Legislature(2003 - 2004)
04/01/2003 09:02 AM Senate FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 106(TRA) "An Act relating to studded tires; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken explained this bill "imposes a ten dollar fee on retail sales of studded tires in Alaska." GEORGE LAVASSEUR, Acting State Maintenance Engineer, Office of the Commissioner, Department of Transportation and Public Facilities testified this bill would impose the $10 surcharge on the purchase of all studded tires beginning July 1, 2003. He cited Department of Revenue estimates this would generate approximately $2 million annually and would cost approximately $50,000 to administer. He noted businesses collecting this surcharge would be allowed to retain five-percent of the surcharge, up to $1,000, to cover expenses. Mr. Lavasseur commented that many drivers use studded tires as an aid to winter driving to improve traction on icy surfaces. He shared that an analysis of Alaska winter driving conditions found that primary roads with highest traffic roads are covered with ice or snow only about five-percent of the time. The remaining "studded tire season" he reported that pavements are bare and/or dry. Mr. Lavasseur instructed that pavement in Alaska wears at a rate of ".3 inches per million studded tire passes," which he translated "we lose about a dump truck full of asphalt" every four million cars with studded tires traveling over a mile of roadway. He added that each studded tire causes approximately $50 worth of damage over its life. He informed that the Department of Transportation and Public Facilities expends over $5 million annual to repair ruts caused by studded tires. Mr. Lavasseur directed attention to a photograph and stated the condition of the road depicted is typical of "what we're seeing" in portions of Southcentral Alaska, as well as in Juneau. Senator Bunde relayed that he has heard that this damage caused by studded tires does not occur on roadways in Interior Alaska. He had been told this is due to the usage of different asphalt applications. Mr. Lavasseur attributed the lesser-studded tire wear to less vehicle traffic and different weather conditions in Interior Alaska. He stated that more icepack is present on Interior roads during a larger percentage of time. Senator Bunde asked if the different damage rates are in any way related to the materials and application methods used. Mr. Lavasseur answered it is not related. He stressed the Department is "doing several things" to attempt to improve asphalt performance. He admitted that the asphalt used in Alaska, which originates as North Slope crude oil, is soft. He listed the additives to strengthen the asphalt, including the use of larger and harder rock material imbedded in the asphalt. He qualified that rock in Alaska is very soft due to the areas geological newness. He listed the two hard rock sources in Alaska, one at Cantwell and the other near Haines and informed of the high cost to transport the hard rock to the road sites. Mr. Lavasseur gave the Egan Expressway in Juneau as an example and detailed the project utilizing materials from Haines and Washington State. He remarked this project is "holding up quite well." He spoke to the difficulty in locating hard rock sources in the interior regions of the State. Senator Bunde asked if it has therefore been determined that it is less expensive to repave the road than to import hard rock. Mr. Lavasseur replied that no studies have been conducted to research this matter; however the "economy" in utilizing Alaskan hard rock is "very important" to the refiners in Alaska. He added that it is expensive to barge hard rock into the State. He informed that the Department is initiating a project to ascertain the amount of hard rock in the area near Cantwell. Senator Bunde interpreted the witness' testimony to state that roads in Alaska are "softer" due to the intent to subsidize asphalt production from North Slope crude oil. Mr. Lavasseur countered that "a combination of factors" are responsible. He stated that the Department is "fixing" the Alaskan asphalt utilizing modified asphalt. SENATOR JOHN COWDERY told of studies conducted on certain streets in Anchorage, which show minimal development of ruts due to the addition of rubber and other materials to the asphalt. Mr. Lavasseur added that speed also impacts the wear of pavement. Senator Cowdery indicated the cost per studded tires is approximately $11 more per tire than non-studded tires. He opined that "lightweight" studded tires hit the pavement with the same force and cause the same amount of damage. He then told of an "ice tire" developed in Finland that could be utilized year-round. Although the cost of these tires is higher, he asserted options other than studded tires are available. Co-Chair Wilken drew attention to a packet of the "lightweight" studs, which he would share with Committee members. Senator Taylor spoke of cement roads in Wrangell and the process of two-inch overlays of asphalt on other roads. He compared the wear on both road types and questioned why cement is not more widely used. Mr. Lavasseur replied that Portland cement is excellent for use in areas with a stable base. However, in areas with unstable bases he stated the cement cracks, noting that most of Southcentral Alaska has an unstable base due to freezing and thawing. Senator Taylor challenged that the base of Egan Expressway is stable. He asked if the Anchorage area roads were "that unstable" that cement pavement would be unviable. Mr. Lavasseur answered yes. Senator Taylor suggested chains would cause greater damage to roads then studded tires. Mr. Lavasseur detailed "an aggressive chemical program" of magnesium chloride utilized in Southcentral Alaska to keep roads as ice free as possible throughout the winter. Senator Cowdery asked the witness to compare damage caused by cars versus trucks. Mr. Lavasseur listed the width of cars versus trucks noting the width of the ruts match the width of mid-size passenger cars, indicating the majority of the damage is caused by cars. Mr. Lavasseur then showed a photo of a lightweight studded tire. He described how the ruts are caused and reported that for every one million passes, approximately one-tenth of an inch of roadway is eroded. He stated that with the 40,000 vehicles traveling the Glenn Highway daily, the damage accumulates in a short period of time and the road must be repaired every two to three years. Mr. Lavasseur stressed that the ruts cause hydroplaning when filled with rainwater, and also hamper the visibility of drivers traveling behind a vehicle riding in a rut as the water sprays. He furthered. Senator Taylor asked if differential exists between the wear of cement and asphalt. Mr. Lavasseur told of his experiences in the 1960s with cement roads in the State of Minnesota. He stated that studded tires caused significant damage to the cement roads and therefore the cement roads were discontinued. BILL CORBUS, Commissioner, Department of Revenue, read a statement into the record as follows. The Governor and I very much appreciate this Committee's consideration of this important legislation. As you may be aware, the companion bill, House Bill 173 was substantially changed in the House Transportation Committee last week to apply a $2 fee on all tires. The Governor is not opposed to the changes contained in CS HB 173. Why is this legislation necessary? SB 106 is a critical and necessary element of the Governor's overall budget investment plan and investment plan for FY 2004 and he recently submitted it to you for your consideration. Governor Murkowski's primary mission is to build a robust growing economy and generate sufficient State revenue to fund programs and services that Alaskans need and expect. Passage of SB 106 will ensure increased State revenues and may prevent elimination or diminution of other important programs and services. What this legislation will accomplish. SB 106 will attach a fee of $10 per studded tire sold in Alaska to begin in July 1, 2003. Businesses, including tire dealers, service stations and garages will fill out monthly reports of studded tire sales and remit the fees to the Department of Revenue containing five percent of the fees not to exceed $300 per month. Anticipated additional revenue to the State of Alaska is approximately $2 million. The amendment contained in CS HB 173 to apply a $2 fee to all tires is expected to generate revenue of approximately $2.5 million. Impact on Alaskan businesses. Although Alaskan businesses will be called upon to collect and remit the fees, SB 106 allows studded tire sellers to retain their administrative costs up to five percent, not exceeding $300 per month. I believe this allowance is fair. In conclusion the fee of $10 per studded tire is necessary and essential to the Governor's spending and investment plan for Alaska. The Department of Revenue can and will efficiently administer the fee as discussed in the Department's fiscal note. I urge and appreciate your serious consideration of this legislation and ask that you pass it out of Committee today with your support for enactment this session. Senator Bunde voiced concern about the volume of paperwork and asked if quarterly reports have been considered. Mr. Corbus was unsure if this had been considered and indicated the Department would not oppose a quarterly reporting method. Senator Taylor asked if the intent is to dedicate the revenues generated by the fee to highway maintenance or repairs. Co-Chair Wilken answered the revenues would be deposited into the State general fund. JIM JOHNSON, President, Johnson Tire Service, testified via teleconference from an offnet location in Anchorage and referenced his written testimony [copy on file]. He told of testimony given by physicians and engineers serving on the Swedish Road and Transport Research Institute (VIT) at the 1994 Winter Cities Conference, attesting to the increased deaths and property damage that would be caused by a discontinuance of studded tires. As a result of these findings, he informed that the VIT participated in development of lightweight environmental studs weighing 1.1 grams and also recommended better road construction, particularly to the road base. He relayed that the VIT charged the Alaska Department of Transportation and Public Facilities with building "terrible roads" and recommended the use of the lightweight studded tires, which would minimize damage. He stated that his company introduced environmental lightweight studs to North America in 1994 in an attempt to be "good corporate citizens". Mr. Johnson opined that the damage caused by studded tires is less significant than claimed by others and pointed out that the annual cost of $5 million to repair roads has not increased since 1993, which he calculated would have increased over time without the use of the newer lightweight studded tires. He claimed the damage is the result of poor quality road base, which is not rectified with resurfacing. Mr. Johnson charged that this legislation would impact lower income residents, who might not be able to afford the $40 additional cost to purchase studded tires. He reported, "Studded tires is the most proven safety device that is known to man." He attested that although ice tires, also known as "friction" tires, have improved driving safety, they do not compare to the starting and stopping ability and the length of wear of studded tires. He questioned why lightweight studded tires were not mandated rather than the fees for all studded tires proposed in legislation. He suggested assessing a $2 fee for all tire purchases and utilize the revenues for better road construction. He predicted that if better roads were constructed damage would decrease by 30 percent, and mandated use of lightweight studs would decrease road damage by 15 percent. Mr. Johnson remarked this legislation would benefit no party, and the issue was creating revenue rather than the use of studded tires. He remarked, "If you're going to tax safety, you have a problem." Senator Cowdery referenced a study conducted by the University of Alaska and asked if the use of studded tires has resulted in a per capita decline in the number of accidents. Mr. Johnson did not know, but emphasized that if motorists were discouraged from purchasing studded tires, fatalities and property damage would increase and more sand, gravel and chemicals would be required to provide better traction on roads. Senator Cowdery asked the number of states with similar weather conditions to Alaska that ban studded tire use. Mr. Johnson listed Wisconsin and Minnesota, but pointed out that no bans have been issued since 1975 and that studded tire use is permitted on emergency vehicles. He stressed that injury rates "skyrocketed" when the bans were implemented. Senator Cowdery asked about bans on studded tire use in Canada. Mr. Johnson that use of studded tires is permitted in Canada with the exception of Toronto. Senator B. Stevens asked if the witness has reviewed the committee substitute for HB 173, which would impose a $2 fee for the purchase of all tires. Mr. Johnson supported that bill. Senator B. Stevens took issue with the assertion that more accidents would occur. He stated that he has driven in the State his entire life, never with studded tires and has had no accidents. He questioned the applicability of the statistics showing increased accidents in Wisconsin and Minnesota following the studded tire ban, suggesting that winter conditions over the time period could have been more severe than average. Mr. Johnson and Senator B. Stevens debated the issue. CHUCK MCGEE, United States representative for Ugigrip, testified via teleconference from an offnet location in opposition to the bill. He told about the lightweight tire studs manufactured by Ugigrip and other manufacturers, which have been proven to reduce road wear. He attested to the better braking and traction capabilities of studded tires, citing the Swedish VTI studies. He stated that any cost increase would cause drivers to not use studded tires. He spoke to the benefits of the newer studs and the lesser damage caused by them. RICHARD NORDNESS, Executive Director, Northwest Tire Dealers Association, testified via teleconference from offnet site in the state of Washington in opposition to the bill. He stated the Association's position that studded tires is an important safety feature for Alaskan residents. He remarked that a $10 per studded tire fee would be have a negative impact on winter driving safety, as many motorists could not afford the $40 total and that many drivers would chose to not purchase the tires. Mr. Nordness also opposed tire dealers acting as tax collectors. He told of efforts in conjunction with legislatures in Washington, Oregon to promote the use of lightweight studs. Co-Chair Green clarified the Association represents tire dealers in the states of Alaska, Oregon and Washington. Mr. Nordness affirmed. Co-Chair Green asked if the Association conducted a comparison of the licensing and taxation of vehicles registered in the three states. Mr. Nordness replied the Association had not conducted such studies. Co-Chair Green predicted the total licensing and taxation cost for vehicles is significantly less in Alaska. Senator Bunde asked if studded tires are permitted in Oregon and Washington. Mr. Nordness answered they are. SFC 03 # 37, Side B 09:49 AM BRUNO WESSEL, Bruno Wessel Inc., Member, National Safety Council, and Member, Scandinavian Tire and Rim Organization, testified via teleconference from an offnet location in Sarasota, Florida, told of his experiences as an importer of tire studs since the 1960s. He opposed this bill, as some motorists could not afford the tax. He disputed the excuse that ice is only present on roadways five percent of the year, arguing that in Minnesota it was learned this was the time that 90 percent of accidents occurred. Mr. Wessel spoke to the ineffectiveness of overlaying roads because the ruts return rapidly. He stressed that the roads must be "milled", or ground out, before being relayed. He referenced "government studies" that found that one truck is equal to 6,000 car passes. Mr. Wessel also spoke of the VTI and reiterated that findings that reduced studded tire use would increase accidents and fatalities. He asserted that studded tires have "the added benefit of roughening road and roughening the ice," which provides better traction for vehicles without studded tires. Senator Cowdery commented he has observed vehicles in Alaska's body shops for repair that had studded snow tires. Mr. Wessel emphasized that although some vehicles with studded tires would be involved in accidents, they would be less likely than vehicles without studded tires. He informed that he was a delegate at the Winter Cities Conference in 1994 and has traveled to Alaska on several occasions. CLINT QUIGGLE testified via teleconference from Mat-Su as a private citizen about his 36 years "in the tire business" and in opposition to this bill. He suggested the focus is on tax revenue, but stressed the safety issue. He stressed that studded tires prevent accidents and save lives, particularly on ice covered roads. He predicted that because some motorists could not afford the tax they would continue to drive with old studded tires or without studded tires. Senator Cowdery asked if witness agreed the average cost per studded tire is $11 higher than for non-studded tires. Mr. Quiggle responded the amount varies from $10 to $12 per tire. Senator Cowdery asked if the witness had experience with ice tires. Mr. Quiggle reported that after driving with studded tires for 30 years, he experimented with ice tires this year. He liked the tires, but stressed that in the event the vehicle slides, the ice tires respond significantly slower than studded tires. Senator Cowdery indicated most modern cars have an ABS brake system and he told of his driving experience with ice tires on the hills in Juneau. HANNELE ZUBECK, Associate Professor, School of Engineering, University of Alaska-Anchorage, testified via teleconference from Kenai about a study she conducted on the social-economical impacts of studded tire use in Alaska. The preliminary report, titled "Socio-Economic Effects of Studded Tire Use in Alaska: Interim Executive Summary-March 10, 2003" is on file. Her recommendation is that a $10 fee per studded tire would encourage the use of driving with old studded tires, which may not provide adequate traction but would instill driver confidence. She predicted this would increase the accident rate. She furthered the same impact would result if a $2 fee were imposed on the sale of all tires, as proposed in HB 173. She suggested a higher fee for the conventional heavy studs, which would encourage drivers to select lightweight studs and have less impact on the State's economy. Ms. Zubeck addressed the matter of soft asphalt informing that hardening the asphalt is possible; however, cracking and other problems would occur. She stated that aggregate is the actual issue. Ms. Zubeck listed the states that currently ban the use of studded tires and noted Illinois is the only state where icy road conditions are present. Senator Taylor asked the witness repeat of the conclusions of the preliminary report. Ms. Zubeck detailed the findings of the studies, in comparison to data learned from research conducted in Sweden and Norway. She qualified that the annual estimated damage amount of $5 in Alaska is inaccurate and should be reevaluated. Ms. Zubeck testified that studded tire use reduces accident rates and that reducing studded tire use would increase the overall costs, despite savings in road maintenance and revenue generated from the studded tire fee. Senator Taylor appreciated the University of Alaska's efforts on this matter. Senator Cowdery asked if the ruts caused by studded tires are a safety issue as well. Ms. Zubeck answered, "absolutely". She noted the absence of studies of summertime accidents, as most studies concentrate on winter accidents. She remarked that that information on hydroplaning is important to collect and analyze. Senator B. Stevens referenced certain information contained in the section of the preliminary report relating to pavement wear as follows. · Traffic conditions (decrease wear by decreasing traffic volume and proportion of studded tires, decreasing winter speed limits and increasing lane widths); and · Weather conditions (decrease wear by keeping the road surface dry). Senator B. Stevens commented that the Legislature does not have the authority or ability to decrease traffic and keep road surfaces dry. Ms. Zubeck clarified that salting the roads would assist in keeping them dry and that subsidized pubic transportation could reduce the amount of traffic in urban areas. She noted that parking costs in Helsinki, Finland are high and that with the availability of "park and ride" and other public transportation programs, vehicle traffic into the city has been reduced. ROGER BURNS testified via teleconference from Fairbanks in reference to the VTI report and a State of Alaska report, AK-RD-96- 1, issued in 1996 [copies on file]. He commented on the amount of anecdotal testimony about road conditions. He reiterated earlier testimony that "putting consumers in harm's way" for the purpose of collecting $2 million in taxes is "unconscionable". Since this is a revenue source proposal rather than a matter of safety, he supported the house bill plan to impose a $2 fee on the purchase of all new tires, as it would raise $2.5 million per year. He asserted that all studies show that studded tires reduce accidents and he opined that purchasers should chose tires based on the conditions of the roads they drive. He noted that the roads in Fairbanks have ice and snow more often than roads in other parts of the State. Senator Bunde affirmed the witness supports a tax on the purchase of all tires. Senator Taylor associated himself with the previous speaker that the purpose of this bill is to generate funds. He noted the funds would not be dedicated for road maintenance. He supported the house bill proposal to add a tax to the sale of all new tires. He suggested it would remove the arguments for and against studded tires, which should be addressed in separate legislation. Senator Taylor offered a motion to amend SB 106 to reflect the language contained in CS HB 173 to impose a $2 fee on the sale of all new tires [This conceptual amendment was not numbered]. Co-Chair Wilken requested the motion be removed to all a committee substitute to be drafted for Committee review. Senator Taylor agreed and the motion was WITHDRAWN without objection. Senator Bunde indicated he would offer amendments for the purpose of discussion, although he did not intend action to be taken at this meeting. Amendment #2: This amendment deletes "studded" from the title of the committee substitute. The amended title reads as follows. "An Act relating to tires; and providing for an effective date." This amendment also eliminates the proposed $10 fee imposed on the retail sale of studded tires and imposes a fee of $2.50 on the retail sale of all motor vehicle tires. This amendment also deletes the language in Sec. 43.98.025(b), relating to a $10 fee for the installation of studs on a motor vehicle license, and inserts new language to read as follows. (b) In addition to the fee imposed under (a) of this section, a fee of $5 a tire is imposed on the retail sale of tires studded with metal studs or spikes weighing more than 1.1 grams each embedded in the periphery of the tire surface and protruding beyond the tread surface of the tire, or on the installation for a fee of metal studs or spikes weighing more than 1.1 grams each on a motor vehicle tire in the state. Senator Bunde moved for adoption of the amendment. Co-Chair Wilken objected for discussion. Senator Bunde spoke to the amendment. He recommended a fee of $2.50 for each tire rather than $2 proposed in the house bill based on conversations with retailers indicating that because tires are usually sold in sets of four, the $10 total fee would be easier to account. Senator Bunde removed his motion to adopt the amendment without objection and Amendment #2 was WITHDRAWN. Amendment #3: This conceptual amendment changes the remittance period for submission of the collected fees by retailers to the State from monthly to quarterly. The amended language of Sec. 43.98.025(d) reads as follows. (d) A seller shall collect the fee from the purchaser. A seller shall file a return on a form prescribed by the department and remit the fee collected to the department on a quarterly basis of the sale or installation. Senator Bunde moved for adoption. Senator Bunde removed his motion to adopt Amendment #3 without objection and the amendment was WITHDRAWN. Co-Chair Wilken requested members submit suggestions for incorporation into a committee substitute and ordered the bill HELD in Committee. Co-Chair Wilken understood that Department of Transportation and Public Facilities vehicles are exempt from weight limits. He requested Mr. Lavasseur to provide an explanation on the matter.