Legislature(2015 - 2016)BUTROVICH 205

02/04/2016 01:00 PM TRANSPORTATION

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-- Public Testimony --
Heard & Held
Heard & Held
         SB 132-ELECTRONIC TAX RETURNS & MOTOR FUEL TAX                                                                     
1:47:00 PM                                                                                                                    
CHAIR MICCICHE announced consideration of  SB 132. He invited Mr.                                                               
Binder to  come forward and  address the open questions  from the                                                               
last hearing. One  was the percentage of the  gap between revenue                                                               
and expenses at  airports in Alaska that would be  covered by the                                                               
proposed  increase  in  the  jet fuel  and  aviation  gas  taxes.                                                               
Senator  Stedman also  requested more  background information  on                                                               
airport costs in his district.                                                                                                  
1:48:42 PM                                                                                                                    
At ease                                                                                                                         
1:48:55 PM                                                                                                                    
CHAIR MICCICHE  reconvened the  meeting and  asked Mr.  Binder to                                                               
discuss how much  of the general fund (GF) gap  will be filled by                                                               
increasing the aviation fuel tax by $14 million.                                                                                
JOHN BINDER, Deputy  Commissioner, Statewide Aviation, Department                                                               
of Transportation  and Public Facilities (DOTPF),  explained that                                                               
the  GF subsidy  that  goes  to the  rural  aviation system  (247                                                               
airports  not including  Anchorage  and Fairbanks  International)                                                               
totals about  $39 million. The  rural system also  generated $5.7                                                               
million in revenues in FY15 based  on land rent, leases and those                                                               
sorts of  things. That brings  that number  down to around  a $33                                                               
million subsidy.  The aviation fuel  tax is collected by  DOR and                                                               
goes directly  into the GF;  in FY15  it was about  $4.1 million.                                                               
The projected aviation  fuel tax increase would bring  in $9.5 to                                                               
10 million more.  That would leave a remaining GF  subsidy of $19                                                               
to 20 million per year to the rural airport system.                                                                             
CHAIR  MICCICHE asked  if that  is minus  the municipal  airports                                                               
that sell fuel.                                                                                                                 
MR. BINDER  answered that is  correct. He  added that of  the $14                                                               
million  that comes  in, about  $200,000 would  go back  to seven                                                               
communities that  own and  operate their airports  (as part  of a                                                               
revenue sharing program through DOR).                                                                                           
1:51:43 PM                                                                                                                    
JERRY BURNETT, Deputy Commissioner,  Department of Revenue (DOR),                                                               
Juneau, Alaska,  advised that DOR  had gone through  its prepared                                                               
testimony  at the  last meeting  and  he had  provided a  written                                                               
response to the questions from the last hearing.                                                                                
1:52:22 PM                                                                                                                    
CHAIR  MICCICHE   acknowledged  that   and  stated   that  public                                                               
testimony  would  remain  open  while awaiting  a  new  committee                                                               
substitute  (CS). The  logic of  the CS  is to  convince Alaskans                                                               
that the  legislature is not in  the tax business, but  the state                                                               
has a fiscal gap that everyone  has to work through together. The                                                               
CS will  reflect a  reduction in  that tax  should the  price per                                                               
barrel of oil return to a normal range.                                                                                         
MR. BURNETT said the department  shares many of the same concerns                                                               
about taxation and  they are discussing taxes,  because the state                                                               
needs additional funds to balance the budget.                                                                                   
1:53:50 PM                                                                                                                    
LARRY DEVILBISS,  representing himself,  Palmer, Alaska,  said he                                                               
farms  beef cows,  and last  year, fuel  was by  far his  largest                                                               
expense; he  spent 50 percent  more on that than  fertilizer. So,                                                               
the increase in tax will have  an impact on him. He was concerned                                                               
that electronic filing will require  extra paperwork and that the                                                               
12 cent off-road  exemption has to also be applied  for. "That is                                                               
probably equally as ominous to me as the extra charge," he said.                                                                
MR. BURNETT  explained that the  bill requires taxpayers  to file                                                               
electronically, but it does not  change the paperwork requirement                                                               
for getting the off-road exemption.                                                                                             
CHAIR  MICCICHE said  the committee  understands the  frustration                                                               
that comes  with the feel  of someone reaching into  your pocket,                                                               
and he  belongs to  a team that  feels strongly  that significant                                                               
reductions are  still required. Legislators are  trying to manage                                                               
a  gap  that  is unlikely  to  go  away  even  if they  are  very                                                               
1:58:31 PM                                                                                                                    
SENATOR  DUNLEAVY asked  what the  anticipated revenues  are from                                                               
this bill.                                                                                                                      
MR.  BURNETT answered  the total  anticipated  new revenues  from                                                               
this bill is $49 million.                                                                                                       
SENATOR DUNLEAVY asked how much is currently brought in.                                                                        
MR. BURNETT answered around $40  million. He pointed out that the                                                               
increase  on  aviation jet  fuel  tax  is  more than  double  the                                                               
current tax.                                                                                                                    
1:59:20 PM                                                                                                                    
AVES  THOMPSON, Executive  Director, Alaska  Trucking Association                                                               
(ATA),  Anchorage, Alaska,  testified in  support of  SB 132.  He                                                               
said that  one of their priorities  for 2016 is development  of a                                                               
balanced,  durable,  long-term,  fiscal plan  utilizing  cuts  to                                                               
state government,  use of  Permanent Fund  earnings and  taxes if                                                               
required. The fuel tax increase  proposed in SB 132 is acceptable                                                               
to the  ATA within the  framework of the long-term,  fiscal plan.                                                               
They  believe  that  action  is   critical  in  this  legislative                                                               
MR. THOMPSON said the ATA has  long supported a fuel tax increase                                                               
if the  funds could  be dedicated  to transportation  needs. They                                                               
know that won't happen in this  bill, but they feel strongly that                                                               
they need to help resolve the fiscal issues by doing their part.                                                                
2:00:33 PM                                                                                                                    
CHAIR MICCICHE said  his understanding is that a  letter from ATA                                                               
will be forthcoming.                                                                                                            
MR. THOMPSON said he would follow up with a letter.                                                                             
SENATOR  DUNLEAVY  asked  Mr. Burnett  what  exempted  categories                                                               
there will be.                                                                                                                  
MR. BURNETT replied  that the exempted category  is off-road use:                                                               
construction, farming,  and ATVs;  a school  bus working  under a                                                               
private  contract  with  the  local  school  district  would  not                                                               
necessarily be exempt.                                                                                                          
SENATOR DUNLEAVY  noted that  those costs  will likely  be passed                                                               
along to the school districts.                                                                                                  
MR. BURNETT said  they would expect the cost of  this type of tax                                                               
to be passed on to the ultimate consumer in one way or another.                                                                 
SENATOR STEDMAN  informed his constituents  that a tax  bill will                                                               
not  automatically move  from committee.  It might  not have  the                                                               
votes or be in a different form.                                                                                                
SENATOR BISHOP  asked if the  marine fuel  tax stays the  same in                                                               
the bill.                                                                                                                       
MR.  BURNETT answered  that the  marine fuel  tax changes  from 5                                                               
cents  a  gallon  to 10  cents  a  gallon  in  this bill.  It  is                                                               
accounted  for  separately  and  it  would  apply  to  commercial                                                               
fishermen, but not to the Alaska Marine Highway System.                                                                         
SENATOR  STEDMAN   asked  for  a   regional  breakdown   of  fuel                                                               
consumption in the state.                                                                                                       
MR.  BURNETT   responded  that  the   department  taxes   at  the                                                               
distributor  level,  but there  should  be  local government  tax                                                               
records for communities that charge a local tax on fuel.                                                                        
SENATOR DUNLEAVY  asked if  additional administration  would have                                                               
to be put in place to handle the additional tax.                                                                                
MR.  BURNETT  answered  that  no  additional  overhead  would  be                                                               
CHAIR MICCICHE  asked him  to explain  the system  as it  is now,                                                               
because this  bill is just  changing the numbers on  the existing                                                               
MR. BURNETT explained that the  current system, which is taxed at                                                               
the distributor level,  will be used but just the  tax rates will                                                               
change. There  will be some  implementation costs  for programing                                                               
and forms, but over time using electronic filing it will be less                                                                
2:05:47 PM                                                                                                                    
CHAIR MICCICHE found no further questions and held SB 132 in                                                                    
committee awaiting a committee substitute. Public testimony was                                                                 

Document Name Date/Time Subjects
SB92 ver W.PDF STRA 2/4/2016 1:00:00 PM
SB 92
SB92 Sponsor Statement 2.pdf STRA 2/4/2016 1:00:00 PM
SB 92
SB92 Sectional Anaylsis.pdf STRA 2/4/2016 1:00:00 PM
SB 92
SB92 Fiscal Note DOT-TMS 1-19-16.pdf STRA 2/4/2016 1:00:00 PM
SB 92
SB92 Supporting Documents-Letter-City of Craig-9-4-2015.pdf STRA 2/4/2016 1:00:00 PM
SB 92
SB92 Opposing Documents-Letter-Mary McDowell 1-30-16.pdf STRA 2/4/2016 1:00:00 PM
SB 92
SB92 Supporting Documents-Federal Motor Vehicle Safety Standard No., 108; Lamp, Reflective Devices and Associated Equipment.pdf STRA 2/4/2016 1:00:00 PM
SB 92
SB92 13 AAC 04.010.docx STRA 2/4/2016 1:00:00 PM
SB 92
SB92 Fatal Motor Vehicle Crashes by Borough Census Area.pdf STRA 2/4/2016 1:00:00 PM
SB 92
SB132 ver A.pdf STRA 1/26/2016 1:00:00 PM
STRA 2/4/2016 1:00:00 PM
SB 132
SB132 Sponsor Statement - Governor's Transmittal Letter.pdf STRA 1/26/2016 1:00:00 PM
STRA 2/4/2016 1:00:00 PM
SB 132
SB132 Sectional Analysis Motor Fuel Tax.pdf STRA 1/26/2016 1:00:00 PM
STRA 2/4/2016 1:00:00 PM
SB 132
SB132 Fiscal Note-0912-DOR-TAX-01-13-16.pdf STRA 1/26/2016 1:00:00 PM
STRA 2/4/2016 1:00:00 PM
SB 132
SB132 Tax presentation MOTOR FUEL 1-22-16.pptx STRA 1/26/2016 1:00:00 PM
STRA 2/4/2016 1:00:00 PM
SB 132
Per-Capita Broad-Based State Tax Revenues, by State, 2014.pdf STRA 1/26/2016 1:00:00 PM
STRA 2/4/2016 1:00:00 PM
SB 132
SB132 Support Letter Aviation Advisory Board 11-2-15.pdf STRA 2/4/2016 1:00:00 PM
SB 132
SB132 Aviation Advisory Board Resolution.pdf STRA 2/4/2016 1:00:00 PM
SB 132
SB132 Written Testimony -Alaska Trucking Association - 2-4-2016.pdf STRA 2/4/2016 1:00:00 PM
SB 132
SB132 DOR response to questions at 2-1-16 meeting.pdf STRA 2/4/2016 1:00:00 PM
SB 132
SB132 DOR response to breakdown of fuel consumption by region at 2-4-16 meeting.pdf STRA 2/4/2016 1:00:00 PM
SB 132