Legislature(2009 - 2010)HOUSE FINANCE 519
03/13/2009 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 121 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 121
"An Act relating to a municipal property tax credit for
an improvement that aids in improving air quality."
8:35:52 AM
KAREN LIDSTER, STAFF, REPRESENTATIVE JOHN COGHILL, read the
following statement:
HB 121 is being proposed to be able to provide the
municipalities with optional tools to create incentives
for individuals to take action that will improve air
quality and reduce fuel consumption. Local taxation
policy and discretion is governed by Title 29 of
Alaska Statute. Tax exemptions and tax credits are
only permitted within the authority of this section of
state law. The proposed legislation will expand the
discretion of municipalities in order to allow by
ordinance the creation of programs that will offer tax
credits for actions that the local governing body
determines will improve air quality. The proposed
language requires that eligibility, conditions, and
other criteria for the tax credits be established by
ordinance. This will create a full range of options
for local municipalities to address their air quality
issues rather than just through restriction and
enforcement.
Portions of the Fairbanks North Star Borough were
designated as nonattainment for PM2.5 by the
(Environmental Protection Agency) EPA in December 2008.
Based on the requirements of the Clear Air Act the
state and the borough have three years to develop an
attainment plan that is designed to bring air quality
into compliance with federal air standards. It is
unquestioned that reduction of the amount of fine
particulates released into the air by space heating of
residences and businesses will be a component of any
attainment plan.
The proposed legislation is requested as a fist step in
that process to allow local municipalities the latitude
in developing tax credit programs to address the
important public health and community compliance issues
that result from poor air quality.
8:38:08 AM
Ms. Lidster cited representatives from the Fairbanks North
Star Borough, Air Quality Control, Fairbanks North Star
Borough Assembly, and Alaska Environmental Conservation
staff available to answer questions.
8:38:29 AM
ALICE EDWARDS, ACTING DIRECTOR, DIVISION OF AIR QUALITY,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION (DEC) indicated her
availability to answer questions relating to air quality
issues in Fairbanks.
8:39:01 AM
Representative Fairclough asked for the number of testing
stations in Fairbanks. Ms. Edwards replied that Fairbanks
has one primary air monitoring station located downtown and
a number of additional monitors, in conjunction with the
Department of Environmental Conservation, that have been
implemented in the borough over the past few years to
monitor air quality.
8:39:51 AM
Representative Fairclough asked if the violation site was in
the downtown area. Ms. Edwards indicated that was correct.
Representative Fairclough remarked that she has dealt with
nonattainment in the municipality of Anchorage and offered
that downtown air quality may be more closely affiliated
with cold starts.
8:40:26 AM
Co-Chair Hawker asked if this bill was point specific for a
problem in Fairbanks. Ms. Edwards replied that HB 121
focuses on giving Fairbanks additional tools to address fine
particulate matter problems; Juneau also faces this issue.
Both communities have a variety of sources that contribute
to pollution, but a large part of the problem derives from
space heating or other solid fire fuel heating devices.
8:41:18 AM
JIM CONNOR, AIR QUALITY CONTROL, FAIRBANKS NORTH STAR
BOROUGH, testified via teleconference, indicated he was
available for questions.
8:41:49 AM
Representative Fairclough inquired if Mr. Conner would be
responsible for putting together the attainment plan. Mr.
Conner indicated he would be working closely with the
Department of Environmental Conservation and the
Environmental Protection Agency Region 10 to develop the
attainment plan.
8:42:29 AM
Representative Fairclough asked if he would be the lead in
Fairbanks. Mr. Conner replied that he would.
8:42:41 AM
Representative Gara asked what portion of the pollutants was
generated by automobiles. Mr. Conner replied that the study
is continuing on the actual apportionment between sources of
pollution, but the belief is that automobiles contribute 5
to 10 percent to the problem; space heating components
generate around 25 to 30 percent.
8:44:01 AM
NADINE WINTERS, PRESIDING OFFICER, FAIRBANKS NORTH STAR
BOROUGH ASSEMBLY, testified via teleconference, commented
that the borough is in nonattainment for the PM2.5 and the
borough was trying to reach attainment while making it as
painless as possible for residents and businesses. The bill
could be used to provide incentives through property tax
credits to change old wood stoves for EPA certified wood
stoves; this may reduce particulate matter by 67 percent.
The situation represents a health issue for residents and a
possible hindrance for future economic development. House
Bill 121 provides tools to help the community in terms of
economic development, resident health, and to achieve
attainment. Ms. Winters urged support for HB 121.
8:45:30 AM
Representative Salmon requested more information on the
types of improvements. Ms. Lidster responded that the
options available to the communities are open for their
determination on how to best attain the designated air
quality. Ms. Winters described wood smoke pollution, a
popular method for heating in Fairbanks, as a major
contributor to the problem. The purpose of HB 121 is to give
tax credits for residents to replace their old wood stoves
with EPA certified wood stoves. Tax credits would help
people offset the costs.
8:47:42 AM
Representative Salmon agreed Fairbanks has real problem with
cold during the winter; a wood stove in the home helps as
electricity frequently goes out during cold weather.
8:48:32 AM
Representative Fairclough remarked that she was familiar
with nonattainment during local service in Anchorage, but
she wondered if the inversion affect in Fairbanks prevents
attainment no matter what is attempted.
8:49:10 AM
Ms. Winters remarked that the PM2.5 nonattainment area
covers a significant part of the borough, not just in the
city. The boundaries extend past Ft. Wainwright to Gold
Stream. Representative Fairclough referred to page 1, line
10, "… the credit may be granted for more than one year."
She questioned how Fairbanks would implement this. Ms.
Winters replied that they are waiting on this legislation
before making a final decision, but a consideration is a
dollar for dollar tax credit. She suggested that if it cost
$1500 to replace a wood stove for the EPA certified wood
stove, then there would be a $1500 tax credit.
8:51:05 AM
Representative Fairclough appreciated the challenged in
Fairbanks, but she noted that in past two years there had
been conversation and publicity about the boroughs ability
to tax in different ways. She wondered, in making a local
decision to implement an ordinance, if Fairbanks would take
the financial responsibility and not have a cost return to
the state. Ms. Winters asserted that Fairbanks would accept
that responsibility. She indicated Fairbanks operates under
a tax cap, and it will be painful in the short run, but it
must be done for the health of the residents and future
economic development. Representative Fairclough asked if Ms.
Winters knew the costs of the replacement stoves. Ms.
Winters reported that the EPA certified stove would costs
between $1500 and $2500.
8:52:53 AM
Representative Gara questioned why a wood stove over an oil
heater. Ms. Winters noted that a cord of wood could be
purchased for around $250 or harvested free in certain
public areas. The numbers of homes heating with wood
increased as the price of oil increased. Representative Gara
asked if the rebate program would also be available for
those who go off wood. Ms. Winters indicated that had not
been thought through.
8:54:38 AM
Co-Chair Stoltze asked if the borough has policies promoting
information that wood is available in some public areas. Ms.
Winters replied there was no policy, but in road accessible
borough lands some areas have been opened up for local
timber harvest.
8:55:40 AM
Representative Fairclough asked if there was a state
assessor online. Co-Chair Stoltze responded there was not.
8:55:51 AM
Representative Fairclough remarked that when other cities
take tax credits against property taxes the community is
adversely affected by student reimbursement calculations,
depending on if the state assessor accepts that credit and
how it is applied. She referred to a tax credit in Anchorage
for religious organizations and how some of these credits
adversely impact the student rate. She inquired if that had
been considered in this legislation. Ms. Winters remarked
that this tax credit will not affect their education
funding.
8:57:25 AM
Co-Chair Stoltze asked if Steve van Sant, the State
Assessor, attended the recent Alaska Municipal League event
(copy on file). Ms. Winters replied she had not participated
in the meeting, therefore she did not know who attended.
8:57:47 AM
Representative Kelly asked if wood boilers qualify under
this bill. Ms. Winters replied it could be investigated, but
she not sure how it would be handled. Representative Kelly
wanted more clarification if wood boilers would qualify.
9:00:10 AM
Representative Austerman felt this bill was written so that
any community in Alaska who wanted to change their air
quality could develop any method they wanted. He asked if
that was a correct interpretation.
9:01:05 AM
Ms. Lidster stated in HB 121, page 1, line 12-13, that "a
credit may be granted under this section and to property
located in areas that do not meet air quality standards
required by federal or state law or regulation." She did not
know how far that extended, but it could be researched.
Representative Austerman asked if DEC could answer the
question.
9:01:50 AM
Ms. Edwards replied that three communities have air quality
problems: Fairbanks, Anchorage, and Juneau. Representative
Austerman questioned if this bill was specific to those
three communities. Ms. Edwards remarked she could not answer
that question. Co-Chair Stoltze asked if any community,
other than the Fairbanks North Star Borough, advocated this
legislation. Ms. Lister reported she had no contact with any
other community. Representative Austerman asked if DEC could
provide this information.
9:03:10 AM
Ms. Edwards replied she would work with the bill sponsor and
the borough to obtain an answer. Representative Austerman
asked if DEC sets the standards. Ms. Edwards declared that
air quality standards are set by the federal Environmental
Protection Agency, and then the state adopts the federal
standards. Representative Austerman asked if the standards
had been adopted. Ms. Edward replied they are in the process
of adopting them.
9:03:58 AM
Representative Kelly agreed that the PM2.5 problem in
Fairbanks is real in the core area, but the EPA extended the
area to cover all the way to the base of the Alaska Range
where no human lives. He wondered if Fairbanks had been able
to get a reduction of this area. Ms. Lister replied she had
not been given information that the area had been reduced.
Ms. Edwards remarked that the DEC was successful in reducing
the original EPA boundary. The boundary does not include the
flats south of the river, Eielson Air Force Base, and the
training areas to the east, but does include North Pole, Ft.
Wainwright, downtown Fairbanks, Gold Stream valley out to
Ester, and Fox. Representative Kelly read on page 1, line 5-
8, "A municipality may, by ordinance, provide for an air
quality improvement tax credit to offset a portion of the
property taxes due on property that, during the immediately
preceding tax year, has been improved in a way that aids
improving the air quality in the municipality." He wondered
how this would work to qualify for the tax credit. Ms.
Winters replied that whatever year improvements are made,
the following year the tax credit would be applicable.
9:07:43 AM
Representative Kelly remarked that the EPA had cut in half
the PM2.5 per cubic liter from 65 to 30 which changed the
equation. He indicated his frustration with this decision
and questioned the medical impact studies in Fairbanks. Ms.
Winters replied there was no study on the medical
implications, but she reported receiving many constituent
calls in the last year indicating a public perception that
air quality is a problem. Representative Kelly remarked that
he did not believe the number change made by the EPA made
any difference and he strongly believed that the EPA was
unreasonably hassling the community.
9:11:49 AM
Representative Fairclough asked the state assessor, now
online, how the credit would be calculated and if there
would be an adverse effect on school funding.
STEVE VAN SANT, STATE ASSESSOR, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT testified via
teleconference, that this bill goes to the tax side, not the
assessment side. If the improvement is exempted from the
assessment for full value, the assessor's office will add it
back in for school funding. This is a tax credit rather than
an assessment exception. There will be times that the credit
will probably be different from what an exemption would be
because the exemption might not show up on the improvement
value. In reality it will not affect the full value since it
is on the tax side.
9:14:27 AM
Representative Austerman read HB 121, page 1, line 10-13,
"The ordinance may limit the availability of a credit to
some, but no all, types of improvements for which a credit
may be granted under this section and to property located in
areas that do no meet air quality standards required by
federal or state law or regulation." His interpretation
indicated that it would be open to all areas. Co-Chair
Stoltze asked Ms. Lidster if she needed that much direction
and specificity from a state statute or just the ability to
grant the tax credit for Fairbanks.
9:15:44 AM
Ms. Lidster indicated that the legislation was brought
forward for communities in nonattainment. She could not say
how it would be interpreted beyond that. Representative
Austerman believed that the interpretation was open
according to his reading of the bill.
9:16:39 AM
Representative Gara believed this bill could be used for
communities that want to offer the tax credit, but not
telling communities what they have to do. He observed that
there is a movement of individuals in some communities that
want to use alternative energy, such as wind or solar. He
offered that in helping Fairbanks, tax credits could also be
available for other communities should they wish. He thought
a questionable part of the sentence on line 12 could have a
period inserted after the word "section." This would allow
communities to offer the tax credit if they so choose.
9:18:09 AM
Co-Chair Hawker asked if public testimony was concluded. Co-
Chair Stoltze invited Kate Troll to testify.
9:18:30 AM
KATE TROLL, EXECUTIVE DIRECTOR, ALASKA CONSERVATION ALLIANCE
(ACA), declared that the Alaska Conservation Alliance, an
umbrella organization of 40 conservation groups, supports
the idea of allowing municipalities to create an incentive
to help them reach their particulate matter standard of 2.5.
The bill is being driven by the needs of Fairbanks to reach
the attainment area; Juneau is also in non-attainment. Ms.
Troll believed HB 121 enables communities to have one more
tool to help meet air quality standards. She acknowledged
that if this tax credit option could be extended to other
communities to address their needs to reduce fuel
consumption or attain air quality challenges, then the ACA
supports this effort.
9:20:36 AM
Representative Foster asked if the conservation group list
is updated. Ms. Troll replied that it is updated regularly
and is available on the ACA website.
9:21:08 AM
Co-Chair Stoltze announced public testimony closed.
9:21:32 AM
Representative Gara observed that all communities should be
allowed to decide if they want to grant tax credits to their
citizens that want to reduce air pollution. Co-Chair Stoltze
noted that the bill would not pass out today as there were
so many questions and concerns. Representative Foster
indicated his support for this bill.
9:22:20 AM
Representative Austerman expressed his need to understand
the bill more clearly. He believed the bill, as it currently
reads, could be interpreted both ways. He agreed with
Representative Gara that there were many communities that
would like to be more diversified in alternative energy
choices.
9:23:03 AM
Representative Fairclough favored the bill passing from the
committee at the appropriate time. She believed the existing
language already allows the flexibility that Representative
Gara and Representative Austerman suggested. She referred to
page 1, line 12-13, "…areas that do not meet air quality
standards required by federal or state law or regulation."
She believed that because of the inclusion of "or" the bill
already conveys that it includes any community.
9:23:54 AM
Co-Chair Hawker questioned if there is any limit to the
amount of credit granted under the authority requested in
this bill.
9:24:12 AM
Ms. Lidster understood there to be no limit as written. Co-
Chair Hawker agreed that is how the bill reads; there is no
limit on the amount of credit. Co-Chair Hawker expressed his
concern that this bill permits any municipality to allow
credits; there is no constraint being applied. He noted that
HB 121 was written for the immediate needs of Fairbanks and
Juneau. The fact that the credit is unlimited and any action
taken by the municipal assembly that would offer credits up
to unlimited amount, is going to transfer the property tax
obligation from the beneficiaries to the rest of the
community. Co-Chair Hawker expressed his hesitancy and
concern passing a bill that would empower his assembly to
pass credit to special interests groups that would have to
be born by all the citizens residing in his district. Co-
Chair Hawker noted he understands Representative Kelly's
dilemma of not liking this idea, but acknowledged Fairbanks
is being backed into the wall by federal regulations.
9:26:26 AM
Co-Chair Hawker read on page 1, line 9, the "…amount of the
credit shall be based on a percentage of the verifiable
costs…" He contended that the "shall" makes it a mandatory
methodology. He wondered if this inappropriately limits the
bill. He ascertained it might be more appropriate for the
credit to be on a unit cost option. This would protect the
community and other tax payers to whom the tax burden would
be transferred. The language is limiting in that there does
not appear to be the ability to have a percent of variable
costs up to a certain amount.
9:28:16 AM
Co-Chair Hawker read page 1, line 10-13, "...The Ordinance
may limit the availability of a credit to some, but not all,
types of improvements for which a credit may be granted
under this section and to property located in areas that do
no meet air quality standards required by federal or state
law or regulation." He believed that the term "may"
indicated that it was purely permissive, since it could also
be read as "may not" and if so, everything beyond that was
irrelevant. The section "…to some, but not all…" gives the
government complete latitude. Co-Chair Hawker suggested that
in redrafting this legislation, he wanted to protect his
constituents from the transference of tax burdens to special
interest groups. The bill needs to be written simpler to
protect his community.
9:30:12 AM
Co-Chair Stoltze agreed with Co-Chair Hawker.
9:30:21 AM
Representative Foster believed there needs to be a mechanism
to reward communities for making air quality changes. He
acknowledged that different solutions for alternative energy
depend on the location of and variables within the
community. Co-Chair Stoltze believed Fairbanks would rather
not deal with this issue.
9:31:34 AM
Representative Kelly commented that tax based erosion and
general applicability concerned him. He wanted the bill to
stay narrow enough to prevent erosion of the local tax base
which results in more municipal revenue sharing pressures.
He expressed his fear that the bill could die on the floor
if it moved too far away from solving the specific problem.
Representative Kelly indicated he had problems opening the
bill up beyond its original intent. He also did not want to
hear from constituents who believed they were being denied
conversions of their stove or have people playing games to
get the tax credit. He worried about the bill's application
if local officials were empowered to do things with the bill
that was never intended.
9:35:07 AM
Representative Kelly believed his constituents wanted to
"fight the calendar" on the EPA ruling until first-gas
arrives in Fairbanks. He asked Ms. Winters if it was the
intention of the borough to do what they had to do to reach
compliance or to "fight the calendar."
9:35:50 AM
Ms. Winters observed that a report on how to reach
attainment in Fairbanks must be reported to the EPA within 3
years. Fairbanks is trying to reach attainment to meet EPA
requirements and deal with the health of residents, but not
hinder any economic development projects that might bring
gas to Fairbanks.
9:37:36 AM
Representative Kelly believed the borough could generate a
great deal of expense over a temporary measure that may look
like a joke when the gas pipeline is developed and in
general use. He recognized that the borough was being
threatened under a timeline and there was no easy solution.
9:38:34 AM
Co-Chair Stoltze invited all to work with the bill's
sponsors to try and get the bill back to the committee as
quickly as possible.
HB 121 was HEARD and HELD in Committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AML Resolution.doc.pdf |
HFIN 3/13/2009 8:30:00 AM |
HB 121 |
| FNSB_letter of support herron.doc.pdf |
HFIN 3/13/2009 8:30:00 AM |
HB 121 |
| FNSB_letter of support_Munoz.doc.pdf |
HFIN 3/13/2009 8:30:00 AM |
HB 121 |
| memo to Finance for hearing.doc |
HFIN 3/13/2009 8:30:00 AM |
HB 121 |
| sectional.doc |
HFIN 3/13/2009 8:30:00 AM |
HB 121 |
| sponsor statement.doc |
HFIN 3/13/2009 8:30:00 AM |
HB 121 |
| Letter ACA.pdf |
HFIN 3/13/2009 8:30:00 AM |
HB 121 |