Legislature(2003 - 2004)

04/08/2003 09:02 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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 second  hearing for  this bill in  the Senate  Finance                                                            
AT EASE 10:11 AM / 10:13 AM                                                                                                     
Senator Bunde  moved to adopt  CS SB 106,  23-GS1127\U as a  working                                                            
Co-Chair Wilken objected to give an explanation.                                                                                
Co-Chair Wilken  stated the proposed  committee substitute  includes                                                            
all changes discussed at  the previous hearing. He noted language in                                                            
Section 2, amending AS  43.98.025(a). Tire fees., would impose a fee                                                            
of  $2.50 on  the  retail sale  of  every  tire for  motor  vehicles                                                            
designed  for use on  a highway.  He commented  this would apply  to                                                            
tires  for cars  and  all weights  of  trucks.  Referencing  earlier                                                            
testimony  regarding  heavy  studs  and lightweight  studs  and  the                                                            
subsequent  damage  they cause  to  roads,  he noted  the  committee                                                            
substitute language  amending AS 43.98.025(b), would  also impose an                                                            
additional $5 fee per tire  for those tires fitted with heavy studs.                                                            
He noted  this provision  would take effect  July 1, 2004,  one year                                                            
after the effective  date of the bill,  which he stated would  allow                                                            
retailers  to  update   inventory  to  include  tires   fitted  with                                                            
lightweight studs.                                                                                                              
Co-Chair  Wilken continued  that the committee  substitute  language                                                            
amending AS  43.98.025(d) and (e),  provide for quarterly  reporting                                                            
and remittance  of the tax receipts  by retailers to the  Department                                                            
of Revenue.                                                                                                                     
Co-Chair  Wilken next noted  language in  the committee substitute,                                                             
amending  AS 43.98.025(h)   defines "highway"  and  "motor  vehicle"                                                            
according to AS 28.40.100.                                                                                                      
Co-Chair  Green  asked  if motor  vehicle,  in  this  context  would                                                            
include off-road vehicles.                                                                                                      
Co-Chair  Wilken  cited  AS  28.40.100(a)(14)  as  follows:  ""motor                                                            
vehicle" means  a vehicle which is  self-propelled except  a vehicle                                                            
moved by human  or animal power." However, he stated  that tires for                                                            
a 4-Wheeler  would not be  subject to the  tax as such a vehicle  is                                                            
not designed for highway travel.                                                                                                
Senator Bunde  opined it would be simpler to outlaw  heavy studs, as                                                            
it would achieve  the goal of reducing  the use of the heavy  studs,                                                            
however he anticipated  this tax would decrease their  use. Although                                                            
funds could  not be dedicated,  he predicted  the increased  fee for                                                            
heavy  studded  tires would  allow  generate  additional  income  to                                                            
offset the cost of the damage caused by the tires.                                                                              
Co-Chair  Wilken  removed  his  objection  to the  adoption  of  the                                                            
committee substitute and it was ADOPTED without objection.                                                                      
Co-Chair Wilken  announced the committee substitute  would require a                                                            
new fiscal note for this bill.                                                                                                  
LANDA BAILY, Special  Assistant and Legislative Liaison,  Department                                                            
of  Revenue   testified   on  behalf  of   Governor  Murkowski   and                                                            
Commissioner  Corbus in support  of this  legislation. However,  she                                                            
requested  amending the language  in Section  2 to provide  that the                                                            
tax receipts be  remitted by sellers in a timely manner.  She stated                                                            
this would be  consistent with statutes governing  the remittance of                                                            
motor fuel tax receipts.                                                                                                        
Ms.  Baily  also requested   amending the  language  in  Section  2,                                                            
relating to  AS 43.98.025(g), to clarify  the tax would be  exempted                                                            
on the sale of tires sold  for resale. She stated this would prevent                                                            
the tax from being imposed twice.                                                                                               
Amendment   #4:   This  amendment   inserts   "timely"   into   Sec.                                                            
43.98.025(e)  of  the committee  substitute.  The  amended  language                                                            
reads as follows.                                                                                                               
          (e) A seller timely remitting the fees collected under                                                                
     this section  to the department  within 30 days after  the last                                                            
     day of the  preceding calendar quarter may retain  five percent                                                            
     of  the amount  collected,  not to  exceed $900  a quarter,  to                                                            
     cover  expenses associated  with collecting  and remitting  the                                                            
Co-Chair Green moved for adoption.                                                                                              
ROBYNN WILSON,  Department of Revenue, testified via  teleconference                                                            
from an off-net  location that the definition of timely  in relation                                                            
to  the submission  of  motor  fuel  tax receipts  in  contained  in                                                            
regulation  rather than  in statute.  She  stated the  intent is  to                                                            
receive the revenues in a timely manner.                                                                                        
Senator  B. Stevens  understood  the language  requiring  remittance                                                            
within  30 days  of the  last day  of a  quarter,  is equivalent  to                                                            
"timely".  He  asked  if  similar  language   is  contained  in  the                                                            
regulations governing motor fuel tax collection.                                                                                
Ms. Wilson  replied that the motor  fuel tax regulation in  question                                                            
pertains to the submission  of a report of the amount collected. She                                                            
determined the  existing language in the committee  substitute would                                                            
be adequate.                                                                                                                    
Co-Chair  Wilken asked whether  the insertion  of "timely"  would be                                                            
Senator  B.  Stevens surmised  it  would  be  and noted  Ms.  Wilson                                                            
affirmed this  in pointing out that  the motor fuel tax regulations                                                             
pertain  to  reporting,  while  the committee   substitute  language                                                            
pertains to the collection  of fees. He asked if the reporting would                                                            
be submitted annually with remittance occurring quarterly.                                                                      
Ms. Wilson responded the reporting would be submitted quarterly.                                                                
Co-Chair  Wilken and Ms.  Wilson established  the amendment  was not                                                            
Co-Chair Green  WITHDREW her motion  to adopt the amendment  without                                                            
Amendment #5:  This amendment inserts  "sold for resale"  on page 2,                                                            
line 14  of the  committee substitute.  The amended  language  of AS                                                            
43.98.025(g) reads as follows.                                                                                                  
          (g) The fees imposed in this section do not apply to                                                                  
     tires sold for resale or services sold to federal, state, or                                                               
     local government agencies for official use.                                                                                
Co-Chair Green moved for adoption.                                                                                              
Co-Chair Wilken objected for the purpose of discussion.                                                                         
Senator Bunde asked if  the intent of this amendment is to establish                                                            
that  the tax  would  be  collected  at the  point  of sale  to  the                                                            
Ms. Baily affirmed.                                                                                                             
Co-Chair  Green asked whether  this language  could be construed  to                                                            
apply to a used or second-hand tire.                                                                                            
Ms. Baily replied  the intent is to  levy the tax on each  tire only                                                            
Co-Chair Wilken indicated  the matter would be reviewed to avoid Co-                                                            
Chair Green's concern.                                                                                                          
Co-Chair  Wilken  removed  his  objection   and  the  amendment  was                                                            
Co-Chair  Wilken announced  intent to  consider this  bill with  the                                                            
updated fiscal note at the following meeting.                                                                                   
Senator Olson  understood the intent of the fee to  generate revenue                                                            
to offset  the impacts  vehicles have  on roads.  He asked if  tires                                                            
sold  for vehicles  that do  not utilize  the road  system would  be                                                            
exempt from this tax.                                                                                                           
Co-Chair Wilken cited AS 28.40.100(a)(12) as follows.                                                                           
          (12) "highway" means the entire width between the                                                                     
     boundary lines of  every way that is publicly maintained when a                                                            
     part  of it is  open to the  public for  purposes of  vehicular                                                            
     travel,  including  but not  limited  to every  street and  the                                                            
     Alaska  state marine highway  system but not vehicular  ways or                                                            
Senator Olson  surmised if the tires  would be mounted on  a vehicle                                                            
located in an  area containing no public roads the  fee would not be                                                            
levied. He gave an example  of a resident in the Village of Savoonga                                                            
who would drive a truck along the beach to reach a fish camp.                                                                   
Co-Chair Wilken  remarked the intent of this legislation  is to levy                                                            
the tax on the purchase of all motor vehicle tires in Alaska.                                                                   
Senator  Olson  clarified  no  exemption  would be  given  to  tires                                                            
designed for highway use.                                                                                                       
Co-Chair Wilken affirmed.                                                                                                       
Senator Bunde  pointed out that the same driver in  Savoonga is also                                                            
paying the motor fuel tax.                                                                                                      
Amendment  #1: This amendment  inserts a  new subsection to  Section                                                            
43.98.028(d) to read as follows.                                                                                                
                (2) studded tires exclusively for use on a motor                                                                
     vehicle that meets  the qualifications under AS 28.22.011(a)(1)                                                            
     for  exemption  from  the  motor  vehicle  liability  insurance                                                            
     requirement of AS 28.22.011.                                                                                               
[Note: This amendment was also referenced as Amendment #6.]                                                                     
Senator Olson moved for adoption.                                                                                               
Co-Chair Wilken objected for an explanation.                                                                                    
Senator Olson  noted Departmental testimony to the  damage caused by                                                            
studded tires and heavy  traffic use on publicly maintained roadways                                                            
and  the  need  to  generate  revenue  to  assist  with maintenance                                                             
expenses. He  stated that tires that  would not be used on  publicly                                                            
maintained  roads should not  be charged this  tax. He spoke  to the                                                            
importance  of studded  tires  for safe  travel  along unmaintained                                                             
Senator Olson  pointed out that vehicles operating  in areas without                                                            
publicly  maintained  roads  are exempt  from  registration  and  he                                                            
remarked that tires for these vehicles should also be exempted.                                                                 
Co-Chair  Wilken  clarified that  tires  purchased  for mounting  on                                                            
vehicles operating  in communities exempt from vehicle  registration                                                            
would be exempt from the fees proposed in this legislation.                                                                     
Senator Olson affirmed.                                                                                                         
Co-Chair Wilken maintained his objection.                                                                                       
Senator  Bunde  also   objected  to  the  amendment,   arguing  that                                                            
supplies,  equipment,  and  goods  are  transported   over  publicly                                                            
maintained roads and highways for use in these communities.                                                                     
Senator  Olson countered  that  the tire tax  would  be paid on  the                                                            
tires mounted on the vehicles used to transport those goods.                                                                    
A roll call was taken on the motion.                                                                                            
IN FAVOR: Senator Olson                                                                                                         
OPPOSED: Senator  Bunde, Senator B. Stevens, Co-Chair  Green and Co-                                                            
Chair Wilken                                                                                                                    
ABSENT: Senator Taylor and Senator Hoffman                                                                                      
The motion FAILED (1-4-2)                                                                                                       
The amendment FAILED to be adopted.                                                                                             
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             

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