Legislature(1993 - 1994)

02/09/1993 01:00 PM House CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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              HOUSE COMMUNITY AND REGIONAL AFFAIRS                             
                       STANDING COMMITTEE                                      
                        February 9, 1993                                       
                            1:00 p.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Representative Harley Olberg, Chairman                                       
  Representative Jerry Sanders, Vice-Chair                                     
  Representative Con Bunde                                                     
  Representative John Davies                                                   
  Representative Cynthia Toohey                                                
  Representative Ed Willis                                                     
  Representative Bill Williams                                                 
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  None                                                                         
                                                                               
  OTHER HOUSE MEMBERS PRESENT                                                  
                                                                               
  Representative Tom Brice                                                     
                                                                               
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  *HB 66:   "An Act relating to municipal property tax                         
            exemptions for certain residences and to property                  
            tax equivalency payments for certain residents;                    
            and providing for an effective date."                              
                                                                               
            CS PASSED FROM COMMITTEE WITH INDIVIDUAL                           
            RECOMMENDATIONS                                                    
                                                                               
  *HB 30:   "An Act amending the definition of 'municipality'                  
            for purposes of the human services community                       
            matching grant program."                                           
                                                                               
            CS PASSED FROM COMMITTEE WITH INDIVIDUAL                           
            RECOMMENDATIONS                                                    
                                                                               
  (* first public hearing)                                                     
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  Bruce Geraghty, Deputy Commissioner                                          
  Department of Community and Regional Affairs                                 
  P.O. Box 112100                                                              
  Juneau, AK  99811                                                            
  Phone: 465-4700                                                              
  POSITION STATEMENT: Supported HB 66                                          
                                                                               
  Duncan Monroe, Administrative Assistant                                      
  Property Tax Exemption Program                                               
  Department of Community and Regional Affairs                                 
  P.O. Box 112100                                                              
  Juneau, AK  99811                                                            
  Phone: 465-4787                                                              
  POSITION STATEMENT: Supported HB 66                                          
                                                                               
  Kent Swisher, Executive Director                                             
  Alaska Municipal League                                                      
  217 Second Street, Suite 200                                                 
  Juneau, AK  99801                                                            
  Phone: 586-1325                                                              
  POSITION STATEMENT: Opposed HB 66                                            
                                                                               
  Joe Alter, Chairperson                                                       
  American Association of Retired Persons                                      
  P.O. Box 20304                                                               
  Juneau, AK  99802                                                            
  Phone: 586-6680                                                              
  POSITION STATEMENT: Opposed HB 66                                            
                                                                               
  Barbara Blasco, Assistant Attorney General                                   
  Department of Law                                                            
  P.O. Box 110300                                                              
  Juneau, AK  99811                                                            
  Phone: 465-3600                                                              
  POSITION STATEMENT: Provided legal expertise on the proposed                 
                      amendment to HB 66                                       
                                                                               
  Representative Tom Brice                                                     
  Court Building, Room 605                                                     
  Juneau Alaska 99811-1182                                                     
  Phone: 465-3466                                                              
  POSITION STATEMENT: Prime Sponsor, HB 30                                     
                                                                               
  PREVIOUS ACTION                                                              
                                                                               
  BILL:  HB 66                                                                 
  SHORT TITLE: MUNICIPAL PROPERTY TAX EXEMPTIONS                               
  BILL VERSION:                                                                
  SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                 
  TITLE: "An Act relating to municipal property tax exemptions                 
  for certain residences and to property tax equivalency                       
  payments for certain residents; and providing for an                         
  effective date."                                                             
  JRN-DATE     JRN-PG               ACTION                                     
  01/15/93        84    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/15/93        84    (H)   CRA, HEALTH, EDUCATION & SS,                     
                              FINANCE                                          
  01/15/93        84    (H)   -3 ZERO FNS (2-DCRA, ADM)                        
  1/15/93                                                                      
  01/15/93        84    (H)   GOVERNOR'S TRANSMITTAL LETTER                    
  02/09/93              (H)   CRA AT 01:00 PM CAPITOL 124                      
                                                                               
                                                                               
  BILL:  HB 30                                                                 
  SHORT TITLE: HUMAN SERVICES MATCHING GRANTS                                  
  BILL VERSION:                                                                
  SPONSOR(S): REPRESENTATIVE(S) BRICE,Sitton,Therriault,                       
  Davies, James                                                                
  TITLE: "An Act amending the definition of `municipality' for                 
  purposes of the human services community matching grant                      
  program."                                                                    
  JRN-DATE     JRN-PG               ACTION                                     
  01/04/93        32    (H)   PREFILE RELEASED                                 
  01/11/93        32    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/11/93        32    (H)   CRA, HES, FINANCE                                
  01/15/93        92    (H)   COSPONSOR(S): DAVIES, JAMES                      
  02/09/93              (H)   CRA AT 01:00 PM CAPITOL 124                      
                                                                               
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 93-4, SIDE A                                                            
  Number 000                                                                   
                                                                               
  CHAIRMAN HARLEY OLBERG called the meeting to order at 1:09                   
  p.m.  He noted for the record that Representatives Sanders,                  
  Toohey, Williams, Davies and Willis were present.                            
  HB 66:  MUNICIPAL PROPERTY TAX EXEMPTIONS                                    
  Number 030                                                                   
                                                                               
  BRUCE GERAGHTY, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY                 
  AND REGIONAL AFFAIRS (DCRA), gave a synopsis of HB 66 and                    
  read for the record the third paragraph of the governor's                    
  transmittal letter dated January 15, 1993.  (A copy of this                  
  letter may be found in the House Community and Regional                      
  Affairs Committee Room, Capitol #110, and after the                          
  adjournment of the second session of the 18th Alaska State                   
  Legislature, in the Legislative Reference Library.)  He also                 
  favorably acknowledged the amendment proposed by the                         
  Attorney General's Office.                                                   
                                                                               
  (Representative Bunde joined the committee at 1:10 p.m.)                     
                                                                               
  REPRESENTATIVE ED WILLIS questioned the hardship effects of                  
  Section 5 of HB 66 which states, "This Act is retroactive to                 
  January 1, 1993."                                                            
                                                                               
  MR. GERAGHTY replied, "...There is no money in the budget to                 
  reimburse municipalities for this program at this time."  He                 
  added the municipalities he was familiar with had indicated                  
  they would continue granting exemptions this year (1993).                    
                                                                               
  Number 125                                                                   
                                                                               
  REPRESENTATIVE CON BUNDE gave Sitka as an example noting                     
  that a $500,000 shortfall could not be absorbed in Sitka's                   
  budget.  He supported Representative Willis' concerns                        
  regarding retroactive taxes.                                                 
                                                                               
  CHAIRMAN OLBERG suggested decisions be made at the community                 
  level.                                                                       
                                                                               
  MR. GERAGHTY reminded the committee property tax exemption                   
  funding was currently only at 20 percent.  "There's short                    
  funding now of 80 percent," said Mr. Geraghty.                               
                                                                               
  REPRESENTATIVE WILLIS inquired about the time frame the                      
  municipalities had to implement HB 66 if it passed.                          
                                                                               
  DUNCAN MONROE, ADMINISTRATIVE ASSISTANT, DCRA, pointed out                   
  the municipalities in tax year 1993 would "only be losing 20                 
  percent...then by tax year '94 they can implement their own                  
  ordinances exempting none or all of the assessed value."                     
                                                                               
  Number 214                                                                   
                                                                               
  REPRESENTATIVE WILLIS asked what determined the percentage                   
  rendered by the DCRA in this program.                                        
                                                                               
  MR. GERAGHTY replied that it was prorated based on what the                  
  legislature appropriated to the program.  He pointed out                     
  since 1985, the program had been increasingly short funded.                  
                                                                               
  REPRESENTATIVE CYNTHIA TOOHEY believed the municipalities                    
  would take indigent senior citizens into consideration.                      
                                                                               
  REPRESENTATIVE BILL WILLIAMS said, "We do need to get                        
  spending under control (but)  ...the seniors, all of them in                 
  Ketchikan probably do not understand what's happening."                      
                                                                               
  REPRESENTATIVE BUNDE shared Representative William's                         
  concerns and added when HB 66 was referred to the House HESS                 
  committee, of which he was the co-chair, a more "user-                       
  friendly" committee substitute would be developed.                           
                                                                               
  Number 334                                                                   
                                                                               
  KENT SWISHER, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL LEAGUE,                   
  testified against HB 66 in its current form.  He indicated                   
  the league would prefer that the state maintain the tax                      
  exemption program:  "We feel the State has the greatest                      
  ability to support the kind of tax forgiveness that we're                    
  talking about for senior citizens and disabled veterans and                  
  the state can make that program work in a way that's fair                    
  and equally applicable to everyone who lives here."                          
                                                                               
  MR. SWISHER explained the procedures regarding this program                  
  and expressed concern on the retroactivity of HB 66.  "A                     
  great many senior citizens who file as of January 15th have                  
  every reason to expect that the system is working in the                     
  normal way and it's not if the bill is passed...the rules                    
  are going to change," he said.                                               
                                                                               
  Number 398                                                                   
                                                                               
  REPRESENTATIVE TOOHEY explained this was not the issue                       
  before the committee as she saw it.  She said, "We are no                    
  longer mandating or funding a mandate."                                      
                                                                               
  CHAIRMAN OLBERG said the issue was whether or not local                      
  municipalities were going to determine if tax exemptions                     
  should be granted.  "It's obvious that funding has declined                  
  to 20 percent and now it is zero. ...we are talking about                    
  taking a state mandated program and turning it into a local                  
  option," he  said.                                                           
                                                                               
  REPRESENTATIVE JERRY SANDERS pointed out the difference HB
  66 would make was only 20 percent.                                           
                                                                               
  MR. SWISHER informed that the statutory commitment was to                    
  fund the program 100 percent and added, "You do need to                      
  understand that we cannot mechanically, by the time this                     
  bill becomes law place into effect an exemption in 1993,                     
  even if we wanted to.  There isn't simply going to be time                   
  given how the process works. So you are, in fact, entirely                   
  repealing that exemption.  Now that's fine, that's our                       
  second preference.  Our first preference would be that you                   
  fund it.  If the State doesn't want to fund it, then the                     
  state should outright repeal it."                                            
                                                                               
  MR. SWISHER added further, "If it goes away we reinstitute                   
  it by option, if we don't reinstitute it by option, it's                     
  gone."                                                                       
                                                                               
  CHAIRMAN OLBERG said, "The procedures are all in place, its                  
  up to the municipalities to eliminate them or not."                          
                                                                               
  MR. SWISHER stressed the time limitations and said, " Many                   
  of us (municipalities) would want to pose this as a                          
  referendum to the public."                                                   
                                                                               
  Number 487                                                                   
                                                                               
  REPRESENTATIVE JOHN DAVIES pointed out if HB 66 passed, the                  
  residents of Fairbanks would have to vote on this issue                      
  since their local property taxes were capped, "in order to                   
  cover the additional $300,000 plus" at 20 percent to                         
  maintain this program.                                                       
                                                                               
  REPRESENTATIVE TOOHEY disputed the validity of the previous                  
  comment and said, "We're discussing relieving the state of                   
  the responsibility...  We don't have the money to do this,                   
  it's very clear."                                                            
                                                                               
  REPRESENTATIVE WILLIS inquired, "If we pass this bill as it                  
  is, we would in effect repeal ... and if nothing happened at                 
  the local level, the local level didn't by ordinance reenact                 
  this, then it's gone."                                                       
                                                                               
  MR. SWISHER reiterated many municipalities would want to                     
  take that to the local public in terms of a referendum and                   
  pointed out the time limits.  He said, "I think maybe you                    
  ought to hold the senior citizen harmless for just a little                  
  bit longer while that decision gets made."                                   
                                                                               
  Number 542                                                                   
                                                                               
  JOE ALTER, CHAIRPERSON, AMERICAN ASSOCIATION OF RETIRED                      
  PERSONS, testified against HB 66.  He suggested tax reform                   
  in Alaska was long overdue.  He said, "I would see this bill                 
  as an option to allow even further discrepancies in equal                    
  treatment under the law, so far as taxation of senior                        
  citizens is concerned.  At the same time, I see a very                       
  serious problem in this 'last man out' approach to who pays                  
  the bill," he added.                                                         
                                                                               
  MR. ALTER continued, "Our 40,000 member association is                       
  heartily in favor of tax reform, one which gives equal                       
  treatment under the law.  I would not attempt to tell you                    
  exactly what that tax reform should be...  It's a matter of                  
  public policy as to whether you take that reform out on the                  
  backs of a few senior citizens or whether you take it out on                 
  the public at large.                                                         
                                                                               
  MR. ALTER continued further, "We have progressed from the                    
  'old poor house' system of the 'lower 48' to a model system                  
  in Alaska which has encouraged senior citizens to retire in                  
  Alaska.  ...It's a system which allows a person to stay in                   
  their own home as long as possible, which is the cheapest                    
  place for a senior to be.  Therefore, I speak in opposition                  
  to any program that would tend to take this privilege away.                  
  It takes the dignity away.  It increases the cost to society                 
  and I would add that this is a billion dollar industry which                 
  most state courts would be threatened if you were to pass                    
  this legislation."                                                           
                                                                               
  Number 584                                                                   
                                                                               
  MR. ALTER said, "It would not only threaten the social                       
  structure of Alaska with these thousands of volunteers that                  
  help your tourism business and so forth.  Florida wants                      
  them.  It's a post office mailbox industry which can move.                   
  They can take their portable income wherever they wish.                      
  This industry has been evaluated for Alaska to be about a                    
  billion dollar industry..."                                                  
                                                                               
  Number 615                                                                   
                                                                               
  REPRESENTATIVE BUNDE refuted the previous testimony.  With                   
  regard to taxes, he said, "If you use services you have to                   
  pay for them."                                                               
                                                                               
  REPRESENTATIVE TOOHEY pointed out there was a lot of fraud                   
  in relation to the senior citizen tax exemption program.                     
                                                                               
  JOE ALTER said there would always be people who try to beat                  
  the system and expounded again on his position.                              
                                                                               
  Number 668                                                                   
                                                                               
  BARBARA BLASCO, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF                    
  LAW, testified on behalf of an amendment brought forth by                    
  the Attorney General's Office.  She gave a detailed and                      
  mechanical explanation of the amendments.                                    
                                                                               
  REPRESENTATIVE DAVIES moved that the amendment be adopted.                   
                                                                               
  REPRESENTATIVE OLBERG asked if it was possible to amend HB
  66 further to add "a sunset clause to give some lead time to                 
  this process" and change the effective date to January 1,                    
  1994.                                                                        
                                                                               
  TAPE 93-4, SIDE B                                                            
  Number 000                                                                   
                                                                               
  MR. MONROE reiterated the current lack of funding for the                    
  program.                                                                     
                                                                               
  REPRESENTATIVE BUNDE described his plan for a committee                      
  substitute for HB 66 when it was referred to the House HESS                  
  committee.                                                                   
                                                                               
  REPRESENTATIVE OLBERG positively acknowledged Representative                 
  Bunde's plan.                                                                
                                                                               
  REPRESENTATIVE WILLIS asked if any veterans' organizations                   
  had been notified of the hearing.                                            
                                                                               
  REPRESENTATIVE OLBERG said not to his knowledge.                             
                                                                               
  REPRESENTATIVE DAVIES moved to amend Section 5 of HB 66 to                   
  read January 1, 1994.                                                        
                                                                               
  REPRESENTATIVE TOOHEY objected to the amendment due to the                   
  lack of funding.                                                             
                                                                               
  Number 090                                                                   
                                                                               
  REPRESENTATIVE DAVIES replied by comparing the Governor's                    
  Longevity Bonus phase out plan and how that program was                      
  scheduled in advance to phase out at a future date, not                      
  retroactively.  He said, "I think its important that we give                 
  not only the individual senior citizens some time to react                   
  to this kind of thing, I think we need to give some time to                  
  the municipalities who want to consider how to deal with                     
  this sometime also...                                                        
                                                                               
  REPRESENTATIVE DAVIES continued, "...[I]f in fact the                        
  longevity bonus gets phased out and this program gets                        
  eliminated, we have really taken some major whacks at one                    
  portion of our population.  ...The property tax exemption                    
  really gets perhaps closer to the original intent of the                     
  Longevity Bonus in its present incarnation than the                          
  longevity bonus now does..."                                                 
                                                                               
  REPRESENTATIVE BUNDE pointed out a "significant" fiscal note                 
  would be needed for the proposed amendment.                                  
                                                                               
  REPRESENTATIVE DAVIES said it would be necessary to work                     
  with the governor and the legislature to acquire funding for                 
  this fiscal year.                                                            
                                                                               
  Number 200                                                                   
                                                                               
  CHAIRMAN OLBERG requested a roll call vote be taken on the                   
  motion to adopt the second amendment to HB 66.                               
  Representatives Davies and Willis voted for the adoption of                  
  the second amendment.  Representatives Bunde, Sanders,                       
  Toohey, Williams and Olberg voted against the adoption of                    
  the second amendment.  The MOTION FAILED.                                    
                                                                               
  REPRESENTATIVE SANDERS moved that HB 66, as amended, be                      
  moved to the next committee of referral.                                     
                                                                               
  REPRESENTATIVE WILLIS objected and asked that there be                       
  further discussion.  He stated for the record that he was a                  
  senior and recognized a potential conflict of interest.                      
                                                                               
  REPRESENTATIVE WILLIS expounded on his objection by pointing                 
  out the tax exemption program had been in effect prior to                    
  the abundance of oil money.  He said, "By doing this, the                    
  evidence that I have read and substantiated by Mr. Alter is                  
  that the seniors in this state bring in about a billion                      
  dollars... because of this we have to look at it in the                      
  context of an industry."                                                     
                                                                               
  Number 292                                                                   
                                                                               
  REPRESENTATIVE WILLIAMS restated his objection.  "I still                    
  don't feel we have sat down long enough at the table and I                   
  want everybody to understand that we should be trying to get                 
  spending under control before we start cutting services.                     
  ...the people out in the community feel it first," he said.                  
                                                                               
  REPRESENTATIVE DAVIES concurred with Representative Williams                 
  and repeated his reasoning.                                                  
                                                                               
  REPRESENTATIVE TOOHEY reiterated that the municipalities                     
  would responsibly take care of the indigent elderly.                         
                                                                               
  CHAIRMAN OLBERG requested a roll call on the motion to move                  
  HB 66, as amended, out of committee with individual                          
  recommendations.  Representatives Willis, Davies and                         
  Williams voted against the motion.  Representatives Bunde,                   
  Sanders, Toohey and Olberg voted to move HB 66 out of                        
  committee.  The MOTION CARRIED.                                              
                                                                               
  Number 355                                                                   
                                                                               
  CHAIRMAN OLBERG called an at ease at 2:10 p.m.                               
                                                                               
  HB 30:  HUMAN SERVICES MATCHING GRANTS                                       
                                                                               
  CHAIRMAN OLBERG reconvened the meeting at 2:21 p.m. with all                 
  members except Representative Williams present and took up                   
  HB 30.                                                                       
                                                                               
  REPRESENTATIVE TOM BRICE, PRIME SPONSOR of HB 30, stated the                 
  bill had been introduced to facilitate eligibility of Human                  
  Services Community Grants by the Fairbanks North Star                        
  Borough in lieu of the City of Fairbanks.   He said, "The CS                 
  has an added section which would basically disallow 'double-                 
  dipping' of funds.  So in other words, the City of Fairbanks                 
  could not participate in the program at the same time as the                 
  Fairbanks North Star Borough."                                               
                                                                               
  REPRESENTATIVE DAVIES moved that the committee adopt the CS                  
  provided by the sponsor.  There being no objections, CS HB
  30 was ADOPTED.                                                              
                                                                               
  Number 422                                                                   
                                                                               
  REPRESENTATIVE DAVIES gave his support for CS HB 30 and                      
  expounded on his experience as a North Star Borough                          
  assemblyman.                                                                 
                                                                               
  (Representative Williams rejoined the committee at 2:27                      
  p.m.)                                                                        
                                                                               
  REPRESENTATIVE TOOHEY asked about the effect of CS HB 30 on                  
  the City of Fairbanks.                                                       
                                                                               
  REPRESENTATIVE BRICE said the Fairbanks and North Pole City                  
  Councils passed resolutions in support of HB 30.                             
                                                                               
  REPRESENTATIVE BUNDE asked if the North Star Borough was                     
  more willing to provide social services than the City of                     
  Fairbanks.                                                                   
                                                                               
  REPRESENTATIVE BRICE replied in the affirmative and added,                   
  "The services provided by City non-profits are area-wide and                 
  borough-wide so it's probably more appropriate that the                      
  borough be the entity administering the grants."                             
                                                                               
  REPRESENTATIVE DAVIES moved that CS HB 30 be moved out of                    
  committee with individual recommendations.  Without                          
  objections, IT WAS SO MOVED.                                                 
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  CHAIRMAN OLBERG adjourned the meeting at 2:29 p.m.                           

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