JUNEAU — An Anchorage state senator is proposing to increase the tax on studded tires from $5 to $75 — making the cost of the tax rival that of the tires themselves in some cases.
With Alaska facing a $3 billion budget deficit, Republican Sen. Cathy Giessel said she wants to raise the "user fee" to cover the steep costs of re-paving roads, which can run to $1 million a mile.
"Frankly, our oil revenues are not going to be able to pay for all the services anymore," Giessel said at a Monday news conference.
Giessel introduced Senate Bill 50 last week. It would bring the total tax on four studded tires to $300, up from the current rate of $20.
At the news conference, Giessel said she drives her 16-year-old Oldsmobile sedan on the Glenn Highway each week with her grandchildren inside.
"It is deeply rutted. It is incredibly dangerous," Giessel said, referring to the road. She described studless tires — such as the flexible rubber Blizzaks made by Bridgestone — as an effective alternative.
Giessel's husband, Richard, works for the Alaska Department of Transportation as a quality assurance engineer — a job he described in a brief phone interview as working on "things that affect the quality of our roads and infrastructure." But he said he didn't think that he inspired his wife's legislation, which he said "may have come through some other channel."
SB 50, which hasn't been scheduled for a hearing, has caused alarm among in-state businesses that sell tires. Alaskans can already go online and buy tires from Amazon, shipped for free, without being forced to pay the state's existing fees of $2.50 a tire, and $5 more for each one with studs, said Steven Wortham, the operations manager at Alyeska Tire.
Online buyers are still legally required to pay the fees but that provision isn't actively enforced by the state revenue department, said Brandon Spanos, deputy tax director.
Wortham, in a phone interview, said his company sells more than 5,000 sets of studded tires annually at its half-dozen stores from Fairbanks to Homer. He's been emailing and calling senators since last week, and was approached by a lobbyist wondering if the company needed representation in Juneau.
"It would devastate us," said Wortham of the proposed increase.
The 13-year-old studded tire fee raised $375,000 for the state in 2015, the last year for which data is available. At that rate, a 15-fold increase would bring in $5.6 million, though the fee increase would undoubtedly lead to a decrease in sales.
Giessel's proposal suggests that the fee revenue be spent on road maintenance, though it can't force lawmakers to do that because of the Alaska Constitution's prohibition on dedicating funds to a particular purpose.
Asked how the state should fix its massive budget deficit instead of increasing tire taxes, Wortham said lawmakers should ask for more money from Alaska's oil companies.
"Repeal SB 21; that would help," he said, referring to the 2013 legislation that established the state's current oil tax framework.
Giessel and her colleagues have been skeptical about changing that framework, which Rep. Les Gara, D-Anchorage, cited in expressing his own displeasure with her proposal.
"I think that Sen. Giessel would hit working-class Alaskans especially hard, and seems unwilling to ask for our fair share from the oil industry. I think that's backwards," he said.