04/29/2005 01:30 PM House FINANCE

HOUSE BILL NO. 217                                                                                                            
                                                                                                                                
     "An Act relating  to the determination of  full and true                                                                   
     value  of taxable  municipal  property  for purposes  of                                                                   
     calculating  funding  for  education and  certain  other                                                                   
     programs."                                                                                                                 
                                                                                                                                
TOM  WRIGHT,  STAFF,  SPEAKER  JOHN  HARRIS,  introduced  Mr.                                                                   
Fellman.                                                                                                                        
                                                                                                                                
2:20:25 PM                                                                                                                    
                                                                                                                                
PETE   FELLMAN,    STAFF,   SPEAKER    JOHN   HARRIS,    (via                                                                   
teleconference)  explained  that  under  HB  217  communities                                                                   
forming boroughs  that have gas  and oil properties  in their                                                                   
borough boundaries  could exclude the value  of that property                                                                   
as a means to raise new revenue.                                                                                                
                                                                                                                                
2:22:09 PM                                                                                                                    
                                                                                                                                
Representative Holm  asked Mr. Van  Sant why a  borough would                                                                   
choose not to tax  a large piece of property at  20 mills, so                                                                   
that it could then tax people at 4 mills.                                                                                       
                                                                                                                                
2:23:16 PM                                                                                                                    
                                                                                                                                
STEVE  VAN  SANT, STATE  ASSESSOR,  DEPARTMENT  OF  COMMERCE,                                                                   
COMMUNITY  AND  ECONOMIC  DEVELOPMENT,  (via  teleconference)                                                                   
explained that  under current  law requirements,  the borough                                                                   
would  have  to come  up  with  additional money  for  school                                                                   
funding and  would need to levy  a property tax.   He related                                                                   
that the  proposed legislation  would lower the  property tax                                                                   
by $200  million.  The bill  would provide boroughs  with the                                                                   
option to levy a property tax or not.                                                                                           
                                                                                                                                
Representative  Holm asked why  that option  is not  given to                                                                   
any other  large municipalities such  as Fairbanks.   Mr. Van                                                                   
Sant replied that under this scenario  the borough would have                                                                   
that option.   The property mentioned in the  bill is singled                                                                   
out because it  is "centrally accessed property"  and crosses                                                                   
jurisdictional  lines.    HB  217 would  apply  to  all  such                                                                   
municipalities.    Representative  Holm  asked  if  there  is                                                                   
currently a  property tax.  Mr.  Van Sant replied  that there                                                                   
is  no local  tax being  levied,  but there  is  a state  tax                                                                   
leveled against the pipeline.                                                                                                   
                                                                                                                                
2:27:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  inquired where  the cost  to the  state of                                                                   
$1.9 million  would come  from.  He  asked about  mill rates.                                                                   
Mr. Van  Sant clarified that he  was giving an example:  at 4                                                                   
mills, the proposed borough would  receive a little less than                                                                   
$800,000,  and at  10 mills,  they would  receive about  $1.9                                                                   
million.                                                                                                                        
                                                                                                                                
2:28:26 PM                                                                                                                    
                                                                                                                                
PETE  HALLGREN,  CITY  ADMINISTRATOR,  DELTA  JUNCTION,  (via                                                                   
teleconference)  related that his  city is currently  looking                                                                   
at developing a  borough proposal.  There are  currently four                                                                   
boroughs  in the  state, which  have  no property  tax.   The                                                                   
charter commission  of Delta Junction  has been looking  at a                                                                   
petition,  which  would  allow  for funding  for  a  proposed                                                                   
borough,  with  a  variety  of   taxes.    He  explained  the                                                                   
differences  in taxes and  how the  property tax would  work.                                                                   
There would  be no fiscal impact  from this bill, but  in the                                                                   
future there would  be issues.  He said that  Fairbanks could                                                                   
also choose  to do this.   The bill would make  the formation                                                                   
of new boroughs along the pipeline more feasible.                                                                               
                                                                                                                                
2:33:13 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault inquired about  the advantages of accepting                                                                   
this bill  in order to  assess a smaller  tax.  Mr.  Van Sant                                                                   
said that it  offers alternatives in taxation.   He clarified                                                                   
what the bill would allow.                                                                                                      
                                                                                                                                
2:35:35 PM                                                                                                                    
                                                                                                                                
Representative  Hawker   MOVED  to  report  HB   217  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HB   217  was   REPORTED  out   of  Committee   with  a   "no                                                                   
recommendation"  recommendation and  with zero fiscal  impact                                                                   
note  #1  by  the  Department   of  Commerce,  Community  and                                                                   
Economic Development.                                                                                                           
                                                                                                                                
2:36:40 PM