Legislature(2005 - 2006)SENATE FINANCE 532
02/01/2006 09:00 AM FINANCE
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* first hearing in first committee of referral
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9:09:07 AM HOUSE BILL NO. 217(title am) "An Act relating to the determination of full and true value of taxable municipal property for purposes of providing planning assistance to the Department of Education and Early Development and the legislature, calculating funding for education, calculating school district participating shares for school construction grants, and calculating tax resource equalization payments and excluding from that determination the value of property in certain areas detached from a municipality and the value of certain property involved with oil and gas that is not taxed by a municipality." This was the third hearing for this bill in the Senate Finance Committee. Co-Chair Wilken moved to adopt CS HB 217, 24-LS0427\G, as a working document. Co-Chair Green objected for an explanation. Co-Chair Wilken noted the insertion of language on page 2, lines 7 through 10 to provide for the ability for the State assessor to make a determination of full and true value of property in organized areas that do not impose property taxes. 9:09:46 AM Co-Chair Wilken stated that, as with current practice, every two years the State assessor would do a modeling of the value to determine the four-mil requirement. Every four years, the assessor would undertake a thorough assessment similar to the assessments done the previous year for the Delta region and currently underway for the Lake and Peninsula Borough. 9:10:04 AM Co-Chair Wilken remarked that this would assure that an analysis would be done every four years for "the four boroughs and nine first class cities that do not have a mechanism in which to establish and validate property values" in the same manner done in the rest of the state by "willing buyers and sellers in the free market - that's how we establish our property values in the rest of the boroughs." 9:10:40 AM Co-Chair Wilken directed attention to a new fiscal note of $98,000 to assist the State assessor in those efforts. 9:10:53 AM Senator Hoffman understood Co-Chair Wilken's intention to "level the playing field between those school districts that tax on a property tax base and those do otherwise, such as payment in lieu of taxes." He gave the Northwest Arctic Borough as an example. He also understood that these governments would be required to contribute an amount equal to 50 percent of the annual increase in property values, with the State providing the remaining 50 percent. 9:11:33 AM Co-Chair Wilken affirmed that as provided in existing statute, as the assessed value increases, the burden is shared by the State and the local school assessed community. 9:11:50 AM Senator Hoffman characterized this as "the next step" to the process established by legislation passed in 2001 in distributing the property value increases between the State and local governments. This committee substitute would expand the distribution to those school districts that receive local funding through payment in lieu of taxes. He therefore asked if the intent would be to further extend this practice to the payment in lieu of taxes received by the State for federal lands. 9:13:12 AM Co-Chair Wilken responded that this legislation does not "contemplate anything having to do with federal land." The impact funds received by the federal government are distributed across the state. Some consider these funds as the local contribution for unorganized areas of the state. This perception is untrue, although the discussion is irrelevant to the legislation before the Committee. 9:13:58 AM Senator Hoffman argued that the federal funding is a payment in lieu of taxes, similar to agreement between the Northwest Arctic Borough and the Red Dog Mine in which the company provides funding in lieu of taxes to be used for education. He did not recognize a difference between privately owned property and federally owned property in this context. 9:15:15 AM Co-Chair Wilken reiterated that federal lands is not part of this bill 9:15:24 AM Senator Hoffman agreed but asked if the intention is to address this in the future with separate legislation to ensure that all areas of the state are treated equally. 9:15:36 AM Co-Chair Wilken was not interested in dealing with federal lands. 9:15:39 AM STEVE VAN SANT, State Assessor, Division of Community Advocacy, Department of Commerce, Community and Economic Development, testified via teleconference from an offnet location that federally owned lands are not included in the formula used to determine fair value. Mr. Van Sant informed that existing statute requires the Division to visit each school district annually and make fair value determinations. However, funding provided for this function has not been sufficient to allow this to occur. This committee substitute would establish a "cycle" in which to undertake these efforts, while only requiring an on-site visit once every four years, and would provide funding assistance to make this possible. 9:16:47 AM Senator Hoffman asked if the intention of the co-chair was to report this bill from Committee at this hearing. 9:16:54 AM Co-Chair Green announced the bill would be held in the Committee for one day. 9:16:59 AM Co-Chair Wilken explained that Senator Olson had approached him prior to this meeting and requested an opportunity to review the committee substitute, as an area of the state could be unintentionally affected. 9:17:18 AM Senator Olson furthered that the inserted language could possibly adversely impact the payment in lieu of taxes agreement between the Northwest Arctic Borough and Cominco, regarding the Red Dog Mine. He intended to secure advice from Cominco officials. 9:18:05 AM Co-Chair Green withdrew her objection to the adoption of the committee substitute and CS HB 217, 24-LS0427\G was ADOPTED as a working document. Co-Chair Green ordered the bill HELD in Committee. She then invited the bill sponsor to speak. 9:18:26 AM REPRESENTATIVE JOHN HARRIS, sponsor of the bill supported the committee substitute and Co-Chair Wilken's attempt to enforce current law. True value of property should be maintained and adjusted on an annual basis.