Part of a bill introduced late in the legislative session would hike the price that municipalities pay for their license plates.
The bill, HB 409, sponsored by the House State Affairs Committee, removes an exemption for municipalities in the Alaska Division of Motor Vehicles’ fees for vehicle licensing. They currently pay $10 per vehicle, and the bill would raise it to $100, which is the standard. The bill includes a number of other adjustments for the DMV, including a $5 fee for driver knowledge tests, repealing permanent vehicle registration for vehicles that are at least 8 years old and increasing the age for free senior identification cards from 60 to 65.
Municipalities objected to the bill, which passed the House on April 27 with a 26-12 vote. The Alaska Municipal League, an association which represents the various cities and boroughs around the state, didn’t even find out about the bill until the last minute, said Executive Director Kathie Wasserman.
“What bothered me is the … (Staff for House State Affairs Committee Chairman Rep. Jonathan Kress-Tomkins, D-Sitka) called me the night before it went on the House Floor,” she said. “It’s too late by then.”
Kreiss-Tomkins said during a Senate Finance Committee hearing on May 2 that the bill resulted from an indirect expenditure report that the Office of Legislative Finance produced with some statute change recommendations and some recommendations produced in the Alaska Department of Administration Finance Subcommittee in the House.
“There’s two ways to look at it,” he said. “One is it’s increasing the vehicle registration fee for municipalities from $10 to $100. The other way to look at it is it’s eliminating a $90 reduction that municipalities have enjoyed and bringing the rate to the same rate everybody else pays. I’m not saying one’s right and one’s wrong, I’m just saying there’s two ways to look at it.”
Wasserman pointed out in a letter to the Legislature that the Division of Motor Vehicles does not operate at a loss, so the fees would be going directly to the state’s general fund to support operations.
For municipalities with large vehicle fleets, it would significantly increase their costs. The Matanuska-Susitna Borough, for example, maintains a fleet of approximately 410 vehicles, and the bill would increase the costs to register them from $4,100 to $41,000. Borough Manager John Moosey wrote in a letter to the Legislature that the increase would “dramatically” affect the borough’s operating budget.
“Arbitrarily raising prices for Alaska’s citizens on chosen services, when that service has not been shown to operate at a loss, should not be considered as a solution to help balance the state budget,” he wrote.
Wasserman said the move acts as a pass-through tax, shifting more of the state’s operation cost onto municipalities. The only way for the cities and boroughs to raise revenue is through taxes and fees, which come from citizens.
“Basically, they’re politicians, so they’re saying we don’t want to tax the beautiful people of Alaska, but they’re perfectly fine with us doing it,” she said.
During its budget cuts and discussion for the past three years, the Legislature has made a number of moves to shift some costs to municipalities. A major one is changing the amortization schedule for public employee and teacher retirement system contributions, known as PERS/TERS, resulting in the cities and boroughs contributing more than the state. The Community Assistance Program distributions, which provide funding to the various municipalities throughout the state, have been significantly reduced as well, and the municipalities have picked up some airport and road maintenance handed down by the state, Wasserman said.
“I said in the hearing that these vehicles that you’re going to charge us 10 times for are sometimes out maintaining your roads,” she said.
The Senate Finance Committee heard the bill May 2 but has not advanced it to another committee or to the Senate floor.
Reach Elizabeth Earl at firstname.lastname@example.org.