Legislature(2003 - 2004)

01/20/2004 08:00 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 241-MUNICIPAL PROPERTY TAX EXEMPTION                                                                                       
                                                                                                                                
[Contains discussion of SB 36.]                                                                                                 
                                                                                                                                
[Tape didn't  record for  the first 30  seconds, but  no testimony                                                              
was lost.]                                                                                                                      
                                                                                                                                
Number 0067                                                                                                                     
                                                                                                                                
CHAIR WEYHRAUCH  announced that  the first  order of business  was                                                              
HOUSE BILL NO.  241, "An Act relating to optional  exemptions from                                                              
municipal property taxes on residential property."                                                                              
                                                                                                                                
Number 0110                                                                                                                     
                                                                                                                                
SHARALYN  WRIGHT, Staff  to Representative  Mike Chenault,  Alaska                                                              
State Legislature,  presented HB  241 on behalf of  Representative                                                              
Chenault, sponsor.   She  informed the committee  that HB  241 has                                                              
two provisions, one  of which is to give municipalities  an option                                                              
to provide  an exemption on residential  property taxes.   It does                                                              
not affect  taxes levied in  a service  area.  Under  current law,                                                              
municipalities may  exempt up to $10,000 of the  assessed value on                                                              
any   single  residential   property.     She   listed  the   five                                                              
municipalities that  offer this  exemption:  Bristol  Bay Borough,                                                              
Kenai  Peninsula  Borough,  Fairbanks   Northstar  Borough,  North                                                              
Slope Borough,  and the City of  Valdez.  The second  provision is                                                              
to increase  the tax  exemption on real  property from  $10,000 to                                                              
$20,000 for volunteer  firefighters or emergency  medical services                                                              
personnel.   She  deferred further  statements  to Gary  Superman,                                                              
Vice  President,   Kenai  Peninsula  Borough  Assembly,   who  was                                                              
participating via teleconference.                                                                                               
                                                                                                                                
CHAIR  WEYHRAUCH asked  Ms. Wright  who really  wanted this  bill,                                                              
that  is,  what   are  some  of  the  more   factual  developments                                                              
regarding why  this bill came  about.  He  asked why this  bill is                                                              
coming before the legislature now as opposed to earlier.                                                                        
                                                                                                                                
MS.  WRIGHT,  in  response,  said   the  Kenai  Peninsula  Borough                                                              
Assembly   passed   a   resolution    in   2003   that   requested                                                              
[Representative  Chenault]  submit   this  bill.    She  said  she                                                              
thought Mr. Superman is more qualified to answer that question.                                                                 
                                                                                                                                
CHAIR  WEYHRAUCH   asked   Ms.  Wright  if   the  [five   boroughs                                                              
previously mentioned] had any comments to make about the bill.                                                                  
                                                                                                                                
MS. WRIGHT  remarked,  "None that  we've been  apprised of."   She                                                              
said the  bill only  gives the municipalities  the authority,  and                                                              
it is her  understanding that everyone  has to have a  vote of the                                                              
people  before that  can increase.   She  said it  only gives  the                                                              
municipalities the authority to do so.                                                                                          
                                                                                                                                
Number 0380                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HOLM said  he served  on  the Fairbanks  Northstar                                                              
Borough  Assembly,  and Ms.  Wright  is  correct.   He  said  he'd                                                              
recently had a  discussion about this [same subject],  and in that                                                              
discussion he was  told the second part of this  bill is important                                                              
because  it will  provide  the ability  to  give  a reduction  for                                                              
volunteer  firefighters  for  taxation.     He  said  this  is  no                                                              
different   than    what   is   done   for    senior   [citizens].                                                              
Representative  Holm said it  is his  understanding that  Title 29                                                              
does not  allow "us" to give  any exemptions as  boroughs, without                                                              
the state's authority.   He remarked, "We really  care about this,                                                              
but we  care about  it because  of the  fact that  we can't  do it                                                              
under Title 29, as I understand it."                                                                                            
                                                                                                                                
CHAIR  WEYHRAUCH said  he has  two issues  with the  bill, one  of                                                              
which  is  the   State  of  Alaska's  "fiddling"   with  municipal                                                              
exemptions.   The  other  issue  is in  regard  to the  [possible]                                                              
long-term impact  to other  communities by doing  this.   He asked                                                              
if the  Alaska Municipal League  (AML) has  looked at this  from a                                                              
more  global  perspective, and  whether  it  has any  analysis  or                                                              
comment.                                                                                                                        
                                                                                                                                
MS. WRIGHT  answered not that  she is aware  of.  She said  one of                                                              
the  prime  parts of  this  bill  is that  it  gives  incorporated                                                              
municipalities  the   authority  to  do  this,  not   any  of  the                                                              
villages;  therefore, it  would  impact the  state's urban  areas.                                                              
Ms.  Wright  said  passing  HB 241  does  not  mandate  that  this                                                              
happen, rather  it gives  the local assembly  the authority  to be                                                              
able to do this.   She said Representative Holm  correctly pointed                                                              
out  that Title  29 does  not  "give us  that  authority" at  this                                                              
point.   Municipalities would  have the option  to do it  if there                                                              
is  a tax  surplus, if  people have  a disaster,  or for  whatever                                                              
reason, she explained.                                                                                                          
                                                                                                                                
CHAIR WEYHRAUCH  asked about increases  in the exemption  amounts.                                                              
He asked  if there was any  reason that those  increased exemption                                                              
amounts were  picked, and  if there  is a  study that exists  that                                                              
justifies those numbers.                                                                                                        
                                                                                                                                
MS. WRIGHT  deferred the question  to Mr.  Superman.  She  said it                                                              
was not something the sponsor was involved in.                                                                                  
                                                                                                                                
Number 0660                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH  said that  when  the legislature  addresses  the                                                              
permanent fund  dividend (PFD), it never  seems to be able  to say                                                              
no to  anyone who requests  a PFD check to  be sent out  of state.                                                              
He asked  why this  kind of exemption  is limited to  firefighting                                                              
services and medical  services.  He asked why  this exemption does                                                              
not include people [in other capacities].                                                                                       
                                                                                                                                
MS.  WRIGHT stated  her belief  that the  Kenai Peninsula  Borough                                                              
already  gives tax  exemptions  to  volunteer firefighters.    She                                                              
suggested  this may  be part  of  an emotional  response to  other                                                              
things  that  "we"  have  no  control  over.    She  deferred  the                                                              
question  to Mr.  Superman, and  she  said she  is not  absolutely                                                              
certain of the facts behind this particular exemption.                                                                          
                                                                                                                                
CHAIR   WEYHRAUCH  asked   if  it   was   appropriate  for   local                                                              
legislators,  local  bodies, and  local  people to  identify  what                                                              
exemptions  they may  want as  opposed to  a legislature  figuring                                                              
out what sort of  exemptions may exist.  He asked  why this is not                                                              
opened up to everyone so the municipalities could decide.                                                                       
                                                                                                                                
MS. WRIGHT offered  her belief that this was a  choice that should                                                              
be made on a  local level, and she said it was  something that the                                                              
[Kenai Peninsula Borough Assembly] had requested.                                                                               
                                                                                                                                
CHAIR  WEYHRAUCH  asked  if  she   was  referring  to  the  global                                                              
exemption choice or just these specific exemptions.                                                                             
                                                                                                                                
MS.  WRIGHT, in  response, said  these specific  exemptions.   She                                                              
said the  supporting documents and  resolution were passed  by the                                                              
Kenai  Peninsula  Borough  Assembly   on  04/01/03.    Ms.  Wright                                                              
deferred the question  about the reasoning behind the  bill to Mr.                                                              
Superman.                                                                                                                       
                                                                                                                                
Number 0900                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said it  seemed to  him  that the  main                                                              
thrust of  the bill was to  increase the amount of  the exemption,                                                              
although  the  fiscal  note completely  omits  any  discussion  of                                                              
that.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  HOLM  said  this bill  only  has  to do  with  the                                                              
taxation  of the borough  and of  people within  the borough.   He                                                              
said it has nothing to do with the state.                                                                                       
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  the  analysis in  the fiscal  note                                                              
omits any mention  of that.  He said that, as a  matter of policy,                                                              
when  the  administration  prepares   a  fiscal  note,  it  should                                                              
analyze the piece  of legislation in front of  it.  Representative                                                              
Gruenberg  said he  is choosing  this bill because  it seems  that                                                              
this particular  fiscal note doesn't  talk about the main  part of                                                              
the bill.                                                                                                                       
                                                                                                                                
Number 1020                                                                                                                     
                                                                                                                                
STEVE VAN  SANT, State Assessor,  Division Of Community  Advocacy,                                                              
Department  of   Community  &  Economic  Development   (DCED),  in                                                              
response  to a  question  from Chair  Weyhrauch,  said the  fiscal                                                              
note from DCED  is a zero fiscal  note, and that it  is his belief                                                              
that the  Department of  Revenue has  a fiscal  note that  shows a                                                              
possible  impact of  close to  $2 million.   He  said that  impact                                                              
comes   from  the   possibility  of   all  [five]   municipalities                                                              
increasing the  exemption from $10,000  to $50,000.   He remarked,                                                              
"It could  take about $2  million from  oil and gas  revenues that                                                              
currently go  to the state  and put them  back" ...  Mr.  Van Sant                                                              
said this  bill basically shifts  the tax burden  from residential                                                              
properties to other properties.                                                                                                 
                                                                                                                                
REPRESENTATIVE  HOLM  said  it   is  his  understanding  that  the                                                              
shifting  of  the burden  of  that  taxation is  not  specifically                                                              
enumerated because  "we have no idea  where they would  be able to                                                              
do that or when they would do it at any given point in time."                                                                   
                                                                                                                                
MR.  VAN SANT,  in response,  said that's  correct.   He said  [it                                                              
isn't clear]  whether [municipalities]  are going to  increase the                                                              
exemption,  and the  only  thing that  the  Department of  Revenue                                                              
could do  was give an  estimate.  He said  if it was  increased to                                                              
the total amount, it could [total] $1.8 million.                                                                                
                                                                                                                                
CHAIR  WEYHRAUCH told  Mr. Van  Sant  that the  committee did  not                                                              
have [the Department of Revenue's] fiscal note.                                                                                 
                                                                                                                                
Number 1154                                                                                                                     
                                                                                                                                
MS.  WRIGHT said  this  issue is  being worked  on,  and the  $1.8                                                              
million fiscal  note is  not correct  and was  not supposed  to be                                                              
discussed today.                                                                                                                
                                                                                                                                
Number 1188                                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN asked  if there was anything at  all in HB 241                                                              
that  could set  some kind  of precedent  that could  lead to  the                                                              
elimination of  the current senior  property tax  exemption and/or                                                              
the disabled veteran's property tax exemption.                                                                                  
                                                                                                                                
MS.  WRIGHT  said   it  is  not  the  intent  of   this  piece  of                                                              
legislation to  do anything like  that.  She  said to the  best of                                                              
her knowledge  it's not  attached, and  it does  not and  will not                                                              
affect any senior exemption at all.                                                                                             
                                                                                                                                
Number 1264                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  asked,   on  behalf  of  Representative                                                              
Berkowitz  who could  not  attend the  committee  meeting, if  Ms.                                                              
Wright could  please explain  why there is  a restriction  on this                                                              
exemption with respect  to funding special services  in [lines 6-8                                                              
of the bill].   He asked for  the reason behind the  exemption for                                                              
special service areas.                                                                                                          
                                                                                                                                
MS.  WRIGHT said  it  was her  understanding  that this  exemption                                                              
would not affect the taxes for special services areas.                                                                          
                                                                                                                                
REPRESENTATIVE GRUENBERG  said he understands what  the bill does,                                                              
the question is why.                                                                                                            
                                                                                                                                
MS. WRIGHT said it  is her belief that "we" can't  do that by law.                                                              
She deferred the  question to Mr. Superman.   Ms. Wright remarked,                                                              
"We  can't,  without  an  additional   special  vote,  affect  the                                                              
[millage] rate that affects those special services areas."                                                                      
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  if that's  the case, the  question                                                              
is if  [the legislature] is giving  the municipality the  power to                                                              
exempt one  type of tax,  why not a  tax for these  other purposes                                                              
if they so choose.   He said it would seem to be  in line with the                                                              
policy behind the  bill.  Representative Gruenberg  said he didn't                                                              
see anything in  Kenai Peninsula Borough Resolution  2003-035 that                                                              
would  request this  kind of  an exemption  for special  services.                                                              
He asked, "How did that get in here from this resolution."                                                                      
                                                                                                                                
MS. WRIGHT deferred the question to Mr. Superman.                                                                               
                                                                                                                                
CHAIR WEYHRAUCH  said the committee was  not going to go  into the                                                              
fiscal  note prepared  by the Department  of  Revenue.  He  stated                                                              
his understanding  that  the fiscal  note from  [DCED] is  what is                                                              
before the committee.                                                                                                           
                                                                                                                                
MS.  WRIGHT  said the  last  fiscal  note  is something  that  was                                                              
brought up  recently and is not  something that [the  sponsor] has                                                              
had the opportunity to discuss with the Department of Revenue.                                                                  
                                                                                                                                
Number 1535                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON brought attention  to page  2, line 4.   He                                                              
said it  was his  understanding  that in addition  to the  $50,000                                                              
exemption in  the first provision,  there could be  two additional                                                              
exemptions   per  household   of  $20,000   each  in  the   second                                                              
provision,  which would  be a  total  of $90,000  in property  tax                                                              
exemptions that the municipality could apply.                                                                                   
                                                                                                                                
MS. WRIGHT said  she thought his understanding  was incorrect, but                                                              
she  would defer  the  question to  Mr. Superman.    She said  she                                                              
thought  that was  a  cumulative  effect, and  if  [Representative                                                              
Seaton's understanding]  is correct,  it's not  the intent  of the                                                              
bill.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  SEATON said he  would like  it clarified  that the                                                              
bill isn't  saying that  volunteer firefighters  get $20,000  when                                                              
everybody else gets $50,000.                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  said this goes back to  "the fiscal note                                                              
that  cannot  be named."    He said  this  seems  to be  the  last                                                              
committee of  referral and normally if  there is a fiscal  note of                                                              
any  consequence,  the  bill  has  to  go  to  the  House  Finance                                                              
Committee.   Representative  Gruenberg said  it sounds like  there                                                              
is a  fiscal note in  progress somewhere.   He said, as  matter of                                                              
procedure,  if [the  fiscal  note] subsequently  becomes  attached                                                              
and  is  passed from  the  last  committee  of referral  onto  the                                                              
"floor,"  how can  [the committee]  be  sure that  the bill  would                                                              
then go  to the  House Finance Committee.   He  said he  had never                                                              
seen this [happen].                                                                                                             
                                                                                                                                
Number 1678                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH  said Representative  Lesil  McGuire  had a  bill                                                              
last year  that gave  an exemption  to the  Peace Corp;  it passed                                                              
out of  committee without  a fiscal  note and,  before it  went to                                                              
the floor,  it picked up  a fiscal note.   He said [the  bill] was                                                              
given  a House Finance  Committee  referral and  then went  to the                                                              
floor; therefore, it  has happened.  He added that  it happened to                                                              
one of his bills as well.                                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG  asked if the leadership  would pick that                                                              
[bill] up and refer it.                                                                                                         
                                                                                                                                
CHAIR WEYHRAUCH  said every  time it  does "we" unfortunately  get                                                              
another referral.                                                                                                               
                                                                                                                                
REPRESENTATIVE GRUENBERG remarked, "We won't escape."                                                                           
                                                                                                                                
CHAIR  WEYHRAUCH said  it didn't  escape in  those two  instances,                                                              
but he  didn't know if anyone  would guarantee it  wouldn't escape                                                              
in a instance.                                                                                                                  
                                                                                                                                
MS.  WRIGHT   said  she  appreciated  Representative   Gruenberg's                                                              
concern about  [the fiscal note].   She said [the  sponsor] wasn't                                                              
happy when  the Department of Revenue  came in with a  fiscal note                                                              
three days  ago, and she  didn't think  the department had  a good                                                              
understanding  of  what this  bill  does.    Ms. Wright  said  she                                                              
wasn't sure  if it was  clear [to the  department] that  it wasn't                                                              
very  fair to  [surprise the  sponsor]  with a  fiscal note  three                                                              
days before a  hearing.  She said although she  deeply appreciated                                                              
the committee's time,  [the bill] needed to get a  hearing in this                                                              
committee, and that is exactly what was done.                                                                                   
                                                                                                                                
CHAIR WEYHRAUCH  indicated  that the reason  for calendaring  this                                                              
[bill] as  soon as possible  is because  it gives the  agency some                                                              
time to do the work.                                                                                                            
                                                                                                                                
MS. WRIGHT remarked, "Exactly."                                                                                                 
                                                                                                                                
Number 1794                                                                                                                     
                                                                                                                                
GARY SUPERMAN,  Vice President, Kenai Peninsula  Borough Assembly,                                                              
noted  that he  had  [testified  last year]  on  SB  36, which  is                                                              
basically the  Senate's [version] of  this bill, although  it is a                                                              
little bit  different.   He said  Representative Chenault  fit the                                                              
verbiage  in the  bill that  excludes the  service area  taxation.                                                              
Mr. Superman  said he  thought the  reason that  [HB 241]  is much                                                              
more complete  than [SB 36]  is that the  intent is to  allow that                                                              
exemption to  come off the  borough's general government  services                                                              
mill rate levy.   For instance, he said the Nikiski  borough has a                                                              
six  and  a   half  mill  levy  for  general   borough  government                                                              
services.   In  addition, there  are numerous  service areas  that                                                              
are  tacked  on  to  it.    Those  service  areas  throughout  the                                                              
boroughs are  instituted by  a vote  of the people.   He  said the                                                              
intent  is not  to take  those much  needed  service revenues  and                                                              
deplete them from their current budgets.                                                                                        
                                                                                                                                
MR.   SUPERMAN  explained   that  the   Kenai  Peninsula   Borough                                                              
currently  has a  unique  situation in  comparison  to some  other                                                              
boroughs;  although he  is  not intimately  involved  in what  the                                                              
general fund  balances are in other  boroughs.  He said  the Kenai                                                              
Peninsula Borough  currently has anywhere from $20-$23  million in                                                              
its fund  balance.  He  noted that he  expected those funds  to be                                                              
depleted in the  "not too distant future."  Mr.  Superman said the                                                              
reason that  this [bill]  was brought  forward was to  essentially                                                              
provide  another "tool"  to work  in the  borough's own  budgetary                                                              
process.   He said  the borough  had seen  an increase  in taxable                                                              
assess valuation for the last 5-6 years.                                                                                        
                                                                                                                                
MR. SUPERMAN said  it averages a 5 percent increase  per year with                                                              
that valuation,  which equates to  approximately a  couple hundred                                                              
million  dollars  per  year  in   total  valuation.    He  said  a                                                              
consequence  of  that  is  that  there  has  been  a  considerable                                                              
increase  in  tax  liability  for  those  homeowner's  within  the                                                              
borough.  Some people  have seen their tax rates,  for all intents                                                              
and purposes, double  within that time period, he  explained.  Mr.                                                              
Superman said as  a reflection of that, the borough  is seeing its                                                              
board of  equalization rolls  fill up  more as time  goes by.   He                                                              
said last year was  the fullest schedule he'd seen,  and he'd been                                                              
on the assembly  for two terms,  once in the late 1980s  and again                                                              
more recently.                                                                                                                  
                                                                                                                                
Number 2030                                                                                                                     
                                                                                                                                
MR. SUPERMAN  said  he thought there  would be  more requests  for                                                              
some kind of a  tax relief at the local level,  which doesn't mean                                                              
if  this bill  is passed  that it  is  a done  deal.   He said  it                                                              
essentially brings it  back to the assembly to put  it back out to                                                              
the public for a  vote.  He remarked, "Whether you  think that's a                                                              
done deal  or not  if it  went to a  vote, I  don't know;  I don't                                                              
make  assumptions  anymore."   Mr.  Superman  said he  thought  it                                                              
would  become  a political  debate  at  the  assembly level.    He                                                              
reiterated  his belief that  the main  purpose of  the bill  is to                                                              
provide the  borough with  another tool, and  he said  the borough                                                              
is seeing more liability at the local level.                                                                                    
                                                                                                                                
MR. SUPERMAN  said a proposition  passed this year for  a hospital                                                              
in the borough,  which will increase the [millage]  another half a                                                              
mill.   He explained that  there will be  a proposition  going out                                                              
in a special  election in March  that will ask the people  to vote                                                              
on  a  half  a mill  increase  to  fund  co-curricular  activities                                                              
within the  school district.   He said  this is something  that is                                                              
outside  the cap,  and a  lot of  residents are  beginning to  see                                                              
some very  harmful  effects with  their tax bills.   Mr.  Superman                                                              
said he had always  been a proponent of trying to  keep taxes at a                                                              
steady rate for  a couple of different purposes.   Mainly, he said                                                              
it helps  economic growth and  helps people  to move to  the area.                                                              
It  helps people  to  raise their  children  in the  area and  put                                                              
those children  in local schools.   He  noted that the  borough is                                                              
in desperate need of schools at this time.                                                                                      
                                                                                                                                
MR. SUPERMAN  said a  big plus is  a good, fair  tax rate,  and if                                                              
the borough  does not have this  tool at its disposal,  he thought                                                              
residents would see  some horrendous climbing in  their tax bills.                                                              
He said the  AML has supported this  in the past, but  he couldn't                                                              
say  whether it  was  in  the policy  statement  this  year.   Mr.                                                              
Superman said  Senator Gene  Therriault had  introduced a  bill in                                                              
2000  that essentially  had  the  same effect  as  this bill,  and                                                              
although  that bill did  not pass  it is  something that  has been                                                              
"tossed around" for  some time now.  He noted that  there had been                                                              
a few legislators who have tried to push it through.                                                                            
                                                                                                                                
Number 2200                                                                                                                     
                                                                                                                                
REPRESENTATIVE HOLM  asked Mr. Superman if it is  his opinion that                                                              
HB 241  allows these  potential exemptions  without affecting  the                                                              
individual  landowner's   options  of  voting  themselves   a  tax                                                              
liability for whatever services that they want to pay for.                                                                      
                                                                                                                                
MR. SUPERMAN indicated he did not understand the question.                                                                      
                                                                                                                                
REPRESENTATIVE HOLM  said Title  29 [provides] the  [borough] with                                                              
the opportunity  to tax itself for  whatever it wants  done within                                                              
that  service area.   He  indicated that  [HB 241]  is "over"  the                                                              
broad   taxation   power   of    a   borough   under   Title   29.                                                              
Representative Holm  said in this case "we're"  not changing that,                                                              
or "we're"  specifically saying  in HB  241, which  was not  in SB                                                              
36,  that service  areas  are  exempted  from this  limitation  of                                                              
taxation.                                                                                                                       
                                                                                                                                
MR.  SUPERMAN  said that  is  the  intent  here, although  it  may                                                              
require some additional verbiage to make that perfectly clear.                                                                  
                                                                                                                                
CHAIR  WEYHRAUCH  called attention  to  the proposed  language  in                                                              
lines 6-8  of the bill,  and he asked  Mr. Superman  what "special                                                              
services" meant.                                                                                                                
                                                                                                                                
MR. SUPERMAN  said it is his  belief that that's just  an illusion                                                              
of  the services  that  the service  area  provides, whether  it's                                                              
recreational  services, senior  services,  or fire  services.   He                                                              
said [the language] is just alluding back to the services.                                                                      
                                                                                                                                
Number 2309                                                                                                                     
                                                                                                                                
REPRESENTATIVE   SEATON  said  it   was  his  understanding,   for                                                              
example, that  if there was a half  a mill in library  service tax                                                              
or fire  service tax,  with the $50,000  exemption to  the borough                                                              
tax, that would  not apply.  He  asked if, at some rate,  a half a                                                              
mill in  service area  taxes might  equal or  exceed the  six-mill                                                              
borough property tax.                                                                                                           
                                                                                                                                
MR. SUPERMAN,  in response, said  correct; that could happen.   He                                                              
said [Kenai]  is very close to that  in some areas of  the borough                                                              
now.                                                                                                                            
                                                                                                                                
REPRESENTATIVE SEATON,  in regard  to Mr. Superman's  comment that                                                              
Kenai's  reserve account  will  be depleted  in  the near  future,                                                              
asked if  the assumption  is that if  [revenues] didn't  come from                                                              
the state, [the  Kenai Peninsula Borough] would be  more likely to                                                              
pass an increase  in the millage rate than an  elimination of this                                                              
$50,000 individual residential property tax.                                                                                    
                                                                                                                                
Number 2385                                                                                                                     
                                                                                                                                
MR.  SUPERMAN remarked,  "This, by  no means,  is any  cut at  our                                                              
assessor within  the borough  - I think  he does a  fabulous job."                                                              
He said there  has been an increase averaging  five percent across                                                              
the  board in  the taxable  assessed value  within the  peninsula.                                                              
Mr.  Superman  noted  that  he is  not  speaking  for  the  entire                                                              
assembly,  and he said  he didn't  know which  way [the  assembly]                                                              
would  go with regard  to an  increase in  the general  government                                                              
mill rate.   He indicated he  was unsure whether the  assembly was                                                              
going  to add  the  extra  mill this  year.   Mr.  Superman  said,                                                              
essentially,  with that  growth  in "our"  assessed valuation,  it                                                              
somewhat  mitigates the  loss with  this extended  exemption.   He                                                              
said this  was passed  unanimously on the  consent agenda,  and he                                                              
thought  it  was  the  assembly's   intent  to  try  to  keep  the                                                              
residents of Kenai in the borough.                                                                                              
                                                                                                                                
REPRESENTATIVE SEATON  brought attention  to the fiscal  note, and                                                              
he said it  seemed to him, as  a resident of the borough,  that if                                                              
the issue  was put  to a  vote, he  would be  much more likely  to                                                              
increase the  millage rate, which  is going to basically  apply to                                                              
the  oil assets  within  the  borough  instead of  eliminating  or                                                              
reducing  the exemption  on individual  houses.   He said  because                                                              
Mr.  Superman is  anticipating the  depletion  of the  [borough's]                                                              
reserve  account in  the  near future,  it  seems that  that is  a                                                              
necessity,  which would  therefore  shift the  tax  to the  higher                                                              
valued  properties   -  the  oil  properties  -   and  then  would                                                              
basically  take that  percentage  away from  the state's  revenue.                                                              
He asked if that assumption was correct.                                                                                        
                                                                                                                                
MR. SUPERMAN  said he  thought that  is an  assumption that  he is                                                              
really  not  making, although  that  is  an assumption  that  some                                                              
people are  making.  He said that  within the borough  there is an                                                              
approximate $4  billion in assessed  valuation, and just  a little                                                              
over  $6 million  of  that is  "4356" property.    There are  oil-                                                              
related  real   properties  that  account  for   approximately  30                                                              
percent of  that total.  He said  if the mill rate  was increased,                                                              
with that  in mind, "they're" not  going to be carrying  the whole                                                              
burden of this.                                                                                                                 
                                                                                                                                
Number 2757                                                                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH  asked  if  there  is  an  inconsistency  in  Mr.                                                              
Superman's  comment that  there  is more  liability  at the  local                                                              
level and  residents are looking for  tax relief, but at  the same                                                              
time residents are  voting [for] projects that  increase their tax                                                              
bills.   He asked if  that issue is  being addressed  through this                                                              
bill.                                                                                                                           
                                                                                                                                
MR. SUPERMAN  said there  are always  inconsistencies with  public                                                              
votes.                                                                                                                          
                                                                                                                                
CHAIR WEYHRAUCH said  the committee would take this  bill up again                                                              
in a week and would hear from the Department of revenue.                                                                        
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said that,  as a  member  of the  House                                                              
Special Committee  on Ways and  Means, he is extremely  concerned.                                                              
He said as he  understands it, there is an impact  on this because                                                              
it  will potentially  shift  the  burden  to property  that  would                                                              
otherwise  be taxed  by the  state  and would  thereby reduce  the                                                              
state's  revenue at  a  time of  a  significant  fiscal crisis  in                                                              
Alaska.    Representative  Gruenberg   suggested  that  this  bill                                                              
should probably  be heard by the  House Special Committee  on Ways                                                              
and  Means, and  he may  make  that recommendation.    He said  he                                                              
knows  that  Mr.  Superman and  [the  Kenai  Peninsula  Borough's]                                                              
taxpayers do  not want to pay  taxes, which nobody does,  but [the                                                              
legislature] has to look out for the state's interests too.                                                                     
                                                                                                                                
Number 2633                                                                                                                     
                                                                                                                                
REPRESENTATIVE   SEATON  brought   attention   to  the   exemption                                                              
provisions in the  bill.  He asked if it is correct  that the bill                                                              
could possibly provide a $90,000 exemption.                                                                                     
                                                                                                                                
MR. SUPERMAN said  he thought the intent was to make  the "lid" at                                                              
$50,000.  He  said he could appreciate Representative  Gruenberg's                                                              
comments that  nobody likes  to pay taxes,  and he thought  he was                                                              
speaking for  the people [in the  Kenai Peninsula Borough]  who do                                                              
pay plenty of taxes.   He said he personally pays  plenty of taxes                                                              
on his  home and a  couple of businesses.   Mr. Superman  said the                                                              
intent  is not  to  "divorce ourselves"  from  that liability  and                                                              
that obligation,  but  people are  beginning to  cry out for  some                                                              
type  of  local  tax  relief.   He  said  he  can  understand  the                                                              
predicament  that the  state is  in,  and if  the state  continues                                                              
off-loading to  the lower levels,  more of these types  of request                                                              
from  the taxpaying  constituency  would be  seen.   Mr.  Superman                                                              
remarked, "All we  are asking for is to have this  tool ... at our                                                              
disposal.   Whether  ... it  will  be used  no one  knows at  this                                                              
point; that is a political question."                                                                                           
                                                                                                                                
[HB 241 was heard and held.]                                                                                                    
                                                                                                                                

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