Legislature(1993 - 1994)
03/25/1993 08:37 AM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 66
"An Act relating to municipal property tax exemptions
for certain residences and to property tax equivalency
payments for certain residents; and providing for an
effective date."
Members adopted Work Draft 8-GH1032\R, 3/15/93 during the
March 18, 1992 House Finance Committee meeting (Attachment
1).
Co-Chair MacLean noted that members had received two
amendments from Representative Brown. Amendment 1 adds a
new section to create a mandatory low income deferral
program for seniors, disabled veterans, and widows on the
first $150.0 thousand dollars of the assessed value of real
property (Attachment 2). Amendment 2 gives municipalities
the option to add hardship language to either the exemption
program or the deferral program (Attachment 3). She noted
that members also received a memorandum from Tam Cook,
Director, Legislative Services Division (Attachment 4). Co-
Chair MacLean also referenced a letter from Marjorie Odlund,
Assistant Attorney General (Attachment 5).
Co-Chair MacLean indicated that she supported Amendment 2.
She felt municipalities should be given the option to offer
hardship deferments. She explained that Amendment 2 would
allow the municipalities to develope local ordinances to
defer or exempt senior citizen or veterans from property
tax. She relayed that the Legal Services Division advised
that the two amendments are incompatible.
GERALD DORSHER, VETERANS OF FOREIGN WARS spoke against HB
66. He asked that the Senior Citizen and Veterans Property
Tax Exemption Program be kept intact. He emphasized that
veterans may lose their state death gratuity. He noted that
federal taxes on heating will also hurt veterans and other
fixed income persons.
Co-Chair Larson noted that Amendment 2 would allow
2
municipalities to continue the tax exemption or institute a
deferment. Co-Chair MacLean observed that municipalities
would define "hardship" through ordinances.
Co-Chair Larson reviewed the Senior Citizen and Veterans
Property Tax Exemption Programs. He noted that the programs
were begun around 1973. The State fully funded the programs
until 1985. Since then the municipalities have had to fund
the portion not funded by the State of Alaska.
Municipalities have requested that the State fully fund the
programs or give them the option to fund the programs. The
program cost approximately $9 million dollars in FY 93.
Two-thirds of the FY 93 program cost was carried by the
municipalities.
DREW SCALZI, KENAI PENINSULA BOROUGH ASSEMBLY spoke in
support of HB 66. He noted that state funding of the
mandatory exemption has been steadily declining each year.
He observed that municipalities only received 20 percent of
the total amount exempted in 1992. He emphasized that
municipalities should be given the opportunity to draft an
exemption ordinance. He added that voter approval should be
included. Mr. Scalzi supported a January 1, 1994 effective
date and exclusion for full value determination.
Co-Chair MacLean observed that under CSHB 66 (FIN)
municipalities have the option to exclude full value
determination. She added that the effective date of CSHB 66
(FIN) is January 1, 1994.
KATE SWISHER, ALASKA MUNICIPAL LEAGUE expressed support for
HB 66. He spoke in support of Amendment 2. He emphasized
that the Alaska Municipal League will assist local
governments in creating programs. He reiterated that
municipalities are paying 80 percent of the program. He
stated that the Alaska Municipal League would prefer that
the program be fully funded by the State of Alaska.
Representative Brown asked if the Alaska Municipal League
could live with the mandatory deferral. Mr Swisher felt
that the majority of municipalities would be able to
institute the mandatory deferral.
Representative Martin asked if the assess value should be a
formula to allow for area differentials and inflation.
Mr. Swisher stated that the Alaska Municipal League would
prefer that no specific level be established. He noted that
municipalities could exempt more than the first $150.0
thousand dollars.
Representative Martin MOVED to ADOPT, Amendment 2.
3
Co-Chair MacLean reiterated that Amendment 1 and Amendment 2
are not compatible. Representative Brown questioned the
amendments incompatibility.
PAM COOK, DIRECTOR, LEGISLATIVE SERVICES DIVISION clarified
that Amendment 1 would provide a mandatory deferral with an
income cap in lieu of an optional deferral. Municipalities
would have an obligation to provide a deferral for low
income seniors and veterans. In addition, municipalities
would have the option of exempting property for categories
of individuals without the income test. The optional
deferral portion of CSHB 66 (FIN) is deleted by Amendment 1.
She noted it would be possible to layer an optional deferral
on Amendment 1.
Representative Martin asked if Amendment 1 should be split.
Ms. Cook explained that she could reconcile Amendments 1 and
2 if both are adopted.
Representative Brown asked if the deletion of "Page 3, lines
9 - 31: Delete all material" would allow an optional
deferral, a mandatory deferral and an optional exemption.
Ms. Cook agreed that such an amendment to Amendment 1 would
allow an optional deferral, a mandatory deferral and an
optional exemption.
Representative Hanley noted that Amendment 1 would determine
the income level for deferrals. He asked if municipalities
could deferral assessed property at a higher value than
$150.0. Ms. Cook explained that under Amendment 1,
municipalities would not be able to change the level of
deferral or the classification of qualified individuals. If
an optional deferral is added, municipalities could defer
seniors and veterans whose income is above the mandatory
level. Under Amendment 2 municipalities would have
flexibility to defer at any level they wished seniors and
disabled veterans.
Representative Brown stated that a mandatory exemption must
be accompanied by a dollar amount. Ms. Cook agreed that
municipalities must be told specifically what they are
mandated to defer.
Representative Martin asked if a formula could be used. Ms.
Cook agreed that a formula could be devised. Representative
Martin expressed his concern that rural areas could feel
they were being discriminated against. Ms. Cook emphasized
that tax codes use the same specific dollar amounts across
the board, statewide.
Representative Martin WITHDREW HIS MOTION. There being NO
4
OBJECTION, the motion was withdrawn.
Representative Brown MOVED to AMEND, Amendment 1, to delete
"Page 3, lines 9 - 31: Delete all material." She explained
that Amendment 1, as amended, would provide a mandatory
floor for defer of low income seniors and veterans and an
optional exemption or deferral of others. There being NO
OBJECTION, it was so ordered.
Representative Hanley expressed support for Amendment 2.
Representative Grussendorf felt that municipalities would
have difficulty instituting programs unless guidelines are
provided.
Representative Brown emphasized that the over-riding
consideration is to provide a safety net to the poorest
people. She urged the Committee to not force individuals
out of their homes. She stressed that a new property tax
will be a problem to many individuals on a fixed income.
She acknowledged that many municipalities are moving in the
direction of providing deferrals.
Mr. Swisher, in response to a question from Co-Chair Larson,
stated that the Alaska Municipal League preference is for a
minimum of mandates and maximized flexibility. He
acknowledged that Amendment 1 is less onerous than other
options.
Representative Grussendorf noted that he has been a member
of the Alaska Municipal League. He observed that if there
is legislation that is "too wide open, then there is a
tendency for nothing to happen." He felt that it would be
easy to ignore the need without specific guidelines. Mr.
Swisher felt that seniors and veterans groups would pressure
local governments to address the issue.
(Tape Change, HFC 93-60, Side 2)
Representative Brown MOVED to ADOPT Amendment 1. A roll
call vote was taken on the motion.
IN FAVOR: Brown, Foster, Grussendorf, Hoffman, Navarre
OPPOSED: Hanley, Martin, Parnell, Therriault, MacLean,
Larson
The MOTION FAILED (5-5).
Representative Brown MOVED to ADOPT Amendment 2. There
being NO OBJECTION, it was so ordered.
Representative Brown referred to the effective date. She
asked how the effective date relates to the fiscal notes.
5
She noted that the State would be responsible for half a
year of support to the exemption. Representative Martin
noted that taxes are collected on the calendar year.
Representative Brown asked what is the intention for the
first half of FY 94 in regards to reimbursing
municipalities. Co-Chair Larson emphasized that the
legislature must decide if they are going to appropriate for
a half a year. Representative Brown asked for an
explanation of the zero fiscal notes. Co-Chair Larson noted
that fiscal notes reflect the Governor's proposed zero
funding.
Representative Navarre asked if the tax exemption is
prospective or retrospective.
Representative Martin MOVED to report CSHB 66 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. Representative Brown OBJECTED.
She emphasized that the bill should stay in Committee until
an option is developed which will protect poor persons. She
stressed that programs aiding low income people are
receiving reductions in other areas of the budget. She
asserted that the State will incur other costs as a result
of the legislation. She maintained that individuals will
"fall threw the cracks" as a result of the legislation.
A roll call vote was taken on the motion.
IN FAVOR: Grussendorf, Hanley, Martin, Parnell, Therriault,
MacLean, Larson
OPPOSED: Navarre, Brown
The MOTION PASSED (7-9).
Representatives Foster and Hoffman were absent from the
vote.
CSHB 66 (FIN) was reported out of Committee with"no
recommendation" and with two zero fiscal notes by the
Department of Community and Regional Affairs and with a zero
fiscal note by the Department of Administration and with a
fiscal impact note by Department of Education.
| Document Name | Date/Time | Subjects |
|---|