House approves both tire tax and rental car tax

Posted: Tuesday, May 20, 2003

JUNEAU (AP) The state House approved bills on Monday to impose taxes on new tire sales, studded tires and rental cars.

Motorists would pay a $2.50 tax on each new tire sold in Alaska under Senate Bill 106. They would pay $5 for tires with heavy studs implanted in them beginning July 1, 2004, under the bill.

Supporters argued that the measure would raise money for needed road repairs around the state. They say it is not too much to ask Alaskans to pay more to drive on good roads.

''I know that I am willing to step up to the plate to help pay my fair share and I know that the men and women of my district are too,'' said Rep. Lesil McGuire, R-Anchorage.

The measure would raise about $3.2 million in 2004 when the studded tire tax takes effect, according to the state Department of Revenue. Transportation officials have said the state spends about $65 million on highway maintenance each year.

''What we're talking about here is balancing our budget. We're trying to figure out some way to pay for what we use,'' said Rep. Jim Holm, R-Fairbanks.

Opponents of the measure say that's a false argument since the money will go into the state's general fund the account used to fund most state agencies and not guarantee better roads.

The Legislature had rejected earlier this week a proposal to impose a 3 percent statewide sales tax. The sales tax bill also included a plan to increase the state's motor fuel tax by 12 cents per gallon.

''This is a sales tax on tires only,'' said Minority Leader Ethan Berkowitz, D-Anchorage. ''These funds aren't necessarily going to go for road support or anything to do with motor vehicles.''

The Legislature had considered a raft of tax and fee measures proposed by Gov. Frank Murkowski to raise more than $100 million. The Republican governor is asking lawmakers for a budget that spends less and draws no more than $400 million from the state's dwindling reserve.

Alaska has a chronic budget shortfall that is expected to drain the state's $1.9 billion Constitutional Budget Reserve within three years without significant budget cuts or new revenues.

But Democrats have complained that the measures proposed by Murkowski unfairly impact low-income and working Alaskans.

During debate on the tire tax bill, Democrats argued that this tax too would hurt working-class Alaskans.

The original bill proposed a $10 per tire tax imposed on studded tires. Transportation officials had argued that studded tires damage Alaska's roads and the measure was a way to recoup some of the costs.

The current bill imposes a $5 tax on each tire with studs weighing 1.1 grams or on the installation of studded tires. Road wear from studded tires causes an estimated $5 million in damage to Alaska roads each year, John MacKinnon, deputy commissioner for the transportation department, told a House committee earlier this session.

Senate Bill 106 was approved 24-12. Voting against the measure were Berkowitz and Reps. Sharon Cissna, D-Anchorage; Harry Crawford, D-Anchorage; Les Gara, D-Anchorage; Carl Gatto, R-Palmer; Max Gruenberg, D-Anchorage; David Guttenberg, D-Fairbanks; Beth Kerttula, D-Juneau; Vic Kohring, R-Wasilla; Albert Kookesh, D-Angoon; Beverly Masek, R-Willow; and Carl Moses, D-Unalaska.

Reps Eric Croft, D-Anchorage, Reggie Joule, D-Kotzebue, Mary Kapsner, D-Bethel, and Kevin Meyer, R-Anchorage, were absent.

The House which had rejected a measure to impose a tax on rental cars and recreational vehicle rentals during an early Monday session voted 23-13 to approve the measure late Monday.

The measure to impose a 10 percent tax on car rentals and a 3 percent tax on recreational vehicle rentals. It was rejected by a vote of 19-17 during a floor session that began Saturday but went past midnight.

The measure was called back to the floor under a procedural move and it was approved. The measure now goes to the Senate for consideration.

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