Legislature(1999 - 2000)
04/20/1999 08:09 AM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
April 20, 1999
8:09 a.m.
MEMBERS PRESENT
Representative Andrew Halcro, Co-Chairman
Representative John Harris, Co-Chairman
Representative Carl Morgan
Representative Lisa Murkowski
Representative Fred Dyson
Representative Reggie Joule
Representative Albert Kookesh
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
*HOUSE BILL NO. 200
"An Act relating to exemptions for municipal property taxes for
certain primary residences; relating to property tax equivalency
payments for certain residents; and providing for an effective
date."
- HEARD AND HELD
*HOUSE CONCURRENT RESOLUTION NO. 6
Establishing the Task Force on the Impacts of Transfers of
Governmental Functions to Local Governments.
- HEARD AND HELD
HOUSE BILL NO. 175
"An Act requiring the Department of Health and Social Services to
provide notice to a community council on receipt of an application
for a license to operate a certain kind of foster group home."
- BILL HEARING CANCELLED
(* First public hearing)
PREVIOUS ACTION
BILL: HB 200
SHORT TITLE: MUNICIPAL PROPERTY TAX EXEMPTIONS
SPONSOR(S): FINANCE
Jrn-Date Jrn-Page Action
4/15/99 824 (H) READ THE FIRST TIME - REFERRAL(S)
4/15/99 824 (H) CRA,FIN
4/20/99 (H) CRA AT 8:00 AM CAPITOL 124
BILL: HCR 6
SHORT TITLE: TASK FORCE:TRANSFER STATE FUNCTIONS
SPONSOR(S): REPRESENTATIVES(S) BERKOWITZ, Halcro
Jrn-Date Jrn-Page Action
4/12/99 730 (H) READ THE FIRST TIME - REFERRAL(S)
4/12/99 730 (H) CRA, FIN
4/20/99 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
TOM WRIGHT, Legislative Assistant
for Representative Porter
Alaska State Legislature
Capitol Building, Room 208
Juneau, Alaska 99801
Telephone: (907) 465-4930
POSITION STATEMENT: Testified on behalf of House Finance
Committee.
WAYNE STOTT, Commander
American Legion Post 13
210 Observatory Street
Sitka, Alaska 99835
Telephone: (907) 747-8841
POSITION STATEMENT: Opposed HB 200.
LAWRENCE WIDMARK, Former Commander
American Legion Post 13
202 Princess Way
Sitka, Alaska 99835
Telephone: (907) 747-8718
POSITION STATEMENT: Opposed HB 200.
DAN KECK, Chair
State Legislative Committee
AARP
PO Box 938
Sitka, Alaska 99835
Telephone: (907) 747-3908
POSITION STATEMENT: Testified on HB 200.
PATRICK MOY, Southeast District Commander
PO Box 33
Sitka, Alaska 99835
Telephone: (907) 747-1007
POSITION STATEMENT: Opposed HB 200.
CARL CROSMAN
552 Crosman Way
North Pole, Alaska 99705
Telephone: (907) 488-3354
POSITION STATEMENT: Opposed HB 200.
MARY CURRY
PO Box 877317
Wasilla, Alaska 99687
Telephone: (907) 376-0833
POSITION STATEMENT: Opposed HB 200.
MARY CARLTON
HC02 Box 7682
Palmer, Alaska 99645
Telephone: (907) 745-2073
POSITION STATEMENT: Testified on behalf of IRENE FANDRICH.
ELEANOR RIENDL
Box 870342
Wasilla, Alaska 99687
Telephone: (907) 376-5719
POSITION STATEMENT: Testified on HB 200.
EILEEN JOHNSON, Pioneer
SR 1 Knik Goose Bay Road
Wasilla, Alaska 99654
Telephone: (907) 373-1139
POSITION STATEMENT: Discussed the need to use common sense with the
budget problems.
STEVE VAN SANT, State Assessor
Department of Community & Regional Affairs
333 West 4th, Suited 220
Anchorage, Alaska 99501
Telephone: (907) 269-4605
POSITION STATEMENT: Testified on HB 200.
GERALD DORSHER, Appointed Legislative Officer
Veterans of Foreign Wars
PO Box 240003
Douglas, Alaska 99824
Telephone: (907) 364-3346
POSITION STATEMENT: Testified on HB 200.
JULIE KRAFFT, Director
Member Services
Alaska Municipal League
217 Second Street, Suite 200
Juneau, Alaska 998901
Telephone: (907) 586-1325
POSITION STATEMENT: Supported HB 200 and HCR 6.
REPRESENTATIVE BERKOWITZ
Alaska State Legislature
Capitol Building, Room 404
Juneau, Alaska 99801
Telephone: (907) 465-4919
POSITION STATEMENT: Testified as Sponsor of HCR 6.
ACTION NARRATIVE
TAPE 99-26, SIDE A
Number 0001
CO-CHAIRMAN HARRIS called the House Community and Regional Affairs
Standing Committee meeting to order at 8:09 a.m. Members present
at the call to order were Representatives Harris, Murkowski, Dyson.
Representative Halcro, Morgan, Joule and Kookesh were not present.
Co-Chairman Harris noted that there was not a quorum, therefore the
committee would take public testimony on the legislation before the
committee.
HB 200 - MUNICIPAL PROPERTY TAX EXEMPTIONS
CO-CHAIRMAN HARRIS announced that the first order of business
before the committee would be HOUSE BILL NO. 200, "An Act relating
to exemptions for municipal property taxes for certain primary
residences; relating to property tax equivalency payments for
certain residents; and providing for an effective date."
TOM WRIGHT, Legislative Assistant for Representative Porter, Alaska
State Legislature, informed the committee that he was testifying on
behalf of the House Finance Committee. Mr. Wright explained that
the senior citizen, disabled veteran property tax exemption is an
unfunded mandate for local governments. This tax exemption was
last funded in 1985 and is not funded in the fiscal year (FY) 2000
budget proposal. This legislation, HB 200, would allow each local
government the option to tax property owned by disabled veterans or
senior citizens, the program would not be mandatory. This would
allow local communities to develop their own priorities and funding
obligations providing maximum local choice. Mr. Wright noted that
the committee should have a committee substitute (CS) which would
provide that any property made exempt pursuant to AS 29.45.050
would not count towards the property tax base in calculating
funding for education. The change is necessary in order to prevent
added costs to municipalities choosing to continue this exemption.
The committee packet also includes the funding history of this tax
exemption, information from the Department of Community & Regional
Affairs and the Office of the State Assessor. The committee packet
also includes a letter from the Alaska Municipal League (AML) which
notes that this exemption has been a priority for AML for many
years.
CO-CHAIRMAN HARRIS asked if the priority for the AML is to maintain
the exemption program.
MR. WRIGHT noted that Julie Krafft from the AML could better answer
the question. He said that it has been a priority to allow the
local municipalities to decide whether to allow this option.
Number 0378
REPRESENTATIVE MURKOWSKI asked if Mr. Wright had reviewed Tam
Cook's memorandum.
MR. WRIGHT said that he had glanced at Ms. Cook's memo.
REPRESENTATIVE MURKOWSKI pointed out that Ms. Cook said that she
did not know of any reason to treat the provisions regarding the
determination of full and true value differently, but suggested
checking with the Department of Education and the Department of
Community & Regional Affairs. Representative Murkowski asked if
Mr. Wright knew what the problem is to which Ms. Cook refers.
MR. WRIGHT deferred to Mr. Van Sant.
Number 0532
WAYNE STOTT, Commander, American Legion Post 13, Sitka, Alaska,
testified via teleconference from Sitka. Mr. Stott opposed HB 200
which he said discriminates against disabled veterans. This tax
exemption was earned by the disabled veterans. He urged the
committee to vote against HB 200.
CO-CHAIRMAN HARRIS asked if Mr. Stott understood that HB 200 gives
the municipalities the option to charge senior citizens and
disabled veterans property taxes.
MR. STOTT said that he understood that. In further response to
Co-Chairman Harris, Mr. Stott stated that the property tax
exemption should be given to all veterans.
LAWRENCE WIDMARK, Former Commander, American Legion Post 13, Sitka,
Alaska, testified via teleconference from Sitka. Mr. Widmark
opposed HB 200. He said that he supported Mr. Stott's comments.
Mr. Widmark suggested maintaining the disabled veteran property tax
exemption.
Number 0780
DAN KECK, Chair, State Legislative Committee, AARP, testified via
teleconference from Sitka. Mr. Keck indicated that HB 200 was
"dangling a carrot in front of municipalities for taking away
municipal assistance and revenue sharing and this is a way they can
get some of that money back." Should that money be taken from the
most deserving in Alaska, Alaska's senior citizens and disabled
veterans? He recommended that the committee take a hard look at
HB 200 and ask if this is the direction Alaska wants to go. With
regard to the comment that this is a priority of the AML, Mr. Keck
pointed out that last year's AML handbook did not take a stand on
this issue. He felt that perhaps, some AML members have taken this
as a priority. Mr. Keck reiterated the need to thoroughly review
HB 200. Mr. Keck said, "We don't want to try to balance the budget
on the backs of senior citizens and disabled veterans."
PATRICK MOY, Southeast District Commander, testified via
teleconference from Sitka. He informed the committee that he was
speaking on behalf of all veterans in Southeast Alaska. Mr. Moy
opposed HB 200. He pointed out that many are on a limited income
and therefore do not have money to pay the property tax.
Number 1023
CARL CROSMAN testified via teleconference from Fairbanks. Mr.
Crosman opposed HB 200. He discussed living outside of rural
Fairbanks when there were not many services, although there were
property taxes. Mr. Crosman stated that as people retire, they
often spend more time improving their houses which is like a bank
account because when people die, the house is returned to the tax
rolls at a higher tax rate. Mr. Crosman noted that often this tax
exemption is planned as part of a person's retirement package.
MARY CURRY testified via teleconference from the Mat-Su Valley.
Ms. Curry opposed HB 200. She informed the committee that it had
been explained to her that the more affluent people would be
impacted by HB 200. However, Ms. Curry felt that the trickle-down
effect would result. She noted that she and her husband were on a
fixed income and if the tax exemption was eliminated they would
probably have to sell their home as would many seniors in the area.
MARY CARLTON, testifying via teleconference from the Mat-Su Valley,
informed the committee that she would be speaking on behalf of
Irene Fandrich. Ms. Carlton indicated that Ms. Fandrich recently
moved to Alaska from California where she saw the struggles faced
by seniors. The exemption of seniors from property tax in Alaska
seemed great. She further indicated that Ms. Fadrich believed that
not having the property tax exemption would cause real hardships
for many Alaskan seniors, many of whom are on a fixed income.
Number 1402
ELEANOR RIENDL testified via teleconference from the Mat-Su Valley.
She informed the committee that she has lived in Alaska since 1962
and have paid a lot of taxes in that time. Ms. Riendl discussed
the history of the permanent fund program. She noted that nothing
has changed on her land since 1973 because she has not had the
money to do anything. However, her taxes have increased from $25
a year to $2500 a year. She noted that three years ago she held
three jobs in order to make ends meet. Ms. Riendl informed the
committee that she would be eligible for relief from property taxes
in a little over a year. Ms. Riendl offered the committee the
following deal: "You find me a job at age 64 that pays a working
wage ... and then you can pass this little bill."
EILEEN JOHNSON, Pioneer, testified via teleconference from the
Mat-Su Valley. She informed the committee that she and her
children were brought to Alaska by her husband, a disabled veteran.
Ms. Johnson said, "The legislature along with Governor Tony Knowles
has completely exempted the oil industry from taxes while still
making big profits. And the result, shortfall. The state house is
more concerned about profit margins of ARCO and BP than the pocket
books of Alaskans. So with this selling out of Alaska's revenue,
what is the first proposal to cover the loss and fix the budget.
Simple, tax the citizens, raid the permanent fund, cut monies from
education, from [the Department of] Health & Social Services. Oh
yeah, let's cut property tax relief from the disabled and the
disabled veterans and the elderly. Yeah, and then while we're at
it, let's just give ourselves a raise of five percent. Are you or
are you not elected to be our public servant? Common sense says to
me in running my household ... that when income is down you
economize, not figure out [how] to raid the bank."
Number 1728
STEVE VAN SANT, State Assessor, Department of Community & Regional
Affairs, testified via teleconference Anchorage. He noted that he
had not seen the CS, but by making this an optional exemption the
4 mill equivalency concern should be addressed. Mr. Van Sant noted
that discussions with various municipalities have lead to the
notion of expanding the tax exemption to disabled persons.
Therefore, the committee may want to expand HB 200 to allow the
municipalities to expand the program to include disabled
individuals and make the exemption needs based.
CO-CHAIRMAN HARRIS inquired as to how much the larger areas would
gain from charging property taxes to senior citizens, veterans and
disabled veterans.
MR. VAN SANT informed the committee that if these currently
exempted individuals were taxed, $24.6 million would be generated
statewide. Charging property taxes to those individuals would
generate the following in the following areas: Anchorage - $13.7
million, Fairbanks - $3.2 million, Mat-Su Valley - $2.6 million,
Juneau - $1.3 million, and Kenai - $1.6 million. Mr. Van Sant, in
response to Co-Chairman Harris, clarified that money would be
generated if every person currently eligible for the exemption was
charged. He informed the committee that the program has grown at
a rate of about 10 percent over the past five or so years and that
growth rate is expected for at least the next few years. At the
same level of exemption as currently, Mr. Van Sant projected that
the program would generate $29 million by 2001. Mr. Van Sant noted
that municipalities have expressed interest in expanding the
program or tightening it based on needs.
REPRESENTATIVE MURKOWSKI assumed that if the municipalities
expanded the exemption to disabled individuals, the municipality
would follow the guidelines established by the Disability
Determination Center. She asked if Mr. Van Sant was referring to
those individuals qualifying for social security due to disability.
MR. VAN SANT commented that the definition of disability was
discussed last year. It was difficult to develop a statewide
definition. Currently, the Kenai Peninsula Borough does have a
disability exemption in place. Mr. Van Sant believed the
definition should be left up to the local municipalities rather
than imposing a statewide mandate. He offered to work with the
committee on the language if that was desired.
REPRESENTATIVE MURKOWSKI asked if Mr. Van Sant had read the
proposed CS as not giving the municipality the option to provide
the exemption based on need.
MR. VAN SANT reiterated that he has not seen the proposed CS, but
he assumed the only change was to Title 14 issues on the full
value. Discussions last year determined that the existing language
did not specify that a municipality had the authority to offer the
exemption based on economic need. Mr. Van Sant suggests that the
language be clear in order to avoid any concern regarding whether
the municipality has the authority to offer the exemption based on
economic need.
Number 2161
GERALD DORSHER, Appointed Legislative Officer, Veterans of Foreign
Wars, expressed concern with HB 200. He stressed that these
veterans have served their country and put their lives on the line
for freedom enjoyed in Alaska. These disabled veterans must be
helped to continue enjoying their freedom to stay in their homes
and stay in Alaska. He acknowledged that there are budget cuts for
the city with regard to the revenue sharing. Mr. Dorsher felt that
if this tax exemption is left up to the municipalities, the
municipalities will eliminate the exemption. The veterans and the
disabled veterans of Alaska need to be protected from the loss of
the property tax exemption.
REPRESENTATIVE DYSON asked if Mr. Dorsher was inferring that giving
the municipalities the option to offer the property tax exemption
would be tantamount to eliminating the exemption.
MR. DORSHER replied yes. The AML has been working on this issue
for several years. With regard to the comment that the change
would go to a local vote, Mr. Dorsher pointed out that no local
vote was occurring now.
Number 2340
JULIE KRAFFT, Director, Member Services, Alaska Municipal League,
supported HB 200. Ms. Krafft noted that the AML would like to see
changes that would ensure that the municipalities are not penalized
under the school funding formula and provide the broadest possible
discretion to work with the seniors, veterans and the public in
order to design a program that meets the needs of individual
communities. She explained that in 1973, the Alaska State
Legislature passed legislation requiring municipalities to exempt
senior citizens from local property taxes up to an assessed value
of $150,000. The program required the state to reimburse
municipalities for tax revenues lost to their communities due to
the exemption. Although the exemption is mandated by state law,
the state has not provided funding for the exemption since 1985
which has resulted in all other municipal tax payers bearing that
additional tax burden. She pointed out that reimbursement for the
program was zeroed out in 1996 and now costs municipal tax payers
nearly $25 million. Furthermore, the program is growing by $2-$3
million per year and has increased 400 percent since 1990.
MS. KRAFFT informed the committee that over the years, AML has
supported changes to the program in order to provide local tax
payers an option as to how the program is managed. Ms. Krafft
stated, "Our first choice is the state fully fund its exemptions by
reimbursing municipalities." She acknowledged that in the face of
the current budget situation that would probably not happen. Ms.
Krafft understood that HB 200 would allow municipalities by a vote
of the people to make the property tax exemption to senior citizens
and disabled veterans an optional program. At this time, AML does
not know of any community that wishes to entirely eliminate the
program. She noted that municipalities would be allowed to change
the program in order to slow its growth. For example, the
municipalities could reduce the exemption amount, base the program
on need, defer the taxes, or a combination thereof. She pointed
out that none of those changes would reduce the present cost of the
program to tax payers, but would only slow future growth. Ms.
Krafft stated that HB 200 should be part of a long-range fiscal
plan to control costs, although no money will be saved next year.
Ms. Krafft stressed, "While we support decisions on tax exemptions
to be made at the local level, ... we are unaware of any community
that plans to eliminate the program." She noted that those
communities with a tax cap will not see increased revenue, but will
merely spread the tax burden among more tax payers. Additionally,
HB 200 will not make up for cuts to state revenue sharing programs.
REPRESENTATIVE MURKOWSKI said that Ms. Krafft's conversations with
municipalities have not found any that are planning to eliminate
this program which should provide assurances to those concerned.
Representative Murkowski inquired as to the feedback Ms. Krafft has
received regarding how municipalities intend to address this.
MS. KRAFFT said that she did not know of any one particular
direction municipalities will choose. Ms. Krafft indicated that
the needs based or economic limit approach would probably rise to
the top. She mentioned that a few years ago, the AML worked out an
agreement with the AARP to reduce the exemption amount to $75,000.
She reiterated that this must go to a vote of the people.
Number 2613
REPRESENTATIVE MURKOWSKI asked if the AML has had discussions on
this issue with the disabled veterans' and senior citizen's
organizations.
MS. KRAFFT said there have not been any discussions with those
organizations this year. This legislation just came out last week
which has left AML scrambling. Ms. Krafft stated that AML would be
happy to work with these organizations. She expected that if HB
200 passes, the local groups will meet with the municipalities to
work it out individually.
REPRESENTATIVE MURKOWSKI recognized that this is an educational
process. She interpreted much of the testimony as believing that
the state is cutting this program which is not what HB 200 would
accomplish. This legislation would provide this program to the
municipalities as an option in order to fit the municipality.
Representative Murkowski commented that misperception can be
dangerous. She hoped that there will be much conversation and
education on the matter.
MS. KRAFFT agreed.
MR. WRIGHT said that he was encouraged by the suggestions from Mr.
Van Sant and Ms. Krafft which he would bring before the Co-Chairs
of the House Finance Committee.
CO-CHAIRMAN HARRIS announced that HB 200 would be held to
Thursday's meeting.
HCR 6 - TASK FORCE: TRANSFER STATE FUNCTIONS
Number 2749
CO-CHAIRMAN HARRIS announced that the final order of business would
be HOUSE CONCURRENT RESOLUTION NO. 6, Establishing the Task Force
on the Impacts of Transfers of Governmental Functions to Local
Governments.
REPRESENTATIVE BERKOWITZ, Sponsor of HCR 6, stated that there is
much tension between the state and local governments due to the
current budget shortfall. This resolution, HCR 6, would form a
task force in order to manage the transfer of services and
responsibilities from the state to the local level as well as vice
versa. Representative Berkowitz expressed concern with how local
governments will be effected by cuts to municipal assistance and
revenue sharing. Therefore, the consequences should be studied in
order to manage the transition in a manner that results in the
least amount of dislocation and concern at the local level.
REPRESENTATIVE MURKOWSKI inquired as to why the task force as
proposed under HCR 6 does not include anyone outside of the
legislature; is there a cost issue?
REPRESENTATIVE BERKOWITZ stated that HCR 6 utilized the standard
form for task forces. He was amenable to including others and
thought it appropriate to include members of local government.
REPRESENTATIVE MURKOWSKI noted that often federal money comes into
the state with strings. She suggested that perhaps, it would be
appropriate for the task force in HCR 6 to also review the
federal-state relationship as well as the state-local relationship.
REPRESENTATIVE BERKOWITZ said that made sense. He acknowledged the
intertwining of the local, state, and federal government which he
indicated was difficult to separate. The more the links between
the three can be understood, the better the relationships between
the three can be managed to minimize the impact on citizens.
TAPE 99-26, SIDE B
CO-CHAIRMAN HARRIS asked if HCR 6 is an attempt to delay the
impacts of these transfers in responsibility.
REPRESENTATIVE BERKOWITZ said that he wanted to ensure that the
legislature thinks through the consequences of its actions. Some
would suggest that HB 200 is the state pushing its taxing
responsibilities onto local governments. Regardless of the truth
of that notion, he indicated that a more global approach would be
better than the piecemeal approach. Representative Berkowitz
stated that he opposed cuts to municipal assistance and is not fond
of transferring the senior and disabled veteran property tax
exemption to the local governments. However, he recognized that he
is unable to stop it or slow it down. Representative Berkowitz
expressed the need to ensure that those type of concepts are
managed well. There will be more such concepts. Representative
Berkowitz was confident that these transitions could occur in an
intelligent fashion, but with only 29 days left in session he was
unsure of whether that could be accomplished in the crisis
management mode.
CO-CHAIRMAN HARRIS noted his background in local government and
felt that including local government members in the task force
would be a good idea. He suggested that a paragraph (3) be added
to include representation from local municipalities.
Number 2780
REPRESENTATIVE MURKOWSKI pointed out that there is a zero fiscal
note attached to HCR 6. If public members are added to the task
force, would there be a fiscal note.
REPRESENTATIVE BERKOWITZ acknowledged that a fiscal note could be
necessitated by the inclusion of public members on the task force.
However, he believed that the zero fiscal note could be maintained
through some fiscal responsibility.
Number 2680
JULIE KRAFFT, Director, Member Services, Alaska Municipal League,
noted that the committee should have information on the work done
by the previous task forces on this issue. Ms. Krafft believed it
is important for local government to communicate with state
government regarding this. She agreed that the piecemeal approach
has often been used and the effects on the local tax payers and the
local government have not been discussed. Ms. Krafft supported HCR
6. She felt this would be a good education for all concerned.
REPRESENTATIVE MURKOWSKI pointed out that the task force in 1991
included a representative from an unincorporated community and an
unorganized borough. She indicated those areas should be
represented on the task force created under HCR 6.
CO-CHAIRMAN HARRIS announced that HCR 6 would be held.
REPRESENTATIVE BERKOWITZ noted that Representative Davies was also
contributed in drafting HCR 6.
ADJOURNMENT
There being no further business before the committee, the House
Community & Regional Affairs Standing Committee meeting was
adjourned at 9:05 a.m.
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