Legislature(2007 - 2008)SENATE FINANCE 532
02/21/2008 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB122 | |
| SB204 | |
| HB67 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 201 | TELECONFERENCED | |
| + | SB 122 | TELECONFERENCED | |
| + | SB 204 | TELECONFERENCED | |
| + | HB 67 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 122
"An Act relating to an optional exemption from
municipal property taxes for residential property."
SENATOR BILL WEILECHOWSKI, sponsor, explained SB 201, Alaska
Open Government Act. The legislation mandates a free,
searchable website that provides Alaskans with easy access
to detailed and comprehensive information on state spending.
He asserted that this will encourage better understanding of
state operations and, ultimately, reduce waste and ensure
that funds are directed to the state's most important needs.
He informed the Committee that in 2006 President Bush signed
into law the Federal Funding Accountability and Transparency
Act. The Act calls for the creation of a searchable website
(www.federalspending.gov)of federal contracts and grants
over $25,000.00. He underlined that the legislation was
introduced by a bipartisan team of 4 United States Senators
including: Senator John McCain and Barack Obama. In 2007,
five states (Kansas, Texas, Oklahoma Minnesota and Hawaii)
passed similar legislation mandating an on-line data base
outlining state expenditures. Efforts are underway in 14
other states to adopt a similar mandate. Senator
Weilechowski referenced the handout showing examples of
websites in Texas, Virginia and Missouri. He said that the
states with the information websites had large numbers of
citizens using the site with Missouri reporting as many as
one million hits. He underlined the importance of placing
the provision in statute so it is not affected by political
changes in leadership. He added that placing the provision
in statute gives the Legislature a say in what may or may
not be on the website. He informed the Committee that SB
201 has a zero fiscal note.
Co-Chair Stedman addressed page 3, line 10: "shall be
available October 1, 2009". He asked why the date is so far
in the future.
Senator Weilechowski responded that the Governor provided
the timeline. Previous committees urged the Administration
to have the website finalized before any action was taken on
the bill. He did not object to changing the date. He
acknowledged that the Governor's office has a website up and
running and that it could evolve into something more
polished.
Senator Huggins asked what the difference was between the
Governor's website and the proposed in the bill.
9:15:20 AM
MICHELLE SYDEMEN, STAFF TO SENATOR WIELECHOWSKI, explained
that the Governor's website, Checkbook Online, only lists
some expenditures, but none of the revenue information
outlined in SB 122. She deferred to Kim Garnero for further
clarification. Co-Chair Stedman noted that most of the
information is already available. Senator Weilechowski said
the information is available, but the information would be
consolidated on the website to provide a clearer
understanding for the public. Co-Chair Stedman said the
Legislature is working toward a more easily interpreted
process.
9:17:28 AM
Senator Thomas noted the difficulties of communicating the
future revenue forecast and state expenses to the public.
He asked Senator Weilechowski if the website would help
provide understanding to the public, given the complexity of
the variables involved.
Senator Weilechowski said that the website would help in
providing a level of understanding to the public about
future revenue and expenditures. He noted several ways in
which other states expressed the information on their
websites. There are many ways to explain where the state
revenue comes from and how it is spent.
Senator Dyson felt it would also be helpful to have the
state's outstanding liabilities on the website.
9:19:37 AM
Co-Chair Stedman agreed that both assets and liabilities
should be represented.
Senator Dyson emphasized the importance of clarifying for
the public, the value/erosion of the dollar over time. He
commended the Sponsor for his efforts and underlined the
importance of establishing the provision in statute.
Senator Elton asked about the language on page 2 regarding
receipts and expenditures. He expressed frustration with
the difference between the amount collected and the cost of
operations within the Division of Motor Vehicles (DMV)
licensing. He thought the amount taken in was three times
the amount spent. He asked if the disparity between what is
collected and what is spent would be reflected in the
information on the website.
9:21:47 AM
Ms. Sydeman, answered that the bill, as written, would not
require that information, but thought the idea worth
exploring. She noted that the Administration is attempting
to keep costs down by working within the capabilities of the
State's central accounting system.
9:22:32 AM
KIM GARNERO, DIRECTOR, DIVISION OF FINANCE, DEPARTMENT OF
ADMINISTRATION, added that the relationship of expenditures
to funding source is clear in the budget process and not so
clear in the accounting system. Most appropriations have
multiple funding sources, which means an allocation process
is necessary to match the expenditure to the dollar amount
collected. Attempting to clarify what DMV collects and what
is expended is far more complicated than the first version
of Checkbook Online that is currently available to the
Division. Checkbook Online does not include some
expenditures of the State and certain confidential
information. She explained that the Department of Law would
need to do an analysis on the confidential information. The
provision requires the information be aggregated, which is
not possible with the current system. She noted that as
confidential information comes available, the detail will be
added or a summary will be provided.
Ms. Garnero stated that revenues are not on the website, but
will be by the end of the fiscal year. She went on to
explain that the Alaska Data Enterprise Reporting System
(ALDER) is the first step in replacing aging accounting
payroll systems. She observed that ALDER is a reporting
system data warehouse that is taking legacy information from
the accounting system to a reporting system. The payroll
information is not yet in ALDER, but will be by the end of
the year. How much payroll detail will be added to the
website is yet to be determined. She clarified that the zero
fiscal note is based on using Excel to meet the requirements
on line 5, page 3, with no need to purchase additional
software. She said both the press and the public have
provided positive feedback on the user friendly aspect of
the website.
Co-Chair Stedman asked about the detail of payroll
information. Ms. Garnero said the payroll piece was not
even at the design stage of how detailed it would be.
9:27:16 AM
Senator Elton asked if the Administration could track the
number of hits to the website. Ms. Garnero agreed tracking
the number of hits would be useful, though she did not know
if it was being done.
Senator Huggins noted the value of tracking particular
indicators of government growth; number of people and
authorized positions by year. He wondered if the provision
intends to provide citizens with the ability to track such
information thru the website.
9:28:05 AM
Ms. Garnero said some information is available on the web in
a comprehensive annual report. The report tracks trends
over the years.
Senator Huggins felt that the information should be in a
condensed form to aid understanding of what transpires over
time.
Senator Dyson noted the importance of representing impacts
of the supplemental budget over calendar and fiscal years.
He also noted capital and operating costs are often unclear.
Ms. Garnero said the beauty of using the state's accounting
system is that it is categorized by payments made, not by
legislation that authorized the expenditure.
9:30:17 AM
Senator Olson asked why there is a zero fiscal note if the
compilation of information is required. Ms. Garnero said
the information is currently managed through Excel There are
no costs associated because the software is already
available for processing information. There is financial
impact only if there is a need to purchase software. She
reiterated that the ALDER system will allow for the
retrieval and accounting of 25 years worth of data.
Co-Chair Stedman assumed that by using Excel, the public can
download information more readily. Ms. Garnero agreed and
noted that there has been a great deal of positive support
for the website.
9:31:18 AM
Co-Chair Stedman asked if a person wanted to research a
payment made to the State by British Petroleum, within a
specific month, would that be available as a specific number
or an aggregate number.
Ms. Garnera said the plan now is to present revenues by type
not by source. She further noted that revenues are not
tracked as clearly as expenditures are. That information
would come from the Department of Revenue (DOR) and may or
may not be confidential.
Co-Chair Stedman asked if he understood correctly that the
number would be an aggregate rather than specific.
9:32:40 AM
Ms. Garnero responded that the revenue information would be
by category not by payee.
Co-Chair Stedman asked if the detail on expenses could be
broken down per individual employee of the State.
Ms. Garnero reiterated that only non-payroll expenses equal
to or greater than $1000 would be provided on the website.
The level of payroll information that would be available is
yet to be determined.
Co-Chair Stedman noted that the legislature does receive a
report that provides payroll information regarding salaries
for the higher positions within the executive branch as well
the legislative branch. Ms. Garnero noted that the Division
of Finance produces that report. Senator Thomas asked if
the $1000 threshold is for any non-payroll payment to any
state employee.
9:34:09 AM
Ms. Garnero noted she was uncertain if payroll parameters
are the same as the non-personnel services, parameters.
With non-personnel services the attempt was to cut the
number of venders down to an amount that could be presented
in Excel.
Co-Chair Stedman asked if the website allows a subcontractor
to look up payments of $1000 paid out to general
contractors. Ms. Garnero said that was correct.
Senator Elton concluded from the discussion that there is
currently no ability to track expenses under $1000. He
provided an example of a state employee traveling frequently
with accrued expenses exceeding $1000 in total. Ms. Garnero
responded that in order to track and compile that
information, hundreds of man hours are required. Senator
Elton noted the travel expense information for the executive
branch and the legislative branch is already available. He
asked if providing the information is just a matter of data
entry.
9:36:35 AM
Ms. Garnero reiterated that the manual aggregation of
information is time consuming. She said the information is
not retrievable in an automated fashion from the accounting
system.
Senator Elton assumed that detailed employee travel
information could be obtained through the Legislative
Affairs Agency or the executive branch.
Ms. Garnero also pointed out that the Travel and
Compensation Report is on the Checkbook Online website.
Co-Chair Stedman wondered where the line was between the
amount of information provided for clarity and when to much
information becomes convoluted.
9:37:49 AM
Ms. Garnero said Checkbook On-line is what is currently
being used to meet the research needs regarding any entity
the State makes payments too. With regards to debt loads
and revenue projections, the Comprehensive Annual Financial
Report is a great resource. She further noted that the
budget system produces helpful reports for more strategic
planning objectives.
Co-Chair Stedman noted that the reports mentioned are used
regularly by the legislature. He emphasized the challenges
of reviewing data and thought that the financial reports
could be quite daunting for the general public and even some
staff. He reiterated the desire for a user friendly
information base for true understanding of the financials of
the state.
Ms. Garnero recommended reading the management discussion
and analysis section of the financial report. She explained
that a high level executive overview of financial statements
and the significant events for the year are provided within
the report.
9:41:42 AM
Co-Chair Stedman made a point that it is very easy to get
lost in the complexity of detailed financial reports. He
emphasized the importance of providing information in a
format that is easily understood by the general public.
Ms. Garnero believed the website had potential for being a
communication tool for citizens in understanding the fiscal
health of the State.
Co-Chair Stedman said he would speak to the sponsor about
his concerns.
SANDRA FABRY, STATE GOVERNMENT AFFAIRS DIRECTOR, AMERICANS
FOR TAX REFORM (Testified via teleconference), testified in
support of SB 201 and noted the letter of support from
Americans for Tax Reform (copy on file.) She explained that
she had been working with lawmakers to move towards
providing transparency in government. She said SB 201 is
about providing taxpayers with a consolidated place to get
well-rounded state government finance information. She
quoted Ralph Nadar and noted his support for the concept.
She further pointed out that the movement transcends party
lines at both the federal and state level. She noted the
large percentage of citizens that supported the creation of
the website in other states.
9:49:12 AM
CHRIS NELSON, ALASKANS FOR TAX REFORM (Testified via
teleconference), spoke in support of SB 201 noting the
importance of one, easily accessible information website on
state operations and finances. He maintained that this
provision is an important step and urged that Committee to
move SB 201.
STEVE CLEARY, EXECUTIVE DIRECTOR, ALASKA PUBLIC INTEREST
RESEARCH GROUP (AKPIRG) (Testified via teleconference),
spoke in support SB 201 noting the unique ability to unite
all sides of the political spectrum. He further underlined
the importance of enabling citizens to be actively involved
in government.
9:52:24 AM
Co-Chair Stedman asked Ms. Garnero if the information would
be readily available to citizens. He asked specifically if
the number of state employees requested to be added to the
budget could be accessed through the website. Ms. Garnero
said the information is not available on the Division's
accounting system. The number of employees is a part of the
statistical data within the financial statement. Co-Chair
Stedman said he understood the report was available. He
wanted to make the point that by having understandable,
accessible information online, there is greater potential
for a clearer understanding of government operations and
finances.
9:54:07 AM
Senator Weilechowski concluded his comments by noting that
there is bipartisan support for SB 201. He purported that in
order for the citizenry to function, there needs to be
access to information. He maintained that the bill provides
for that access: information in a simple consolidated area.
9:56:22 AM
SENATE BILL NO. 122
"An Act relating to an optional exemption from
municipal property taxes for residential property."
GRIER HOPKINS, STAFF, SENATOR JOE THOMAS, read from the
Sponsor Statement (On File).
Senate Bill 122 increases the optional municipal
property tax exemption for a private residence from
$20,000 to up to $100,000. This bill does not mandate
any action by municipalities. This bill only allows
local governments the option of increasing their
residential property tax exemption.
Currently there are 12 boroughs and 13 cities - with a
combined population of over 590,000 Alaskans - which
levy property taxes. Each of these is attempting to
respond to homeowners struggling under the rising cost
of energy across the state. In some instances these
issues are coupled with rapidly rising assessed values
of private residences. Across the state, these citizens
are crying for relief.
SB 122 would not affect a smaller, revenue-strapped
community's sources of tax income. Instead, it would
give those municipalities with a large enough
population the ability to relieve the tax burden
largely borne by homeowners. SB 122 would allow local
for control in setting the allowable exemption at any
amount up to $100,000. A local ordinance would then
require voter approval before enactment.
The original option of exempting up to $20,000 was a
good idea when it passed both houses of the Alaska
Legislature unanimously in 2004, and has been a
valuable tool for the municipalities which exercised
this option.
As municipalities around our state attempt to diversify
their income base and respond to the needs of private
citizens struggling under today's rising energy costs,
I urge you to support the timely passage Senate Bill
122.
Co-Chair Stedman asked how many municipalities have used the
exemption. Mr. Hopkins responded that the City and Borough
of Yakutat, Anchorage Municipality, Fairbanks Borough and
the City of Fairbanks and Valdez would implement the
$100,000 exemption.
Senator Huggins asked Mr. Grier to explain the Fairbanks
North Star Borough's allocation of $150,000 for a ballot
initiative in 2008.
JENNIFER YUHAS, SPECIAL ASSISTANT TO MAYOR, FAIRBANKS NORTH
STAR BOROUGH, explained that the $150,000 allocation was
provided for a statewide citizen initiative. If the bill is
passed there would be no need for the allocation.
Senator Huggins referenced Ms. Yuhas' handout and asked
about the three ways communities could respond to the
potential revenue loss from the exemption. He quoted from
the handout "Allowable municipal Property Tax Exemption
increase" (On File):
Each municipality will have the burden to manage
diversification of revenue or retraction of services
associated with implementation of an increased
exemption.
There are 3 options reduction of services:
-decreased budget
-shifting tax burden to non residential properties
-implementing sales, gross receipts, or other taxes.
Senator Huggins asked about the third option that lists:
implementation of sales, gross receipts, or other taxes. He
asked if the list represents a strategy by FBNSB to
implement a tax. Ms. Yuhas said there has not been a
strategy outlined to implement a tax. The tax is just one
option of the three. She reiterated that each community
would decide how to manage the revenue loss.
Co-Chair Stedman asked if there was no other way the
municipalities could relieve this tax burden without passing
legislation. Ms. Yuhas said after researching through the
borough attorney, the assessor's office, and the financial
department, there was no other legal option available.
10:02:29 AM
Ms. Yuhas acknowledged the expressed concern regarding the
implementation of a higher property tax exemption and the
potential shift of the burden to non-residential property
owners. The City of Valdez testified in the last committee
that they would not shift the tax burden to non-residential
property owners. She said it would be up to each
municipality to decide how they would recoup the costs or
work with a decreased budget.
10:04:21 AM
STEVE VAN SANT, STATE ASSESSOR, DEPARTMENT OF COMMERCE
COMMUNITY ECONOMIC DEVELOPMENT, said the Administration does
not have a position on SB 122. The provision expands the
current residential exemption of $20,000. The fiscal note
reflects the cost associated with the implementation of the
$100,000 exemption. In the six communities that use the
exemption, the cost to the State is $4-5 million. This is
due to city oil and gas revenue receiving communities. He
explained that the communities would have to increase the
mill rate, which would cause the State to lose money on oil
and gas revenues.
Co-Chair Stedman asked for an estimate. Mr. Van Sant
reiterated the cost to the state in tax revenue would be $4-
5 million.
Co-Chair Stedman observed that the fiscal note is for $3
million. He asked about mandatory tax exemptions. Mr. Van
Sant explained that the $150,000 exemption is for seniors
who are at least 65 years old and living in their own home.
He elaborated that this exemption is a mandate that all
municipalities must abide by. Municipalities have the
option of exempting anything over $150,000 as outlined in
Title 29, Chapter 45, Section .050. At the present time,
there is only one municipality that has taken advantage of
the option.
10:07:59 AM
TAMMIE WILSON, NORTH POLE (Testified via teleconference),
spoke in support of SB 122. She informed the Committee that
her property tax bill has increased by 63% in one year. She
further explained that in the past four years the tax has
increased 95%. She said her income has not increased at the
same rate. She felt SB 122 is the only way the State can
allow a difference between property tax on homes versus
commercial or other properties. She supported the provision
as optional rather than a mandate. She urged passage of
SB 122.
Co-Chair Stedman noted that citizens do have the right to
appeal an assessment. Ms. Wilson responded that she had
pursued that option.
GARY SUPERMAN, KENAI, spoke in support of SB 122. He
outlined his experience with municipal taxing. In 2004, a
resolution was passed in Kenai supporting SB 136 and raising
the exemption to $20,000. Kenai has since implemented a
sales tax to cover revenue losses from property tax
exemption. He said he understood concerns regarding the
significant increase in the exemption and the potential
impacts to communities. He suggested tying the exemption to
a sliding scale, based on sales tax usage. He maintained
that the concept could provide tax relief, and the necessary
impetus for those without a sales tax, to put one in place.
10:16:26 AM
Co-Chair Stedman asked if Mr. Superman was speaking for
himself. Mr. Superman said he was speaking for himself, but
explained that the Kenai Peninsula Borough (KPB) did support
the property tax exemption in 2004. He said KPB had not yet
taken a stand on SB 122.
SB 122 was HEARD and HELD in Committee for further
consideration.
10:18:07 AM
| Document Name | Date/Time | Subjects |
|---|