Legislature(2013 - 2014)BUTROVICH 205

02/28/2013 03:30 PM COMMUNITY & REGIONAL AFFAIRS


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03:32:09 PM Start
03:32:43 PM HB40
03:48:16 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 40 MUNICIPAL TAX EXEMPTION: FARM STRUCTURES TELECONFERENCED
Moved CSHB 40(CRA) Out of Committee
        HB  40-MUNICIPAL TAX EXEMPTION: FARM STRUCTURES                                                                     
                                                                                                                                
3:32:43 PM                                                                                                                    
CHAIR MICCICHE announced  HB 40 to be up  for consideration [CSHB                                                               
40(CRA) was before the committee].                                                                                              
                                                                                                                                
3:33:09 PM                                                                                                                    
GINGER BLAISDELL,  staff to Representative Hughes,  sponsor of HB                                                               
40,  reviewed  that  this measure  was  introduced  to  encourage                                                               
agriculture throughout  the state  and to encourage  food storage                                                               
for  the  purposes of  having  longer  sustainable food  products                                                               
available on  our shelves  for human  or animal  consumption, and                                                               
also in the event there is a disaster.                                                                                          
                                                                                                                                
She said the  bill allows a municipality the  option to entertain                                                               
a  tax exemption,  either fully  exempt  or a  percentage, for  a                                                               
building that is  100 percent for food storage  or production. It                                                               
must  be  100  percent  related  to  a  farming  activity,  which                                                               
disqualifies a  lot of buildings  that may be partially  for food                                                               
and partially for some other  purpose. The individual must derive                                                               
at least  10 percent of  his/her annual income from  that farming                                                               
activity.                                                                                                                       
                                                                                                                                
3:34:43 PM                                                                                                                    
CHAIR MICCICHE opened public testimony.                                                                                         
                                                                                                                                
3:34:51 PM                                                                                                                    
At ease from 3:34 to 3:35.                                                                                                      
                                                                                                                                
3:35:43 PM                                                                                                                    
BARBARA  MILLER, representing  herself, Wasilla,  Alaska, opposed                                                               
HB 40  saying it  would cost  the taxpayers  of MatSu  roughly $3                                                               
million  more  annually  in  addition to  the  many  millions  of                                                               
dollars in  subsidies farmers get  due to their  land assessments                                                               
of only  $350 an acre.  There are many  homeowners on one  or two                                                               
acres with  a house who have  at least a $175,000  assessment and                                                               
they are subsidizing the farmer  who has 500 acres. Additionally,                                                               
she said old structures should not  be included in the bill; only                                                               
new ones  should since the  old structures are already  paid for.                                                               
On  line  4, "totally  exempt"  should  be deleted,  because  the                                                               
farmer should  have some skin  in the  game instead of  getting a                                                               
free ride  on an already  extremely generous subsidy. In  line 6,                                                               
there  shouldn't be  any leasing  at  all. If  this happens,  the                                                               
farmer then gets  revenue for property that has little  or no tax                                                               
bill attached  so he could actually  be making a big  profit with                                                               
little or  no expenditure, again,  at the expense of  the borough                                                               
taxpayer. On line 7, 10 percent  is ridiculous; if a farmer earns                                                               
that little  on his income from  farming, he is not  a farmer. It                                                               
should be  100 percent  before the farmer  gets any  exemption or                                                               
that person could not be classified as a farmer.                                                                                
                                                                                                                                
3:37:19 PM                                                                                                                    
SENATOR BISHOP joined the meeting.                                                                                              
                                                                                                                                
MS. MILLER continued that MatSu  farmers sell 75 percent of their                                                               
products to Anchorage,  yet the taxpayers of  the MatSu subsidize                                                               
100  percent of  this  already too  generous  tax exemption.  She                                                               
supported  farming as  a  business, but  it should  be  run as  a                                                               
business not as a private club.                                                                                                 
                                                                                                                                
3:38:29 PM                                                                                                                    
CHAIR  MICCICHE,  finding  no  further  comments,  closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
3:39:00 PM                                                                                                                    
SENATOR  GIESSEL  moved  to  report  CSHB  40(CRA),  version  28-                                                               
LS0229\N from  committee to the  next committee of  referral with                                                               
individual recommendations and attached zero fiscal note.                                                                       
                                                                                                                                
3:39:27 PM                                                                                                                    
CHAIR MICCICHE objected  for purpose of discussion.  He asked Ms.                                                               
Blaisdell to comment on Ms. Miller's testimony.                                                                                 
                                                                                                                                
3:40:00 PM                                                                                                                    
MS.  BLAISDELL  responded  that when  this  bill  was  originally                                                               
drafted,  they thought  it was  just  for property  owned by  the                                                               
farmer, but  they found that many  farms are leased to  new young                                                               
families that actually work and  manage the whole farm. The lease                                                               
part  seemed to  cause  a  little strife  for  those  who do  not                                                               
actually own  the land, because their  lease cost would go  up as                                                               
long  as the  property is  exempt or  there is  some kind  of tax                                                               
value  that is  lessened a  little bit.  It didn't  seem that  it                                                               
would be  going to the  actual land  owner, but that  the savings                                                               
would be  passed onto the lessor.  They know of only  a couple of                                                               
families leasing  a farm, because  they can't afford  to purchase                                                               
the land.                                                                                                                       
                                                                                                                                
3:41:07 PM                                                                                                                    
CHAIR MICCICHE asked for the actual impact to MatSu.                                                                            
                                                                                                                                
MS.  BLAISDELL  responded  that  she spoke  with  the  MatSu  tax                                                               
assessor who said  if 50 percent of a building  would be eligible                                                               
for food storage or production it  would take him so much work to                                                               
go into every  single building and determine what  the 50 percent                                                               
is. Is  it volume? Is  it square footage of  the floor or  of the                                                               
upstairs full of hay and  the downstairs is doing something else?                                                               
So they  changed it to  the entire building  to be used  for food                                                               
storage and production.  When it was a  50 percent consideration,                                                               
the assessor  thought the impact  would be slightly more  than $3                                                               
million. Being 100 percent for  food storage and production would                                                               
bring  that  down  significantly,  but he  couldn't  give  her  a                                                               
specific  number  since  he  hadn't  been  inside  all  of  those                                                               
buildings to determine that.                                                                                                    
                                                                                                                                
3:42:31 PM                                                                                                                    
CHAIR MICCICHE  noted that there  wasn't any opposition  from AML                                                               
or the MatSu Borough; and no other municipality was testifying.                                                                 
                                                                                                                                
SENATOR GIESSEL said  that might be because the  bill says "may".                                                               
But  she agreed  with  Ms. Miller  on the  line  7 language  that                                                               
deriving at  least 10 percent  of the person's yearly  gross from                                                               
farming activity seemed  extremely minimal and it,  in fact, made                                                               
her uncomfortable.                                                                                                              
                                                                                                                                
3:43:54 PM                                                                                                                    
CHAIR MICCICHE asked staff about the 10 percent.                                                                                
                                                                                                                                
MS. BLAISDELL  replied that the  10 percent was used,  because it                                                               
is the same as that used  by the state and federal governments in                                                               
the Agriculture  Bill for a farmer's  income. They kept it  at 10                                                               
percent,  because numerous  farmers have  one spouse  working the                                                               
farm  as the  primary  income  and the  other  spouse  has a  job                                                               
somewhere else that  actually pays for the farm. So,  if the farm                                                               
makes $100,000  a year  and the  job brings  in $100,000,  it all                                                               
goes to  pay for the farm;  it's more of a  lifestyle choice. Ten                                                               
percent  still shows  that you're  in the  farming business  as a                                                               
business and selling  goods, and they felt that  anyone who wants                                                               
to  engage in  the business  of food  should be  somehow able  to                                                               
receive a benefit,  because it's so important to  have fresh food                                                               
on our shelves.                                                                                                                 
                                                                                                                                
3:45:43 PM                                                                                                                    
SENATOR BISHOP  said everyone is  cognizant of food  security and                                                               
hopefully this  is a  step in the  right direction  to revitalize                                                               
the industry and grow it a little bit.                                                                                          
                                                                                                                                
3:46:49 PM                                                                                                                    
CHAIR MICCICHE said  the battle occurs in  the Assembly Chambers,                                                               
not in the legislature. As a  former small town mayor he knew how                                                               
painful  it  was   when  the  legislature  made   some  of  these                                                               
exemptions  that are  "shall"; this  is  a "may",  so locals  can                                                               
decide.  He  hoped  growing  food   would  be  supported  by  the                                                               
municipalities.                                                                                                                 
                                                                                                                                
3:47:39 PM                                                                                                                    
CHAIR  MICCICHE  removed his  objection  and  finding no  further                                                               
objections, announced that CSHB 40(CRA) moved from committee.                                                                   

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