The Alaska State Senate is considering hiking the government charge for studded tires from $5 a tire to $50.
The bill, Senate Bill 50, sponsored by Republican State Senator Catherine Giessel, is before the Senate’s Transportation Committee.
About Alaska Senate Bill 50
The bill is titled “An Act relating to fees for the sale or installation of studded tires; and providing for an effective date.”
If passed the bill would raise the fees tenfold beginning July 1.
Giessel’s bill originally called for the tax to be increased 1,400 percent, up to $75.
Alaskan tire retailers don’t like the bill
Don Robinson, Distribution Manager for Alyeska Tire in Alaska, said studded tires, even after the current fees are added up, cost less than studless ice tires. He said it is discouraging that a fee increase of such magnitude is even being considered.
“We sell most of our studded tires to those that can’t afford studless tires,” he said.
“A $75 increase on the tire stud tax would be very hard on them.”
Robinson said that he and his customers can see and handle an increase in the stud tax to about $10 or $15, but the increase under consideration was hard to stomach.
He also said the fee hike would be easier to justify if the fees raised were earmarked solely for road construction and repairs, but they aren’t. The fees will be directed into the state’s general fund, meaning the money can be used for any purpose the legislature desires. This is contrary to things that Sen. Giessel has been quoted as saying to the public in defense of the bill.
Bill is causing too much uncertainty in the market
Robinson said one of the main problems his company has right now with the bill is the uncertainty it’s causing in the market. He has to place his orders in March and April to make sure that he has enough studded tires on hand to fill projected demand because they are made to order.
If the bill passes, Robinson isn’t sure if more people will opt for studless tires than for the less expensive studded tires. This uncertainty is hampering his ability to forecast how many studded tires he will need. Over the 12-month period just ended, he says the company sold just over 17,000 studded tires. If passed, the bill might or might not have a significant impact on that number. He just doesn’t know, and that’s a big problem for him as he can’t simply call up his suppliers and order more.
Bill is designed to make up deficits in state revenue
Most of Alaska’s revenues come from the production of oil around the state. These revenues are off sharply because of the drop in the price of a barrel of oil. Robinson said: “Oil production in the extreme conditions we have in Alaska, like on the North Slope, is expensive. The current price of oil makes it not profitable, so most of the rigs around the state have been idled. Thus, they aren’t generating tax revenue for the state and they have to make up that shortfall somewhere.”
About Alyeska Tire
Alyeska Tire has several locations across the state, including Anchorage, Fairbanks, Homer, Kenai, Palmer, and Soldatna. According to Robinson, they have a 40 percent share of the retail tire market in the state.
Alaska residents wishing to voice their opinion on Senate Bill 50 should contact their state senator.