04/06/2001 10:05 AM Senate FIN

                                                                                                                                
     HOUSE BILL NO. 118                                                                                                         
     "An Act relating to a mandatory exemption from municipal taxes                                                             
     on certain residences; and providing for an effective date."                                                               
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  JIM WHITAKER,  sponsor, testified  this bill  allows                                                            
municipalities  "deal  with  its  local  issues";  specifically  tax                                                            
exemptions for  senior citizen, disabled veterans,  and widowers and                                                            
widows over the age of 60.                                                                                                      
                                                                                                                                
Senator Wilken told of  his parent's current situation living in the                                                            
Fairbanks Pioneers'  Home but maintaining  their house and  property                                                            
as their  official  residence.  Meanwhile,  he noted,  the house  is                                                            
being leased as rental  property. He noted the bill does not require                                                            
annual  affidavits  showing  proof of  residency  and  asked if  the                                                            
intent  is for  the taxpayers  to subsidize  property  owned by  the                                                            
elderly who no longer live in their homes.                                                                                      
                                                                                                                                
Representative   Whitaker  answered  it  is  potentially   so.    He                                                            
explained  the intent  is  that each  municipality  would  establish                                                            
procedures,  which could  preclude such subsidies.  He stressed  his                                                            
concern  is to  "not punish  a significantly  larger  population  of                                                            
seniors with  an over burdensome obligation  to apply every  year in                                                            
consideration  of those who might  attempt to take advantage  of the                                                            
situation."                                                                                                                     
                                                                                                                                
Senator  Wilken  understood  the  current  property  tax  statements                                                            
contain a straightforward  notice  informing that an exemption  must                                                            
be filed  every year and  the statement even  includes a  detachable                                                            
affidavit  for the homeowner  to submit.   He remarked the  issue of                                                            
annual exemptions  has not been a problem that he  has been aware of                                                            
and he questioned  whether this legislation would  "open the door to                                                            
abuse" in anticipation of a problem that has not occurred.                                                                      
                                                                                                                                
Representative  Whitaker  replied  that there  actually  has been  a                                                            
situation  in  the Fairbanks  North  Star  Borough  involving  Olive                                                            
Anderson, an elderly resident  who was unable to comprehend that she                                                            
had to  file on  an annual  basis.  He  stated that  her taxes  went                                                            
unpaid  for  several  years  and  the  Borough   foreclosed  on  the                                                            
property. When  he inquired as to how this could be  averted, he was                                                            
told  that  state law  is  very  specific  and the  Borough  had  no                                                            
alternative.                                                                                                                    
                                                                                                                                
Representative  Whitaker clarified this bill is not  retroactive and                                                            
would not  affect Ms.  Anderson but  would allow  a municipality  to                                                            
prevent a similar occurrence in the future.                                                                                     
                                                                                                                                
Senator Wilken  asked if the Fairbanks North Star  Borough A ssembly                                                            
has indicated support for or against this legislation.                                                                          
                                                                                                                                
LORI  BACKUS,  staff  to Representative   Whitaker,  indicated  that                                                            
Representative Whitaker  received a letter from Mayor Rhonda Boyles,                                                            
of the Fairbanks North  Star Borough stating she had no objection to                                                            
the bill  and expressed  approval that the  municipalities  would be                                                            
given authority  to establish an application  procedure.  Ms. Backus                                                            
relayed that the  State Assessor has testified in  previous hearings                                                            
on the bill  that the Tax Division,  Department of Revenue  does not                                                            
object to the  legislation and anticipates it would  alleviate "some                                                            
of the yearly paperwork."                                                                                                       
                                                                                                                                
Senator Austerman offered  a motion to report from Committee HB 118,                                                            
22-LS0138\J with  zero fiscal note from the Department  of Community                                                            
and Economic Development.                                                                                                       
                                                                                                                                
Without objection HB 118 MOVED from Committee.