Legislature(2005 - 2006)HOUSE FINANCE 519
04/12/2006 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB390 | |
| HB475 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 390 | TELECONFERENCED | |
| += | HB 475 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 390
An Act limiting the amount that a municipality may
charge for an appeal of a residential real property tax
assessment to the municipality's board of equalization.
REPRESENTATIVE BILL STOLTZE, SPONSOR, explained that often
times, homeowners feel that the value of their home has been
wrongly assessed. In order to challenge that assessment, an
appeal must be filed with their municipality's board of
equalization. Currently, municipalities charge a variety of
fees associated with the assessment appeal.
HB 390 would cap the amount a municipality can charge for a
homeowner to appeal the assessment on their home at $10
dollars if the municipality has a population greater than
30,000. The legislation is an attempt to allow homeowners
due process in having their home assessed by local
government.
8:50:09 AM
In response to Representative Weyhrauch, Vice Chair Stoltze
noted that there are communities that provide some built-in
safety valves. A municipality would have the option to
charge no fee. Co-Chair Meyer pointed out that Fairbanks
does not have a fee and that Anchorage has a sliding scale
fee.
8:51:40 AM
Representative Holm asked if Representative Stoltze's
district had a sales tax. Vice Chair Stoltze responded some
sections of his district do and some don't.
Representative Holm commented that he was philologically
opposed to any property tax. He was curious why any fee was
charged to appeal the assessment. Vice Chair Stoltze
acknowledged that was his preference, however, had
compromised, inserting a $10 dollar fee.
Co-Chair Meyer thought that the Anchorage Assembly would not
support the legislation, seeing it as an unfunded mandate.
8:55:00 AM
PUBLIC TESTIMONY
KATHIE WASSERMAN, ALASKA MUNICIPAL LEAGUE (AML), JUNEAU,
explained that AML opposes HB 390, as such decisions should
be left as a matter of local control. Out of 48
municipalities that have property taxing authority, only 3
now charge a fee for property tax appeals. Those
municipalities are Ketchikan Gateway Borough, the
Municipality of Anchorage (MOA) and the Kenai Borough. The
fee is done on a sliding scale based on property value
resulting in a fee from $30 dollars to a high of $100
dollars. Older citizens are exempt from property tax. She
pointed out that appeals result in high costs to the
municipalities.
Ms. Wasserman disagreed with statements that the process was
"rigged". The amount of appeals has dropped dramatically
with the imposition of a fee. Anchorage appeals dropped
from a yearly average of 2,500 to 700. The fee affects
th
approximately 1/5 of the population and is reimbursed if
the property owner's appeal is successful.
Ms. Wasserman said the Kenai Borough is an entity with
taxing authority with a population of 50,000. She wondered
if the bill should be reworded to indicate only the
Municipality of Anchorage.
8:58:04 AM
Vice Chair Stoltze said his constituents requested the
legislation. The MatSu Borough is now approaching 80,000
residents. He did not believe the bill was a special
interest for Anchorage.
8:58:42 AM
SHANE HORAN, (TESTIFIED VIA TELECONFERENCE), KENAI PENINSULA
BOROUGH, stated that the Kenai Borough Assembly instituted a
filing fee in 2005, mirroring that of Anchorage with a $30
dollar fee for property assessed up to $100 thousand
dollars; $100 for property assessed from $100 to $500
thousand dollars and a $200 fee for property assessed up to
$2 million dollars.
According to the code, if the appeal results in a reduction
from the original assessed value or if the appeal is
withdrawn before the evidence is due to the Board of
Equalization, then the filing fee is refunded.
Additionally, the appeal fee may be waived as a result of
one's annual income as provided in the poverty guidelines
for Alaska.
Mr. Horan pointed out that the filing fee has reduced the
number of appeals and has helped that office become more
efficient. The Alaska Statutes note that the burden is on
the property owner to prove that their assessment was
unequal or over-valued. Their office, as a policy, must
inspect every appeal property, address the owners concerns,
prepare presentations to the Board of Equalization, and
often find the property owner's absent or not the presenting
testimony. The fee, as instituted, gives the property owner
more ownership in the appeal process. The fee is reimbursed
to anyone that wins the appeal, which makes for a reasonable
accommodation for the property owners.
Mr. Horan noted that the Borough does offer, through
ordinance, the opportunity for anyone an informal meeting
with the assessor regarding their assessment. The action
has been successful in many of the appeals in an informal
format. He stated that the $10 fee would not be a
sufficient deterrent for frivolous appeals. In 2004, there
were well over 600 appeals and with the institution of the
appeal-filing fee for 2005, there were only 280 appeals.
Mr. Horan noted that the last population estimate for the
entire Kenai Borough was 51,250 residents.
Vice Chair Stoltze commended the City of Kenai for a more
"enlightened" appeal process. He objected to the use of the
term "frivolous", when speaking to someone's property tax.
9:03:47 AM
Co-Chair Meyer understood that it cost the municipality
about $100 dollars per appeal. Mr. Horan said that was
conservatively correct, as they would spend approximately 4
hours on each appeal. Co-Chair Meyer agreed that no one
likes to pay property tax and if the fee was free or even
$10 dollars, it could be detrimental to the boroughs. Mr.
Horan reiterated that the fee is returned if the homeowner
wins the appeal. Last year, the Borough made approximately
$2,300 dollars total from collection of fees.
9:06:19 AM
STEVE VAN SANT, (TESTIFIED VIA TELECONFERENCE), STATE
ASSESSOR, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC
DEVELOPMENT, ANCHORGE, clarified that the beginning fee in
Anchorage starts at $30 dollars for property up to $100
thousand dollars, and is refundable if the owner wins the
appeal. He noted there is an "informal review" process,
where the unhappy taxpayer can speak with the assessor about
their assessment. Mr. Van Sant stated that there are many
people bypassing the assessor's office and not taking
advantage of the informal appeal; the fee encourages the
informal review process. He acknowledged that no one likes
to be taxed. Mr. Van Sant hoped that the assessor & staff
make good judgment; sometimes, however, they do make
mistakes. They are experts in their field and the majority
of time, are correct, as they know what they are doing given
their training.
9:10:00 AM
Representative Weyhrauch commented on the increased
assessment of his own home, pointing out that after
contacting the local assessor's office that office was quite
helpful and not adversarial and an agreement was made.
9:11:07 AM
MARTY MCGEE, (TESTIFIED VIA TELECONFERENCE), ASSESSOR,
MUNICIPALITY OF ANCHORAGE, advised that the appeal process
is designed to addresses issues of value. That is the only
thing that the Board of Equalization is empowered to do.
Frivolous concerns result when taxpayers attempt to address
concerns in a way that it is not designed.
Mr. McGee pointed out that Anchorage had a system that was
"badly broken" and sued by the taxpayers. The Courts gave
the Municipality a one-year time period to determine a
system that works to address appeals. He stated that the
tax was implemented to address the appeals and that it has
been successful. The taxpayers have not been working with
the appraisal staff to resolve those issues and that the
filing fee is an essential component making the system work.
Over 76% of the fees have been refunded to the taxpayers.
He pointed out that an assessor does not have the authority
to go inside a property being appraised.
9:14:09 AM
Co-Chair Meyer asked the cost to the Municipality of
Anchorage (MOA) to process an appeal. Mr. McGee thought it
was higher than $100 dollars, indicating they deal with many
types of properties. For a home appeal, it is more in the
neighborhood of $200 dollars per appeal. He estimated that
their Office was saving the Anchorage taxpayers about $1
million dollars per year by offering the informal process
and fee ladder.
Co-Chair Meyer inquired the year that the fee was put in
place. Mr. McGee replied there was no fee in place until
2004. Once the fee was implemented, the appeals decreased
significantly. He added that no fee is charged for property
review.
Vice Chair Stoltze noted his frustration in his attempts to
get the MOA to indicate a position on the bill.
Mr. Van Sant stated that because the number of informal
appeals decreased does not mean that the total number of
reviews has decreased. In 2004, they reviewed about 2,800
parcels; in 2005, the number of appeals was 667; however,
there was 4,100 informal reviews. The process has forced
people to use the 40-day review period. In the past,
because the taxpayer waited until the last minute, they were
forced to file a formal appeal, bringing it into the cost
mode.
PUBLIC TESTIMONY CLOSED
9:18:48 AM
Vice Chair Stoltze claimed he had limited the legislation to
residential appeal fees and thought it was a modest
proposal.
Co-Chair Meyer MOVED to ADOPT Amendment #1. Vice Chair
Stoltze OBJECTED.
Co-Chair Meyer pointed out that currently, a sliding scale
exists in Anchorage. The amendment would change the current
scale to:
· $25 as a fee for property assessed to $99,999
· $50 as a fee for property assessed to $100,000-$499,999
· $100 as a fee for property assessed to $500,000-
$1,999,999
· $200 as a fee for property assessed over $2,000,000
Co-Chair Meyer noted his time on the Anchorage Assembly,
realizing it costs the Municipality to do the assessment
work; if no fee is charged, people will file. Co-Chair
Meyer acknowledged the steep jump MOA made in 2005 and did
not want to see the appraisal ability as a money raiser for
the cities.
Vice Chair Stoltze respected the comments made by Co-Chair
Meyer, understanding various local challenges but maintained
his objection.
Representative Kerttula asked if any other place in the
State had a $200 dollar fee at this time. Mr. Van Sant
replied that the fee is based on the value of the property;
typically that amount would be a commercial property.
9:23:19 AM
Representative Holm was confused about the proposal as it
takes away local control. Co-Chair Meyer pointed out that
the amendment does not state that the municipality "must"
charge but rather "may" charge. Fairbanks would have the
option either way.
9:25:51 AM
Vice Chair Stoltze WITHDREW his OBJECTION to Amendment #1.
Representative Kelly OBJECTED.
A roll call vote was taken on the motion to adopt Amendment
#1.
IN FAVOR: Joule, Kerttula, Moses, Weyhrauch, Hawker,
Meyer
OPPOSED: Holm, Kelly, Stoltze, Chenault
Representative Foster was not present for the vote.
The MOTION PASSED (6-4).
9:26:59 AM
Representative Joule stated that he supported the amendment
in payback to Representative Kelly, indicating he would not
object to the bill moving from Committee but maintained that
these concerns should be addressed at the local level.
Representative Hawker commented that the State Legislature
has the authority to interfere with local issues and matters
when local authority is abusing the citizenry. Following
the weight of testimony from the municipalities, it has
become clear that there are safe guards already in place.
He agreed that having a fee for the formal process diverts
many claims. Based on testimony, he airs on the side of
support for the municipalities & local control. He noted he
does not support the bill.
9:29:42 AM
Co-Chair Meyer agreed with Representative Hawker, however,
suggested that the process does not always work in that way.
He noted the public's frustration and hoped that appeals
were done correctly the first time. Providing a fee
schedule gets the State closer to that intent.
Representative Kelly suggested that the type of pressure
recommended by the bill keeps the assessor on track.
Vice Chair Stoltze interjected that he respected the debate
of the Committee & the points raised. He stated that he had
mixed emotion regarding "taking the bill" to the House
Floor. He apologized to the Municipality of Anchorage and
noted he would respect the decision of the Committee whether
to table the bill.
Co-Chair Meyer noted the issue is of enough concern that he
would support moving it from Committee.
9:33:04 AM
Representative Hawker MOVED to REPORT CS HB 390 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 390 (FIN) was reported out of Committee with a "no"
recommendation and with zero note #1 by the Department of
Commerce, Community & Economic Development.
9:33:58 AM
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