Legislature(1995 - 1996)

02/21/1996 01:42 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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            
 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           
 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              
 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                        
 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             
 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-           
 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           
 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                
 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               
 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            
 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                   
 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           
 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                          
 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              
 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             
 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             
 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.                    

Document Name Date/Time Subjects