Legislature(2005 - 2006)SENATE FINANCE 532

02/01/2006 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 171 NPR-A COMMUNITY GRANT PROGRAM TELECONFERENCED
Moved CSSB 171(FIN) Out of Committee
+= HB 217 FULL & TRUE VALUE OF TAXABLE MUNI PROP. TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
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.                                                                                                    
                                                                                                                                

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