the accounting procedures involved would be tremendous. Number 2338 REPRESENTATIVE JAMES said, in accounting principles, that maintenance would include any appropriate administrative or other costs that directly related to the maintenance. She expressed concern over the openness of such language. TAPE 96-6, SIDE B Number 000 REPRESENTATIVE JAMES said taking operating costs out of CSHJR 49(TRA), makes it perfectly clear and that the legislature is not intending to allow administrative costs relating to roads and highways out of this fund. She added that statutes could be added to define what the maintenance definition covers. Number 029 REPRESENTATIVE JAMES made a motion to delete, page two, line two, "or operating costs". Hearing no objections this deletion was made to CSHJR 49(TRA). Number 046 REPRESENTATIVE JAMES expressed concern about combining the marine fuel tax with the highway fuel tax. She said this inclusion might gain support in some areas, but lose support in others. Number 061 REPRESENTATIVE WILLIAMS made a motion to move CSHJR 49(TRA) amended from committee with individual recommendations and the attached to- be-amended fiscal note. Hearing no objections, CSHJR 49(TRA) was moved from the House Standing Committee on Transportation.