Legislature(2001 - 2002)

02/28/2001 01:35 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
          SB  48-MUNICIPALITIES:INCORP/PROPERTY VALUATION                                                                   
CHAIRMAN TORGERSON  said Mary Jackson would explain  the changes the                                                            
amendment makes to SB 48.                                                                                                       
MARY JACKSON, staff to  Chairman Torgerson, explained that the first                                                            
change appears in the title and would now read as follows:                                                                      
     "An  Act relating to  the determination  of full and  true                                                                 
     value  of  taxable  municipal  property  for  purposes  of                                                                 
     calculating  funding   for education   and certain   other                                                                 
     programs,  to incorporation  of third  class boroughs,  to                                                                 
     incorporation  of  certain  boroughs  in  the unorganized                                                                  
     borough  and annexation  of  portions of  the unorganized                                                                  
     borough  to boroughs  and unified municipalities,  and  to                                                                 
     the  formation  of  separate  unorganized  boroughs;   and                                                                 
     providing for an effective date."                                                                                          
Section  1  is  all  new and  the  language  addresses  legislative                                                             
purpose.  Subsections (a)  and (b)  are relevant  to newly  inserted                                                            
section 6.  Subsection (c) is relevant  to new subsections  3 and 5.                                                            
Section 2 has no changes.                                                                                                       
Section 3 is  new and inserts, on  page 3, line 4, "or third  class"                                                            
to amend AS 29.05.031(a).                                                                                                       
Section 4 has no changes.                                                                                                       
Section 5  is a new section  and it repeals  AS 29.05.031(b),  which                                                            
prohibits formation of third class boroughs.                                                                                    
Section  6 is new  and it directs  the Department  of Community  and                                                            
Economic  Development to  submit a  proposal to  the Local  Boundary                                                            
Commission  (LBC) by  September 30,2001  to divide  the unorganized                                                             
borough  into separate unorganized  boroughs,  taking into  account,                                                            
for constitutional  purposes,  population,  geography, economy,  and                                                            
transportation.  Within the first  ten days of the next legislative                                                             
session, the LBC will submit their recommendations for boroughs.                                                                
Section 7 is new and was  recommended by Legislative Legal staff. It                                                            
gives notice to the revisor                                                                                                     
r of statutes  to change statutes as necessary when  the unorganized                                                            
borough becomes unorganized boroughs.                                                                                           
Number 91                                                                                                                       
SENATOR  AUSTERMAN asked  whether the  CS changed  the intention  of                                                            
creating  new boroughs  with sufficient  tax bases  to ensure  their                                                            
ability  to  collect taxes  and  pay  for their  portion  of  school                                                            
MS. JACKSON  said it did  not; that it adds  to the bill by  forming                                                            
boroughs but they are still  unorganized until they complete the LBC                                                            
CHAIRMAN  TORGERSON added  that the CS removes  the prohibition  for                                                            
third class boroughs.                                                                                                           
KEVIN WARING,  Chairman of the Local Boundary Commission,  said that                                                            
he had just  received the amended  bill and hasn't reviewed  it with                                                            
commission members so he is commenting for himself.                                                                             
The commission  has previously reported to the legislature  that the                                                            
single unorganized  borough doesn't  comply with standards  outlined                                                            
in Article  10, section  3 of  the Constitution.  Adding Section  6,                                                            
which  deals  with  formation  of  unorganized   boroughs  from  the                                                            
unorganized borough will,  most probably, bring support from the LBC                                                            
but he did think that the  time frame might be too short when public                                                            
hearings and additional staff work are considered.                                                                              
Number 206                                                                                                                      
He felt  less  comfortable  commenting on  restoring  the option  of                                                            
creating   new  third  class   boroughs  without   having   had  the                                                            
opportunity   to  consult  with  the   commission  members.   It  is                                                            
conceivable   that   they   will   not   support    this   addition.                                                            
Constitutional  language and Article 10, section 1,  says that there                                                            
is  to be  a maximum  of  local  self-government  and  a minimum  of                                                            
governmental  units  and  this  implies  that  boroughs  are  to  be                                                            
regarded as  regional and general-purpose  units of governance.  The                                                            
Haines third  class borough came from  special circumstances  in the                                                            
1960s.  If third  class boroughs  were  formed perhaps  making  them                                                            
transitional to a second class would be acceptable.                                                                             
CHAIRMAN TORGERSON appreciated  the comments on third class boroughs                                                            
but  reminded Mr.  Waring  that the  recommendation  comes from  the                                                            
commission. Currently the  LBC may not recommend creation of a third                                                            
class borough.  However, reinstating this classification  recognizes                                                            
that there may be areas  that fall between those that clearly cannot                                                            
collect taxes  and support a government and should  therefore remain                                                            
unorganized  and  those  able to  support  a  second class  form  of                                                            
MR. WARING  said he  wanted to  discuss whether  commission  members                                                            
welcome the opportunity  to create third class boroughs or feel that                                                            
they are  better served by  not having that  option. He understands                                                             
that the LBC wouldn't  be required to approve third  class boroughs.                                                            
CHAIRMAN  TORGERSON  wanted to  make it  clear that  this  provision                                                            
isn't a  mandate for third  class borough  formation. He also  fully                                                            
appreciated the  fact that Mr. Waring couldn't speak  for the LBC at                                                            
this time.                                                                                                                      
PAT POLAND, Division of  Community and Business Development Director                                                            
for the Department  of Community and Economic Development,  informed                                                            
committee  members that  he had just  received the  draft bill  that                                                            
morning and would send comments after a full review.                                                                            
CHAIRMAN TORGERSON said  the bill would be held in committee because                                                            
the CS was  finished late the previous  day and this didn't  provide                                                            
ample opportunity  for review and  comment. It would be heard  again                                                            
on March 7. He asked Mr.  Poland about his opinion on the time line.                                                            
MR. POLAND said  his department would probably want  to consult with                                                            
the LBC  to determine  their comfort  level with  the model  borough                                                            
boundaries.  This would dictate whether  the time line is  realistic                                                            
or not.                                                                                                                         
STEVE VAN SANT, State Assessor  with the Department of Community and                                                            
Economic  Development, was  asked to explain  Section 2 of  the bill                                                            
that deals  with full and  true value of  taxable real and  personal                                                            
property.  First, this section  allows municipalities  or  potential                                                            
municipalities  to  exclude from  valuation,  AF4356  (oil and  gas)                                                            
properties within their  boundaries if a property tax is not levied.                                                            
There  are  some areas  of  the state  that  would  have  to levy  a                                                            
property  tax if the  oil and gas  property was  figured into  their                                                            
full  and  true  value  and  they  were  required  to  pay  a  4-mil                                                            
equivalency on that amount.  "What that does, is it just takes money                                                            
out  of  the  state's  right  pocket and  keeps  a  little  for  the                                                            
municipality  and  puts  the  remaining  back in  the  state's  left                                                            
pocket. The state actually  loses money on that deal." Excluding oil                                                            
and  gas  value  allows  communities  the  opportunity  to  look  at                                                            
different types of taxes to come up with the 4-mill equivalency.                                                                
New language  in Section  2 concerning  detachment  of areas  from a                                                            
municipality from full  and true value determinations stems from the                                                            
two year funding  lag for schools  and he has no quarrel  with that.                                                            
CHAIRMAN TORGERSON asked for a motion.                                                                                          
SENATOR PHILLIPS made a motion to adopt 22-LS0025\S Cook as a                                                                   
working draft for SB 48. There were no objections.                                                                              
CHAIRMAN TORGERSON said the bill would be heard again on March                                                                  

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