Legislature(2001 - 2002)

05/09/2002 08:35 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE COMMUNITY AND REGIONAL AFFAIRS                                                                            
                       STANDING COMMITTEE                                                                                     
                          May 9, 2002                                                                                           
                           8:35 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Carl Morgan, Co-Chair                                                                                            
Representative Andrew Halcro                                                                                                    
Representative Drew Scalzi                                                                                                      
Representative Lisa Murkowski                                                                                                   
Representative Gretchen Guess                                                                                                   
Representative Beth Kerttula                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 4(RLS) am                                                                                                
"An Act  relating to optional exemptions  from municipal property                                                               
taxes on residential property and  limiting an optional exclusion                                                               
or exemption to the assessed value  of $10,000 for a residence in                                                               
a municipality  with a total  bonded indebtedness that  equals or                                                               
exceeds  $15,000 multiplied  by the  number of  residents in  the                                                               
municipality; and providing for an effective date."                                                                             
                                                                                                                                
     - MOVED HCS CSSB 4(CRA) OUT OF COMMITTEE                                                                                   
                                                                                                                                
CS FOR SENATE BILL NO. 181(FIN) am                                                                                              
"An  Act relating  to and  increasing the  interest rate  on that                                                               
portion of  a loan for  a single- family house  or owner-occupied                                                               
duplex that  exceeds $200,000 where  the loan  is for a  house or                                                               
duplex in  a small community with  a population of 6,500  or less                                                               
that is not connected by road  or rail to Anchorage or Fairbanks,                                                               
or with a  population of 1,600 or less that  is connected by road                                                               
or  rail to  Anchorage or  Fairbanks  for purposes  of the  small                                                               
community  housing   program  of   the  Alaska   Housing  Finance                                                               
Corporation; relating to loans for  teacher housing in which each                                                               
unit that  is not vacant is  occupied by at least  one individual                                                               
who is employed as a  certificated teacher in a public elementary                                                               
or secondary  school in  a small community  with a  population of                                                               
6,500 or less that is not  connected by road or rail to Anchorage                                                               
or  Fairbanks, or  with a  population of  1,600 or  less that  is                                                               
connected  by  road  or  rail  to  Anchorage  or  Fairbanks,  and                                                               
increasing  the interest  rate  on the  loans  if this  occupancy                                                               
requirement is not complied with;  and providing for an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - MOVED HCS CSSB 181(CRA) OUT OF COMMITTEE                                                                                 
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: SB 4                                                                                                                    
SHORT TITLE:FIREFIGHTER/EMT MUNI. PROP. TAX EXEMPTION                                                                           
SPONSOR(S): SENATOR(S) THERRIAULT                                                                                               
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
01/08/01     0012       (S)        PREFILE RELEASED - 12/29/00                                                                  
01/08/01     0012       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
01/08/01     0012       (S)        CRA, FIN                                                                                     
02/07/01                (S)        CRA AT 1:30 PM FAHRENKAMP 203                                                                
02/07/01                (S)        Heard & Held                                                                                 
02/07/01                (S)        MINUTE(CRA)                                                                                  
02/28/01                (S)        CRA AT 1:30 PM FAHRENKAMP 203                                                                
02/28/01                (S)        Moved CSSB 4(CRA) Out of                                                                     
                                   Committee                                                                                    
02/28/01                (S)        MINUTE(CRA)                                                                                  
03/01/01     0554       (S)        CRA RPT CS 1DP 2NR NEW TITLE                                                                 
03/01/01     0555       (S)        DP: TORGERSON; NR: PHILLIPS,                                                                 
                                   AUSTERMAN                                                                                    
03/01/01     0555       (S)        FN1: (REV)                                                                                   
03/01/01     0555       (S)        FN2: ZERO(REV)                                                                               
03/19/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/19/01                (S)        Heard & Held                                                                                 
03/19/01                (S)        MINUTE(FIN)                                                                                  
03/22/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/22/01                (S)        MINUTE(FIN)                                                                                  
03/23/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/23/01                (S)        Scheduled But Not Heard                                                                      
03/27/01                (S)        FIN AT 6:00 PM SENATE FINANCE                                                                
                                   532                                                                                          
03/27/01                (S)        Moved CS(FIN) Out of                                                                         
                                   Committee                                                                                    
03/27/01                (S)        MINUTE(FIN)                                                                                  
04/05/01     0955       (S)        REFERRED TO RULES                                                                            
04/05/01     0955       (S)        AM: DONLEY, LEMAN;                                                                           
04/05/01     0955       (S)        NR: KELLY, GREEN, AUSTERMAN,                                                                 
                                   HOFFMAN,                                                                                     
04/05/01     0955       (S)        FN3: (REV)                                                                                   
04/05/01     0955       (S)        OLSON; DP: WILKEN                                                                            
04/05/01     0955       (S)        FIN RPT CS 1DP 5NR 2AM SAME                                                                  
                                   TITLE                                                                                        
04/20/01                (S)        RLS AT 10:45 AM FAHRENKAMP                                                                   
                                   203                                                                                          
04/20/01                (S)        MINUTE(RLS)                                                                                  
03/01/02     2350       (S)        FIN REFERRAL ADDED (RETURNED                                                                 
                                   TO FIN)                                                                                      
03/21/02                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/21/02                (S)        Moved Out of Committee                                                                       
03/21/02                (S)        MINUTE(FIN)                                                                                  
03/22/02     2500       (S)        COSPONSOR(S): WILKEN                                                                         
04/08/02     2657       (S)        FIN RPT CS(2DFIN)3DP 1DNP 2NR                                                                
                                   NEW TITLE                                                                                    
04/08/02     2657       (S)        DP: KELLY, WILKEN, AUSTERMAN;                                                                
04/08/02     2657       (S)        DNP: DONLEY; NR: LEMAN, WARD                                                                 
04/08/02     2657       (S)        FN4: (REV)                                                                                   
04/16/02                (S)        RLS AT 10:30 AM FAHRENKAMP                                                                   
                                   203                                                                                          
04/16/02                (S)        MINUTE(RLS)                                                                                  
04/18/02                (S)        RLS AT 10:30 AM FAHRENKAMP                                                                   
                                   203                                                                                          
04/18/02                (S)        MINUTE(RLS)                                                                                  
04/22/02     2887       (S)        RULES TO CAL W/CS 2OR 4/22                                                                   
                                   SAME TITLE                                                                                   
04/22/02     2887       (S)        FN5: (REV)                                                                                   
04/22/02     2888       (S)        READ THE SECOND TIME                                                                         
04/22/02     2888       (S)        RLS CS ADOPTED UNAN CONSENT                                                                  
04/22/02     2888       (S)        AM NO 1 FAILED Y7 N13                                                                        
04/22/02     2889       (S)        AM NO 2 FAILED Y8 N12                                                                        
04/22/02     2890       (S)        ADVANCED TO 3RD READING FLD                                                                  
                                   Y14 N5 A1                                                                                    
04/22/02     2890       (S)        ADVANCED TO THIRD READING                                                                    
                                   4/23 CALENDAR                                                                                
04/23/02     2905       (S)        READ THE THIRD TIME CSSB                                                                     
                                   4(RLS)                                                                                       
04/23/02     2905       (S)        PASSED Y13 N7                                                                                
04/23/02     2906       (S)        EFFECTIVE DATE(S) ADOPTED Y20                                                                
                                   N-                                                                                           
04/23/02     2906       (S)        OLSON NOTICE OF                                                                              
                                   RECONSIDERATION                                                                              
04/24/02     2925       (S)        RECON TAKEN UP - IN THIRD                                                                    
                                   READING                                                                                      
04/24/02     2925       (S)        RETURN TO SECOND FOR AM 3                                                                    
                                   UNAN CONSENT                                                                                 
04/24/02     2925       (S)        AM NO 3 ADOPTED UNAN CONSENT                                                                 
04/24/02     2926       (S)        AUTOMATICALLY IN THIRD                                                                       
                                   READING                                                                                      
04/24/02     2926       (S)        PASSED ON RECONSIDERATION Y20                                                                
                                   N-                                                                                           
04/24/02     2926       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
04/24/02     2935       (S)        TRANSMITTED TO (H)                                                                           
04/24/02     2935       (S)        VERSION: CSSB 4(RLS) AM                                                                      
04/25/02     3122       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/25/02     3122       (H)        CRA, FIN                                                                                     
05/07/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
05/07/02                (H)        Heard & Held                                                                                 
                                   MINUTE(CRA)                                                                                  
05/09/02                (H)        CRA AT 8:30 AM CAPITOL 124                                                                   
                                                                                                                                
BILL: SB 181                                                                                                                  
SHORT TITLE: SMALL COMMUNITY/TEACHER HOUSING LOANS                                                                              
SPONSOR(S): FINANCE                                                                                                             
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/09/01     1014       (S)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/09/01     1014       (S)        FIN                                                                                          
04/19/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
04/19/01                (S)        Heard & Held                                                                                 
                        (S)        MINUTE(FIN)                                                                                  
04/25/01                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
04/25/01                (S)        Heard & Held                                                                                 
04/25/01                (S)        MINUTE(FIN)                                                                                  
01/31/02                (S)        FIN AT 9:30 AM SENATE FINANCE                                                                
                                   532                                                                                          
01/31/02                (S)        Heard & Held                                                                                 
01/31/02                (S)        MINUTE(FIN)                                                                                  
03/21/02                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
                                   532                                                                                          
03/21/02                (S)        Heard & Held                                                                                 
03/21/02                (S)        MINUTE(FIN)                                                                                  
04/23/02                (S)        FIN AT 4:00 PM SENATE FINANCE                                                                
                                   532                                                                                          
04/23/02                (S)        Moved CS(FIN) Out of                                                                         
                                   Committee                                                                                    
04/23/02                (S)        MINUTE(FIN)                                                                                  
04/24/02     2920       (S)        FIN RPT CS 6DP 2NR NEW TITLE                                                                 
04/24/02     2920       (S)        DP: DONLEY, KELLY, GREEN,                                                                    
                                   OLSON,                                                                                       
04/24/02     2920       (S)        WILKEN, LEMAN; NR: AUSTERMAN,                                                                
                                   WARD                                                                                         
04/24/02     2920       (S)        FN1: INDETERMINATE(REV)                                                                      
05/01/02                (S)        RLS AT 10:30 AM BELTZ 211                                                                    
05/01/02                (S)        -- Location Change --                                                                        
05/01/02                (S)        MINUTE(RLS)                                                                                  
05/02/02     3129       (S)        READ THE SECOND TIME                                                                         
05/02/02     3129       (S)        FIN CS ADOPTED UNAN CONSENT                                                                  
05/02/02     3130       (S)        ADVANCED TO THIRD READING                                                                    
                                   UNAN CONSENT                                                                                 
05/02/02     3130       (S)        READ THE THIRD TIME CSSB                                                                     
                                   181(FIN)                                                                                     
05/02/02     3130       (S)        PASSED Y18 N- E1 A1                                                                          
05/02/02     3130       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
05/02/02     3130       (S)        HOFFMAN NOTICE OF                                                                            
                                   RECONSIDERATION                                                                              
05/02/02     3102       (S)        RULES TO CALENDAR 5/2/02                                                                     
05/03/02     3147       (S)        RECON TAKEN UP - IN THIRD                                                                    
                                   READING                                                                                      
05/03/02     3147       (S)        RETURN TO SECOND FOR AM 1                                                                    
                                   UNAN CONSENT                                                                                 
05/03/02     3147       (S)        AM NO 1 OFFERED BY HOFFMAN                                                                   
05/03/02     3148       (S)        AM TO AM 1 UNANIMOUS CONSENT                                                                 
05/03/02     3148       (S)        AM NO 1 AS AMENDED ADOPTED                                                                   
                                   UNAN CONSENT                                                                                 
05/03/02     3148       (S)        AUTOMATICALLY IN THIRD                                                                       
                                   READING                                                                                      
05/03/02     3148       (S)        AM NO 2 (TITLE AM) ADOPTED                                                                   
                                   UNAN CONSENT                                                                                 
05/03/02     3149       (S)        PASSED ON RECONSIDERATION Y20                                                                
                                   N-                                                                                           
05/03/02     3149       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
                                   PASSAGE                                                                                      
05/03/02     3151       (S)        TRANSMITTED TO (H)                                                                           
05/03/02     3151       (S)        VERSION: CSSB 181(FIN) AM                                                                    
05/06/02     3383       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
05/06/02     3383       (H)        CRA, FIN                                                                                     
05/07/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
05/07/02                (H)        Failed To Move Out Of                                                                        
                                   Committee                                                                                    
                                   MINUTE(CRA)                                                                                  
05/09/02                (H)        CRA AT 8:30 AM CAPITOL 124                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR GENE THERRIAULT                                                                                                         
Alaska State Legislature                                                                                                        
Capitol Building, Room 121                                                                                                      
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified as the sponsor of SB 4.                                                                          
                                                                                                                                
DAN DICKINSON, Director                                                                                                         
Tax Division                                                                                                                    
Department of Revenue                                                                                                           
550 W 7th Avenue, Suite 500                                                                                                     
Anchorage, Alaska 99501-3566                                                                                                    
POSITION STATEMENT:  Provided explanation of the spreadsheet                                                                    
that analyzes the effect of AS 43.56 with the proposed                                                                          
exemption.                                                                                                                      
                                                                                                                                
SARA FELIX, Assistant Attorney General                                                                                          
Civil Division (Juneau)                                                                                                         
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, Alaska 99811-0300                                                                                                       
POSITION STATEMENT:  Answered questions with regard to SB 4.                                                                    
                                                                                                                                
BILL LAWRENCE, Staff                                                                                                            
to Representative Morgan                                                                                                        
House Community and Regional Affairs Standing Committee                                                                         
Alaska State Legislature                                                                                                        
Capitol Building, Room                                                                                                          
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Explained the changes encompassed in HCS                                                                   
CSSB 181, Version H.                                                                                                            
                                                                                                                                
JOHN BITNEY, Legislative Liaison                                                                                                
Alaska Housing Finance Corporation                                                                                              
PO Box 101020                                                                                                                   
Anchorage, Alaska 99510-1020                                                                                                    
POSITION STATEMENT:  Discussed AHFC's concerns.                                                                                 
                                                                                                                                
DAN FAUSKE, CEO/Executive Director                                                                                              
Alaska Housing Finance Corporation                                                                                              
PO Box 101020                                                                                                                   
Anchorage, Alaska 99510-1020                                                                                                    
POSITION STATEMENT:  Testified that the cap in SB 181 should be                                                                 
set as high as reasonably possible.                                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 02-26, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CO-CHAIR  KEVIN MEYER  called the  House  Community and  Regional                                                               
Affairs  Standing  Committee  meeting   to  order  at  8:35  p.m.                                                               
Representatives Morgan, Meyer, Scalzi,  and Kerttula were present                                                               
at the  call to  order.   Representatives Halcro,  Murkowski, and                                                               
Guess arrived as the meeting was in progress.                                                                                   
                                                                                                                                
SB   4-FIREFIGHTER/EMT MUNI. PROP. TAX EXEMPTION                                                                              
                                                                                                                                
[Contains discussion of HB 6.]                                                                                                  
                                                                                                                                
CO-CHAIR MEYER announced  that the first order  of business would                                                               
be  CS  FOR SENATE  BILL  NO.  4(RLS)  am,  "An Act  relating  to                                                               
optional exemptions from municipal  property taxes on residential                                                               
property and limiting  an optional exclusion or  exemption to the                                                               
assessed value of $10,000 for  a residence in a municipality with                                                               
a  total  bonded  indebtedness that  equals  or  exceeds  $15,000                                                               
multiplied by  the number of  residents in the  municipality; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
Number 0114                                                                                                                     
                                                                                                                                
REPRESENTATIVE SCALZI  moved to adopt Version  22-LS0190\E, Cook,                                                               
5/7/02,  as  the working  document.    No objection  was  stated.                                                               
[Version E was treated as adopted.]                                                                                             
                                                                                                                                
CO-CHAIR MEYER informed  the committee that Version  E raises the                                                               
taxation  exemption amount  from $5,000  to $10,000.  He reminded                                                               
the committee  that at  the last hearing  the committee  had been                                                               
discussing   Amendment  2,   which   was  ultimately   withdrawn.                                                               
Amendment 2 reads as follows:                                                                                                   
                                                                                                                                
     Page 1, line 13 - page 2, line 2                                                                                           
          Delete "in a municipality with a level of total                                                                   
     bonded  indebtedness  that  equals or  exceeds  $15,000                                                                
     multiplied   by  the   number  of   residents  in   the                                                                
     municipality."                                                                                                         
                                                                                                                                
SENATOR GENE  THERRIAULT, Alaska State Legislature,  testified as                                                               
the  sponsor of  SB 4.   He  pointed out  that the  Department of                                                               
Revenue  put  together a  spreadsheet  [regarding  the impact  of                                                               
including  or  excluding  the  North  Slope  Borough].    Senator                                                               
Therriault turned  to the  fiscal notes.   The fiscal  notes were                                                               
originally  written  such  that  if  the  borough  increased  the                                                               
property tax  exemption and  suffered a  loss, [the  fiscal notes                                                               
showed both]  the amount the  borough would have to  increase the                                                               
mill rate to  merely recoup the loss and the  potential impact of                                                               
that to  the state  treasury.  The  calculation to  merely recoup                                                               
the loss is fairly minimal.   However, the oil and gas properties                                                               
of  the  North  Slope  Borough are  vast;  the  borough  assessed                                                               
valuation is over $10 billion.   The Senate was concerned that if                                                               
the  additional $5,000  property tax  exemption was  granted, the                                                               
mill rate would be raised  to completely erode the aforementioned                                                               
exemption.  Therefore, the property  owner would pay the same tax                                                               
bill and [the  borough] would more than recoup the  loss from the                                                               
property tax.  Senator Therriault explained:                                                                                    
                                                                                                                                
     That slight increase in the  millage rate that it would                                                                    
     take to  erode that  and make  it net  zero to  you the                                                                    
     residential property taxpayer -  when you multiple that                                                                    
     by the $10  billion of assessed valuation,  you can see                                                                    
     in  the  last column  there  [of  the spreadsheet]  the                                                                    
     potential  impact.    ...I  think  he  [Mr.  Dickinson,                                                                    
     Department of Revenue] did the  calculation [as] if you                                                                    
     made the  entire $15,000 of property  tax exemption net                                                                    
     zero.  The impact to  the state treasury from the North                                                                    
     Slope Borough alone would be over $11 million.                                                                             
                                                                                                                                
SENATOR THERRIAULT said  that if the calculation was  made on the                                                               
complete $15,000, then adding $5,000  would be one-third of that.                                                               
Under the companion  bill, HB 6, with an increase  in the millage                                                               
rate to  make the net impact  to the residential payer  net zero,                                                               
the impact  would potentially be  over $100 million to  the state                                                               
treasury.   Senator Therriault  pointed out  that places  such as                                                               
Fairbanks, Kenai, and  Valdez have a mix  of residential property                                                               
and small  business owners, which  help keep the millage  rate in                                                               
check.   Such a dynamic doesn't  really exist in the  North Slope                                                               
Borough because  so much of  their property tax base  consists of                                                               
oil and  gas properties.   Therefore,  there isn't  pressure from                                                               
the local community to keep the millage rate in check.                                                                          
                                                                                                                                
Number 0583                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS  inquired as  to the difference  between the                                                               
fiscal note for the new valuation  versus the fiscal note for the                                                               
alternative method.                                                                                                             
                                                                                                                                
SENATOR THERRIAULT  said it was  difficult to decide what  to put                                                               
on the fiscal  note because the decision isn't  controlled by the                                                               
legislature [but rather by the local government].                                                                               
                                                                                                                                
REPRESENTATIVE  GUESS requested  that the  Department of  Revenue                                                               
explain  the model  presented  via  the department's  spreadsheet                                                               
entitled, "Effect  on Oil  Gas Property  Tax (AS  43.56) Revenues                                                               
from  Using Higher  Mill Rates  to Recoup  the Effect  of Certain                                                               
Property Tax Exemptions."                                                                                                       
                                                                                                                                
Number 0741                                                                                                                     
                                                                                                                                
DAN  DICKINSON, Director,  Tax Division,  Department of  Revenue,                                                               
testified via teleconference.  He  related his understanding that                                                               
the committee  wanted him  to focus on  the different  numbers in                                                               
the last  column of the  spreadsheet.   He explained that  if the                                                               
alternative method,  excluding the North Slope  Borough, was used                                                               
with the current version of SB  4, then the $1.4 million would be                                                               
used in  the fiscal note.   However, if the language  was changed                                                               
such that the  North Slope Borough could take  advantage of this,                                                               
then  the fiscal  note  would  increase to  $12.7  million.   Mr.                                                               
Dickinson directed attention  to the third block of  text down on                                                               
the spreadsheet and pointed out  that it's based on an additional                                                               
$5,000 exemption, which  has be recouped against the  rest of the                                                               
[value]  of  the home,  $85,000.    He  noted  that he  used  the                                                               
assumption of  $100,000 value for  the home.  Therefore,  in that                                                               
sense  it already  includes the  $10,000  being exempt.   If  the                                                               
$100,000 for the average home  is wrong, then the correct average                                                               
home [valuation]  will drive  the figures.   For example,  if the                                                               
average home is worth less, then  the fiscal note impacts will be                                                               
driven up  because the mill rate  will have to be  increased more                                                               
to offset  the $5,000  against the smaller  base.   Mr. Dickinson                                                               
recalled Senator Therriault's earlier  point that the actual base                                                               
of residences in the North Slope Borough is fairly small.                                                                       
                                                                                                                                
MR. DICKINSON turned  to column B of the  spreadsheet and pointed                                                               
out  that  the  effect  of the  current  $10,000  exemption  only                                                               
amounts  to $2.3  million,  which suggests  that  there are  only                                                               
about  237 homes  that are  able to  take advantage  of the  full                                                               
amount of the credit.                                                                                                           
                                                                                                                                
Number 0976                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS  requested  that  Mr.  Dickinson  walk  her                                                               
through the entire  spreadsheet and the assumptions  used for the                                                               
current fiscal note and the  alternative, but only relating to SB                                                               
4.                                                                                                                              
                                                                                                                                
MR. DICKINSON  began with  column A,  which illustrates  that the                                                               
total assessed  value in  the four  boroughs taking  advantage of                                                               
the $10,000  exemption.   The numbers  illustrate that  the North                                                               
Slope  is  three  times  the  size  of  the  Fairbanks  or  Kenai                                                               
Peninsula, and one-tenth  of the size of Valdez.   In response to                                                               
Representative  Guess, Mr.  Dickinson  confirmed that  it is  all                                                               
property,  but  he  wasn't  sure if  the  personal  property  was                                                               
included  in  those  figures.     However,  the  numbers  include                                                               
residential,  commercial, and  oil and  gas property.   Column  B                                                               
specifies  the   value  of  the  $10,000   exemption  that  those                                                               
municipalities/boroughs  are  currently   taking,  which  is  the                                                               
effect on  their tax base.   Therefore,  the current tax  base is                                                               
the difference  between [column A  and column B].   Mr. Dickinson                                                               
related his  belief that  the total  assessed value  includes the                                                               
senior citizens' and the disabled veterans' exemption.                                                                          
                                                                                                                                
MR. DICKINSON continued  with column D, which  expresses the mill                                                               
rate as  a percentage.   Column E  merely multiplies  the current                                                               
tax base by the mill rate  which results in the amount of revenue                                                               
a  particular  municipality  raises from  their  property  taxes.                                                               
Column F,  which is the first  place where there is  a difference                                                               
between SB  4 and HB 6,  determines how much the  exemption would                                                               
be if  it were  $15,000 instead  of $10,000.   Although  it's not                                                               
going to be  a precise comparison, as an order  of magnitude it's                                                               
a reasonable way to determine  the increase in the exemption that                                                               
would occur if the exemption was  raised to $15,000 under SB 4 or                                                               
$40,000 under HB 6.  Column  G simply takes the new exemption and                                                               
subtracts it  from the  total assessed value  listed in  column A                                                               
and the result is the new  tax base given the new exemption rate.                                                               
The new  tax base is then  divided by the amount  of revenue that                                                               
would be  raised under  the current  tax base  in order  derive a                                                               
mill rate  [as expressed in column  H].  He pointed  out that the                                                               
mill rate increases in all cases  because when there is a smaller                                                               
base, a slightly higher percentage  rate must be charged in order                                                               
to result  in the  same [revenue].   Column  I subtracts  the old                                                               
mill  rate  from   the  new  rate  in  order   to  determine  the                                                               
incremental rate,  that is  how much  additional millage  will be                                                               
charged.   Column  J specifies  the tax  base, which  is from  AS                                                               
43.56 properties.   The  AS 43.56  properties base  in Fairbanks,                                                               
Kenai, and Valdez  is significantly less than  the total assessed                                                               
value whereas  it doesn't change much  for the North Slope.   The                                                               
new incremental rate is then multiplied  by the tax base in order                                                               
to determine  the effect on the  AS 43.56 property base  from the                                                               
higher mill rate.   Mr. Dickinson posed a situation  in which the                                                               
state  tax is  at 20  mills  but allows  a credit  for any  local                                                               
property taxes.   In  such a situation,  if local  property taxes                                                               
increase, the  state's revenue from this  source decreases dollar                                                               
for  dollar.   For SB  4, in  summary, if  all four  boroughs are                                                               
included, [the effect on AS  43.56 collections under the new mill                                                               
rate] would amount  to $238,000.  If the $21,000  effect from the                                                               
North Slope  Borough is subtracted,  the result is $216,000.   He                                                               
noted that these [figures] were rounded to the nearest $100,000.                                                                
                                                                                                                                
Number 1441                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA  inquired as to why  a homeowner property                                                               
exemption  automatically places  the impact  against the  oil and                                                               
gas property.  Why can't that impact be split, she asked.                                                                       
                                                                                                                                
MR. DICKINSON answered that the  statute requires that a locality                                                               
tax its  residential, commercial, and  oil and gas  properties at                                                               
the same rate.   In further response  to Representative Kerttula,                                                               
Mr. Dickinson  said he  didn't know  precisely what  other states                                                               
do.  He said that Alaska is  unusual because it has a single mill                                                               
rate and  allows for a credit  for the local municipalities.   He                                                               
related his belief that typically  one would find states in which                                                               
the legislature would establish  one rate for commercial property                                                               
and  one rate  for  industrial property,  and  often the  farming                                                               
property  is given  a higher  exemption/lower rate.   "The  point                                                               
there is they  are looking at the  state as a whole  and what you                                                               
don't have  is a town  or a municipality that's  fortunate enough                                                               
to  have a  very  large  industrial complex  in  it, asking  that                                                               
complex to bear the entire  burden and exempting the homeowners,"                                                               
he  explained.   However,  a state,  as  Alaska illustrates,  can                                                               
decide that  one industry can  bear the  burden.  In  response to                                                               
Co-Chair  Meyer, Mr.  Dickinson  agreed that  this  has been  the                                                               
situation in Alaska  for some time, since the  early 1970s before                                                               
the Trans-Alaska  Pipeline System  (TAPS) was put  in place.   In                                                               
the early  1970s, the local  mill rates  were 7-8 mills  and thus                                                               
the state  was picking  up approximately  two-thirds of  the tax,                                                               
not the much smaller portion that it is now.                                                                                    
                                                                                                                                
CO-CHAIR  MEYER surmised  then that  a community  such as  Valdez                                                               
could exempt all the residents from  any taxes and merely tax all                                                               
the commercial properties.                                                                                                      
                                                                                                                                
MR. DICKINSON agreed, and pointed  out that roughly two-thirds of                                                               
Valdez'  property value  resides  in the  marine  terminal.   The                                                               
maximum  rate by  a different  law is  30 mills.   Therefore,  if                                                               
Valdez simply raised  the mill rate to 30 mills  and exempted all                                                               
residential  property, the  budget of  the City  of Valdez  would                                                               
remain about the same.                                                                                                          
                                                                                                                                
Number 1711                                                                                                                     
                                                                                                                                
MR. DICKINSON continued the review  of the spreadsheet and turned                                                               
to the  alternative method,  which begins with  a column  for the                                                               
current  mill rate.   The  next column,  column E,  specifies the                                                               
amount of  the proposed exemption.   He  said that the  title for                                                               
column E, "Amount  saved by each homeowner  taking exemption," is                                                               
inaccurate.   Column F is the  amount being saved by  a homeowner                                                               
taking  the  additional  exemption,  assuming that  there  is  no                                                               
change in  the mill rate.   The next column specifies  that after                                                               
the $15,000  exemption is  utilized on  a $100,000  home, $85,000                                                               
worth of [value]  would be left to tax.   Therefore, the question                                                               
is  what mill  rate  would  be necessary  so  that the  homeowner                                                               
notices no difference  between taking the exemption  and paying a                                                               
higher mill  rate.  Mr.  Dickinson said that no  municipality can                                                               
design a  system to accomplish  the aforementioned with  a single                                                               
mill rate  because the higher the  value of the home,  the easier                                                               
it will be to make up the  $5,000 exemption.  "In other words, if                                                               
you  have a  fixed  exemption  but the  tax  is  calculated as  a                                                               
percentage, you're  going to have  to make the  average homeowner                                                               
come out ...  neutral - you can't do it  for every homeowner," he                                                               
specified.   Mr. Dickinson returned  to the question of  how much                                                               
money is necessary against the $85,000  of value left in the home                                                               
to make up  [the difference in the exemption].   The answer is an                                                               
incremental  nine-tenths of  a mill,  he  said.   That amount  is                                                               
determined by dividing the amount  saved, [the estimated value of                                                               
the proposed  exemption to the  homeowner], into the  amount that                                                               
remains taxable.  The new  incremental mill rate is multiplied by                                                               
the AS  43.56 tax base.   Because the incremental mill  rates are                                                               
higher than the  current fiscal note analysis, all  of the values                                                               
increase.   Therefore, if  the AS  43.56 tax  base is  large, the                                                               
amount significantly increases as  illustrated by the North Slope                                                               
Borough's number.  All the  numbers increase, which is the result                                                               
of the  amount of the incremental  mill rate in column  I and the                                                               
amount in the  tax base.  When including all  four boroughs under                                                               
the alternative method, the effect  on AS 43.56 collections would                                                               
be  $12.7 million  whereas  without the  North  Slope Borough  it                                                               
would amount  to almost $1.4  million.   He noted that  these are                                                               
maximums.   Furthermore,  under HB  6 and  its $40,000  exemption                                                               
there would be  other limitations with regard to  the North Slope                                                               
Borough and possibly Valdez.                                                                                                    
                                                                                                                                
CO-CHAIR MEYER asked if the  $200,000 fiscal note attached to the                                                               
current bill would remain accurate.                                                                                             
                                                                                                                                
MR. DICKINSON  remarked that "as-if"  exercises are  difficult to                                                               
characterize as good or bad.                                                                                                    
                                                                                                                                
Number 2050                                                                                                                     
                                                                                                                                
REPRESENTATIVE KERTTULA inquired  as to why the  homeowner has to                                                               
be held harmless.                                                                                                               
                                                                                                                                
MR. DICKINSON explained  that if the exemption  were increased to                                                               
$5,000, the homeowner  has now had the benefit.   The alternative                                                               
method analysis assumes that the  $5,000 exemption wasn't used to                                                               
provide a  benefit to the  homeowner but is  going to be  used to                                                               
hold  the homeowner  harmless and  raise additional  revenue from                                                               
the AS 43.56 property.  Although  the technical term may be "hold                                                               
harmless,"  it's  actually  not  allowing the  advantage  of  the                                                               
$5,000 exemption  to flow to  the [homeowner] but  rather raising                                                               
the average  tax so  that there  is no notice  that there  was an                                                               
exemption.                                                                                                                      
                                                                                                                                
SENATOR  THERRIAULT posed  a situation  in which  an individual's                                                               
tax bill  is $100.   With an  additional exemption, the  tax bill                                                               
decreases  to  $80   and  the  borough  raises   the  mill  rate.                                                               
Therefore, the  borough gives the  individual $20 and  then takes                                                               
it  back  [via the  mill  rate].   The  same  is  true for  every                                                               
property payer in the borough.                                                                                                  
                                                                                                                                
REPRESENTATIVE KERTTULA  identified the [dilemma] as  how to keep                                                               
[the borough] from getting the $20 back from the homeowner.                                                                     
                                                                                                                                
SENATOR  THERRIAULT answered  that  the borough  raises the  mill                                                               
rate  that it  controls  so  that by  "taking  advantage of  this                                                               
thing,  you don't  see  any [lessening]  of  your property  tax."                                                               
That is,  the overall mill  rate has  been raised such  that it's                                                               
net zero to [the homeowner].   However, in the process of raising                                                               
the overall  millage rate  on all  properties, including  oil and                                                               
gas properties,  a large amount  of money  has been swept  in [to                                                               
the borough] from the state treasury.                                                                                           
                                                                                                                                
REPRESENTATIVE  KERTTULA surmised  then  that "net  zero" to  the                                                               
homeowner  means  that  the  homeowner   gets  nothing  for  [the                                                               
exemption].                                                                                                                     
                                                                                                                                
MR. DICKINSON replied  yes.  He explained, "The  math is designed                                                               
so that the average homeowner sees  no net effect."  However, the                                                               
amount of revenue increases and  thus there may be more services,                                                               
et  cetera.   Mr. Dickinson  reiterated  that this  is a  maximum                                                               
effect, but noted that [the  effect] could be less depending upon                                                               
the reaction of each community.                                                                                                 
                                                                                                                                
Number 2272                                                                                                                     
                                                                                                                                
REPRESENTATIVE SCALZI  turned to  column I  and pointed  out that                                                               
the highest  millage of the  four communities is the  North Slope                                                               
Borough with  a rate of  0.111 percent.   However, the  effect to                                                               
personal property  in the  North Slope  Borough under  the $5,000                                                               
exemption wouldn't be as much  as the other municipalities.  "And                                                               
having a larger tax base of  $10 billion, it would seem that that                                                               
number would be the lowest instead  of the highest, as far as the                                                               
increased  millage.   Because you  don't  need that  much in  the                                                               
North Slope  to neutralize  the effect  as far  as the  amount of                                                               
homes that  are up there,"  he said.  He  inquired as to  why the                                                               
0.111 percent is the highest.                                                                                                   
                                                                                                                                
MR.  DICKINSON  explained  that  the analysis  is  based  on  one                                                               
$100,000 home  in the North  Slope Borough.  Therefore,  the size                                                               
of the base  doesn't matter in this analysis  for the alternative                                                               
method.  He  explained that the 0.111 percent  is derived because                                                               
$94 on $85,000  must be recouped.   The  incremental mill rate to                                                               
accomplish  the aforementioned  is driven  by the  fact that  the                                                               
North Slope Borough's mill rate is the highest of the three.                                                                    
                                                                                                                                
REPRESENTATIVE SCALZI said that  the analysis seems inaccurate if                                                               
it's based on one individual home  rather than the true amount of                                                               
homes for which this would be applicable.                                                                                       
                                                                                                                                
MR.  DICKINSON  reiterated  that   these  are  "as-if"  analyses.                                                               
Although  he said  he is  very comfortable  with the  fiscal note                                                               
analysis, which looks at the  total revenue, he acknowledged that                                                               
looking at this with only one  home could be a shortcoming of the                                                               
[alternative method] analysis.                                                                                                  
                                                                                                                                
REPRESENTATIVE SCALZI  noted his belief that  basing the analysis                                                               
on one home is inaccurate.                                                                                                      
                                                                                                                                
MR. DICKINSON explained that the  result is that [the North Slope                                                               
Borough] would  raise $11  million more in  new revenue  save the                                                               
the  $20,000 the  borough would  keep so  that the  one homeowner                                                               
wouldn't  feel  the  effect  of the  increased  exemption.    Mr.                                                               
Dickinson reiterated  that the  fiscal note  method looks  at the                                                               
actual size of the exemption as it's spread across all homes.                                                                   
                                                                                                                                
REPRESENTATIVE  SCALZI  posited that  if  $20,000  is all  that's                                                               
necessary to  raise [the  mill rate to  zero out  the exemption],                                                               
then the $11 million isn't necessary.                                                                                           
                                                                                                                                
MR. DICKINSON agreed, and clarified  that the $11 million doesn't                                                               
suggest that the revenue is  being replaced but rather it ensures                                                               
that  the average  homeowner  doesn't notice  the  effect of  the                                                               
exemption.                                                                                                                      
                                                                                                                                
Number 2552                                                                                                                     
                                                                                                                                
SENATOR   THERRIAULT   surmised  that   Representative   Scalzi's                                                               
question assumes that  the local government would  only raise the                                                               
millage  to recoup  the  lost revenue  suffered  by allowing  the                                                               
exemption.  He  returned to his $100 tax bill  example from which                                                               
the local  government suffers a  $20 loss  in revenue due  to the                                                               
exemption.  Therefore, the question  becomes:  how much would the                                                               
local  government  have to  raise  the  millage rate  across  all                                                               
property classes  in order to  recoup that lost revenue.   Across                                                               
all  [property classes]  the individual  with the  $100 tax  bill                                                               
would [receive the $20 exemption]  and the local government would                                                               
take back $1 from that individual  and the other $19 from all the                                                               
businesses.     Senator   Therriault  pointed   out  that   local                                                               
government isn't merely  trying to recoup the  lost revenue [from                                                               
this exemption].  The local government  is also trying to make it                                                               
net zero  to the property  owner and thus  the mill rate  will be                                                               
raised  high  enough  that  the   $20  exemption  the  individual                                                               
receives will  be taken back.   Furthermore, that same  mill rate                                                               
will  be placed  on all  the businesses  too.   In Fairbanks  and                                                               
Kenai, there isn't much motivation  to do that because [this will                                                               
impact] many  residential property  owners and  small businesses.                                                               
However, on  the North Slope  Borough almost all the  property is                                                               
oil  and gas  property, which  means  that every  dollar that  is                                                               
collected from those oil and gas  properties is a dollar from the                                                               
state treasury.                                                                                                                 
                                                                                                                                
Number 2686                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS surmised  that the  first analysis  answers                                                               
the  question  of  how  much  the mill  rate  would  need  to  be                                                               
increased in  order to keep  revenues harmless, while  the second                                                               
analysis  answers  how  much  the  mill rate  would  need  to  be                                                               
increased  in  order  to   keep  residential  property  taxpayers                                                               
harmless.                                                                                                                       
                                                                                                                                
SENATOR THERRIAULT agreed.                                                                                                      
                                                                                                                                
MR.  DICKINSON agreed,  but specified  that  the second  analysis                                                               
refers to the average homeowner.                                                                                                
                                                                                                                                
REPRESENTATIVE GUESS pointed out  that this [legislation] extends                                                               
a  current   program,  and  inquired   as  to  the   reaction  of                                                               
municipalities to this program.                                                                                                 
                                                                                                                                
SENATOR THERRIAULT  answered that the current  millage rates tell                                                               
the  story.    Those  communities with  tremendous  oil  and  gas                                                               
properties are at the cap and  thus divert dollars from the state                                                               
treasury.                                                                                                                       
                                                                                                                                
REPRESENTATIVE GUESS noted, "And those  who wouldn't want a sales                                                               
tax."                                                                                                                           
                                                                                                                                
Number 2761                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS  turned to  the alternative  method analysis                                                               
and related her  understanding that the numbers are  based on the                                                               
entire $15,000 exemption rather  than the difference.  Therefore,                                                               
she questioned  why the final  analysis doesn't divide  the final                                                               
numbers  by  three  because the  actual  difference  between  the                                                               
$10,000 and $15,000 exemption is one-third.                                                                                     
                                                                                                                                
SENATOR THERRIAULT said  that he misspoke earlier  with regard to                                                               
the  amounts in  the  final column.   The  amounts  in the  final                                                               
columns are calculated only on the additional $5,000.                                                                           
                                                                                                                                
MR. DICKINSON agreed.   "Again, the numbers are going  to show up                                                               
both in  column E  and column  G ... it's  the total  effect from                                                               
adding the $5,000 to what is there."                                                                                            
                                                                                                                                
SENATOR  THERRIAULT  surmised  then   that  amounts  wouldn't  be                                                               
divided by  three.  Using  the $15,000 in the  calculations would                                                               
mean that the property owner would  now lose the benefit from the                                                               
$10,000 for years  and years, which he didn't  believe was likely                                                               
to happen.                                                                                                                      
                                                                                                                                
REPRESENTATIVE GUESS inquired as to  why this isn't an evaluation                                                               
of the entire $15,000 [exemption].                                                                                              
                                                                                                                                
SENATOR THERRIAULT said it's not.   He explained that the $85,000                                                               
is present because  the value of the home that  still remains for                                                               
tax purposes  is necessary  so that there  could be  something to                                                               
apply the millage rate.                                                                                                         
                                                                                                                                
REPRESENTATIVE  GUESS  pointed  out  that  the  first  evaluation                                                               
refers  to the  change  in  the millage  rate  while [the  second                                                               
evaluation]  refers to  the impact  to the  entire millage  rate.                                                               
Those are two different questions.                                                                                              
                                                                                                                                
MR. DICKINSON  highlighted that column  I, in both cases,  is the                                                               
incremental mill rate required to solve the question.                                                                           
                                                                                                                                
REPRESENTATIVE  GUESS inquired  as to  how that  can be  the case                                                               
when the current evaluation of a  home is $90,000.  She said that                                                               
she didn't understand how the entire $15,000 is being evaluated.                                                                
                                                                                                                                
MR. DICKINSON  pointed out that  column D [under  the alternative                                                               
method] already includes  the effect of the $10,000.   If $15,000                                                               
were placed in column E  [under the alternative method], then the                                                               
value to  the proposed  homeowner would  be the  total exemption,                                                               
which would be  roughly three times the numbers  specified.  Then                                                               
the homeowner's taxes  would be raised to the point  that the new                                                               
taxes  under  this analysis  would  take  away the  $10,000  they                                                               
currently have.                                                                                                                 
                                                                                                                                
Number 2967                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS  announced that  she  understood  now.   If                                                               
there is concern  with regard to the oil and  gas property taxes,                                                               
why didn't  the Senate see  the need  to exclude Valdez  as well,                                                               
she asked.                                                                                                                      
                                                                                                                                
SENATOR  THERRIAULT  recalled  that  Valdez  is  already  at  the                                                               
maximum [cap].   He said that he didn't believe  Valdez could use                                                               
the mechanism in  the same manner.  Furthermore, the  oil and gas                                                               
properties in Valdez are magnitudes  less than those in the North                                                               
Slope Borough.                                                                                                                  
                                                                                                                                
MR. DICKINSON  informed the committee  that there is  an informal                                                               
maximum of 20  mills.  That maximum is informal  because up to 20                                                               
mills, the companies aren't really going to ...                                                                                 
                                                                                                                                
TAPE 02-26, SIDE B                                                                                                              
                                                                                                                                
MR. DICKINSON pointed out that in  law [the maximum] is 30 mills.                                                               
In the  area between 20  mills and  30 mills, things  become more                                                               
complex.   He noted that there  is some debate in  the Department                                                               
of  Revenue  and  the  Department  of  Law  over  the  [following                                                               
interpretation].   If the  City of  Valdez were to  go to  a mill                                                               
rate  of 21,  the  credit would  eat into  the  amount the  state                                                               
receives from  the pipeline in  the unorganized  boroughs because                                                               
most of  that property is pipeline  property.  In other  words, a                                                               
taxpayer who  has property inside  and outside Valdez  could take                                                               
the credit outside  of Valdez against the Valdez  area.  Although                                                               
part of that  would be offset the way it  is now, an organization                                                               
that has  spill clean up  equipment, for example, only  in Valdez                                                               
would  feel the  pain  when  Valdez rose  above  20  mills.   Mr.                                                               
Dickinson  indicated  that  [Valdez]  could  [increase  its  mill                                                               
rate].  He agreed with  Senator Therriault's observation that the                                                               
mill rate, in  general, seems to be directly  proportional to the                                                               
amount of oil and gas in that jurisdiction.                                                                                     
                                                                                                                                
Number 2941                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS  continued with  the assumption that  no one                                                               
goes over 20  mills and pointed out that the  North Slope Borough                                                               
only  has  a  small  ways  to  go  [before  reaching  20  mills].                                                               
Furthermore,  the   assumption  of   0.111  percent   [under  the                                                               
alternative  method] would  put  the North  Slope Borough's  mill                                                               
rate to 30.                                                                                                                     
                                                                                                                                
MR.  DICKINSON  clarified  that the  North  Slope  Borough  would                                                               
increase to about  20 mills [under SB  4].  In the  HB 6 analysis                                                               
Valdez would  be at  30 mills.   Mr.  Dickinson pointed  out that                                                               
there are other factors going on  in the North Slope.  He related                                                               
his belief  that the bonding  and rating agencies are  probably a                                                               
major influence on the mill rate.                                                                                               
                                                                                                                                
REPRESENTATIVE  GUESS asked  why the  Senate didn't  send over  a                                                               
more accurate fiscal  note if the reason for  excluding the North                                                               
Slope  Borough  was  because  of  the  potential  problem.    She                                                               
estimated  that  the fiscal  note  should  have been  about  $1.4                                                               
million rather than $200,000.                                                                                                   
                                                                                                                                
SENATOR THERRIAULT said  that the fiscal note could  have been an                                                               
[indeterminate]  with pages  of explanation  because of  the many                                                               
dynamics to evaluate.                                                                                                           
                                                                                                                                
REPRESENTATIVE GUESS  passed out  an amendment for  the committee                                                               
to review.                                                                                                                      
                                                                                                                                
Number 2812                                                                                                                     
                                                                                                                                
SARA FELIX, Assistant Attorney  General, Civil Division (Juneau),                                                               
Department of  Law, informed the  committee that she  was present                                                               
in place of Marjorie Vandor.                                                                                                    
                                                                                                                                
REPRESENTATIVE GUESS  highlighted the question as  to whether the                                                               
exclusion  of one  specific  borough  would raise  constitutional                                                               
concerns.                                                                                                                       
                                                                                                                                
MS.  FELIX noted  that  the bill  doesn't  specifically exempt  a                                                               
borough, [although that  may be the effect].   Ms. Felix reported                                                               
that  it  seems  that  the analysis  under  an  equal  protection                                                               
challenge would  be judged  under the  lowest level  of scrutiny.                                                               
As  long as  the  state has  a reasonable  basis  for having  the                                                               
distinction in  the bill, it  should survive an  equal protection                                                               
[challenge].    She   pointed  out  that  this   is  an  optional                                                               
exemption.   "As  long  as there's  a  reasonable state  interest                                                               
underlying this  bill and there's  no discriminatory  intent, ...                                                               
we think that it would be Okay," she said.                                                                                      
                                                                                                                                
CO-CHAIR   MEYER   asked  if   Ms.   Felix   believes  there   is                                                               
discriminatory intent as the bill is currently drafted.                                                                         
                                                                                                                                
MS. FELIX answered  that she had no reason to  believe such.  She                                                               
clarified that she's merely stating  the standard in the case law                                                               
she reviewed.                                                                                                                   
                                                                                                                                
REPRESENTATIVE KERTTULA asked if there  has been any situation in                                                               
which different rates have been used for different properties.                                                                  
                                                                                                                                
MS. FELIX pointed  out that Alaska Statute says that  oil and gas                                                               
property can't  be taxed  at a higher  rate than  other property.                                                               
Within that constraint, Ms. Felix  supposed that differential tax                                                               
rates   could  be   established   as  long   as   there  was   no                                                               
discrimination  against  oil  and   gas  property.    In  further                                                               
response to  Representative Kerttula, Ms. Felix  agreed that it's                                                               
within the legislature's purview to  decide to change the statute                                                               
specifying that oil  and gas property can't be taxed  at a higher                                                               
rate than other property.                                                                                                       
                                                                                                                                
Number 2645                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS moved that  the committee adopt Amendment 1,                                                               
which reads as follows:                                                                                                         
                                                                                                                                
     Page 1, line 11 to page 2, line 2,                                                                                         
                                                                                                                                
     Delete  "exclusion  or  exemption  authorized  by  this                                                                    
     subsection  may  not  exceed   the  assessed  value  of                                                                    
     $10,000 for any one residence  in a municipality with a                                                                    
     level  of  total  bonded indebtedness  that  equals  or                                                                    
     exceeds $15,000  multiplied by the number  of residents                                                                    
     in the municipality.  Otherwise, an"                                                                                       
                                                                                                                                
     Page 2, lines 6-7,                                                                                                         
                                                                                                                                
     Delete ";or (2) the assessed value of $10,000"                                                                             
                                                                                                                                
REPRESENTATIVE SCALZI objected.                                                                                                 
                                                                                                                                
REPRESENTATIVE GUESS explained  the she didn't like,  as a policy                                                               
matter,  excluding areas.    The current  law  [for the  existing                                                               
exemption] extends  to all boroughs,  and therefore she  said she                                                               
believes  that an  extension of  the exemption  should be  to all                                                               
boroughs.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  SCALZI  announced  his agreement,  in  principle,                                                               
with  the  amendment.    Furthermore, he  noted  that  he  wasn't                                                               
comfortable with the [fiscal] analysis.   However, he deferred to                                                               
the  experts in  the  taxation department  with  regard to  their                                                               
comments  that   [including  the   North  Slope   Borough]  would                                                               
potentially create  a significant  impact to the  state treasury.                                                               
Upon learning  that SB 4  has a  committee referral to  the House                                                               
Finance Committee, Representative Scalzi  announced that he would                                                               
object to moving the [current version] of the bill.                                                                             
                                                                                                                                
CO-CHAIR MEYER  noted his agreement with  Representative Scalzi's                                                               
comments.   He  related  his  belief that  "this"  won't have  an                                                               
adverse  impact  on those  living  in  the North  Slope  Borough,                                                               
although it  could potentially have  a large impact on  the state                                                               
treasury.                                                                                                                       
                                                                                                                                
REPRESENTATIVE KERTTULA questioned why  homeowners in one part of                                                               
the  state should  be allowed  to pay  less, held  harmless, than                                                               
other homeowners.   She  mentioned her  concern of  a potentially                                                               
discriminatory  effect with  this  legislation.   Therefore,  she                                                               
announced her support of the amendment.                                                                                         
                                                                                                                                
Number 2439                                                                                                                     
                                                                                                                                
SENATOR THERRIAULT encouraged the committee  to not lose sight of                                                               
the  volunteer section,  which would  accrue to  the North  Slope                                                               
Borough.   Furthermore, the [volunteers]  would keep  the current                                                               
$10,000  exemption.   Senator Therriault  predicted that  if this                                                               
amendment is successful, then this legislation would [die].                                                                     
                                                                                                                                
REPRESENTATIVE GUESS  asked if the  legislation would  survive if                                                               
Section 1 was deleted.                                                                                                          
                                                                                                                                
SENATOR THERRIAULT replied that he didn't know.                                                                                 
                                                                                                                                
REPRESENTATIVE MURKOWSKI  agreed with  the sponsor that  there is                                                               
great  value [with  the volunteer  section  of the  legislation].                                                               
Although she  acknowledged the concern everyone  should have with                                                               
the potential impact to the  state treasury, she also agreed with                                                               
Representative Kerttula.  She, too,  asked whether the section of                                                               
the bill that everyone agrees  on could move forward [without the                                                               
other section].                                                                                                                 
                                                                                                                                
Number 2277                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS withdrew  Amendment  1.   She, then,  moved                                                               
that the committee  adopt conceptual Amendment 2,  which reads as                                                               
follows:                                                                                                                        
                                                                                                                                
     Delete Section 1.                                                                                                          
                                                                                                                                
REPRESENTATIVE SCALZI objected.                                                                                                 
                                                                                                                                
SENATOR  THERRIAULT pointed  out that  Section 1  is an  optional                                                               
tool   for  communities.     This   legislation  was   [initially                                                               
developed] from the property tax issue  that was on the ballot at                                                               
the last general election.   This legislation attempts to provide                                                               
local governments  with a  tool that  would save  [homeowners] on                                                               
their property  tax by implementing  a sales tax.   Therefore, he                                                               
didn't support eliminating  that tool on the basis  of the stated                                                               
concern.   Senator Therriault noted  his opposition  to Amendment                                                               
2.                                                                                                                              
                                                                                                                                
A roll  call vote was  taken.  Representatives  Murkowski, Guess,                                                               
and Kerttula  voted for the  adoption of conceptual  Amendment 2.                                                               
Representatives  Scalzi,  Morgan,  and Meyer  voted  against  the                                                               
adoption  of  conceptual Amendment  2.    Therefore, Amendment  2                                                               
failed by a vote of 3:3.                                                                                                        
                                                                                                                                
Number 2152                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS moved that the committee adopt Amendment 1.                                                                
                                                                                                                                
REPRESENTATIVE SCALZI objected.   Representative Scalzi said that                                                               
he  intended  to  meet  with  Steve  Van  Sant,  State  Assessor,                                                               
Department  of Community  & Economic  Development, to  review the                                                               
analysis  because   he  remained  uncomfortable  with   it.    He                                                               
explained that  if [he remained uncomfortable]  with the analysis                                                               
after talking  with Mr. Van  Sant, then  he would offer  the same                                                               
amendment to the House Finance Committee.                                                                                       
                                                                                                                                
CO-CHAIR MEYER pointed out that  there is also the opportunity to                                                               
deal with this on the floor.                                                                                                    
                                                                                                                                
REPRESENTATIVE KERTTULA  interjected that this is  where the work                                                               
should be  done on this  legislation.  She reiterated  her belief                                                               
that  it's  not  fundamentally correct  to  discriminate  against                                                               
residents of the state.                                                                                                         
                                                                                                                                
REPRESENTATIVE  SCALZI agreed  that the  work should  be done  in                                                               
this committee.   "My problem is  that in erring, I  would rather                                                               
err  conservatively on  not  reducing the  state  coffers if  the                                                               
analysis is  correct," he said.   He said he didn't  want to slow                                                               
the bill,  and there is  the opportunity  to address this  in the                                                               
House Finance Committee  and on the House floor  if [the analysis                                                               
is incorrect].                                                                                                                  
                                                                                                                                
The committee took a brief at-ease from 9:45 a.m. to 9:47 a.m.                                                                  
                                                                                                                                
Number 1998                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS withdrew Amendment 1.   She moved to rescind                                                               
the committee's  action in failing to  adopt conceptual Amendment                                                               
[2].    There being  no  objection,  the committee's  action  was                                                               
rescinded.                                                                                                                      
                                                                                                                                
REPRESENTATIVE GUESS  moved that  the committee  adopt conceptual                                                               
Amendment [2], which reads as follows:                                                                                          
                                                                                                                                
     Delete Section 1.                                                                                                          
                                                                                                                                
There being no objection, conceptual Amendment [2] was adopted.                                                                 
                                                                                                                                
REPRESENTATIVE GUESS  suggested that  the committee zero  out the                                                               
fiscal note because  of the minimal fiscal impact  and because it                                                               
could help the legislation bypass the House Finance Committee.                                                                  
                                                                                                                                
SENATOR THERRIAULT said that there is  still going to be a fiscal                                                               
note of some magnitude because of the volunteer exemption.                                                                      
                                                                                                                                
CO-CHAIR  MEYER agreed  that  the legislation  should  go to  the                                                               
House Finance Committee.                                                                                                        
                                                                                                                                
Number 1870                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI moved to report  HCS CSSB 4, Version 22-                                                               
LS0190\E,  Cook,  5/7/02,  as  amended   out  of  committee  with                                                               
individual  recommendations  and  the accompanying  fiscal  note.                                                               
There being no  objection, HCS CSSB 4(CRA) was  reported from the                                                               
House Community and Regional Affairs Standing Committee.                                                                        
                                                                                                                                
SB 181- SMALL COMMUNITY/TEACHER HOUSING LOANS                                                                                 
                                                                                                                                
CO-CHAIR MORGAN announced  that the next order  of business would                                                               
be CS  FOR SENATE BILL NO.  181(FIN) am, "An Act  relating to and                                                               
increasing the  interest rate  on that  portion of  a loan  for a                                                               
single-  family  house  or  owner-occupied  duplex  that  exceeds                                                               
$200,000  where the  loan is  for a  house or  duplex in  a small                                                               
community  with  a  population  of  6,500 or  less  that  is  not                                                               
connected by  road or rail to  Anchorage or Fairbanks, or  with a                                                               
population of 1,600 or less that  is connected by road or rail to                                                               
Anchorage  or  Fairbanks  for purposes  of  the  small  community                                                               
housing  program  of  the  Alaska  Housing  Finance  Corporation;                                                               
relating to loans for teacher housing  in which each unit that is                                                               
not  vacant  is  occupied  by  at least  one  individual  who  is                                                               
employed  as a  certificated teacher  in a  public elementary  or                                                               
secondary school in a small  community with a population of 6,500                                                               
or less  that is not  connected by road  or rail to  Anchorage or                                                               
Fairbanks,  or  with  a  population  of 1,600  or  less  that  is                                                               
connected  by  road  or  rail  to  Anchorage  or  Fairbanks,  and                                                               
increasing  the interest  rate  on the  loans  if this  occupancy                                                               
requirement is not complied with;  and providing for an effective                                                               
date."   [HCS CSSB 181(CRA),  Version 22-LS0488\V,  Cook, 5/6/02,                                                               
failed  to move  from the  House Community  and Regional  Affairs                                                               
Standing Committee on May 7, 2002.]                                                                                             
                                                                                                                                
Number 1784                                                                                                                     
                                                                                                                                
REPRESENTATIVE SCALZI  moved that  the committee take  up Version                                                               
22-LS0488\V, Cook, 5/6/02.   There being no  objection, Version V                                                               
was before the committee.                                                                                                       
                                                                                                                                
Number 1762                                                                                                                     
                                                                                                                                
BILL LAWRENCE,  Staff to  Representative Morgan,  House Community                                                               
and   Regional   Affairs   Standing   Committee,   Alaska   State                                                               
Legislature,  explained  that before  the  committee  is a  title                                                               
change  and  a draft  HCS  [Version  22-LS0488\H, Cook,  5/9/02].                                                               
[Version H] removes  everything but the teacher  loan program and                                                               
thus a title change will be  required.  He explained that Section                                                               
1  [of Version  V] isn't  included  in Version  H.   Furthermore,                                                               
Version H includes  an amendment requested by  the Alaska Housing                                                               
Finance  Corporation  (AHFC);  this amendment  ensures  that  the                                                               
teacher  housing loans  receive the  same interest  rates as  all                                                               
other  small  community  housing  loans in  the  program.    That                                                               
language was  inadvertently left  out.   Mr. Lawrence  noted that                                                               
the cap is also taken out of Version H.                                                                                         
                                                                                                                                
REPRESENTATIVE  MURKOWSKI   directed  attention  to  page   3  of                                                               
[Version  H]  and pointed  out  that  the definition  of  teacher                                                               
housing has  been changed such  that it refers to  a multi-family                                                               
residence.   She inquired  as to  the definition  of multi-family                                                               
residence.                                                                                                                      
                                                                                                                                
MR. LAWRENCE  related his belief  that the definition  of housing                                                               
refers to single family homes and duplexes.                                                                                     
                                                                                                                                
Number 1612                                                                                                                     
                                                                                                                                
JOHN   BITNEY,  Legislative   Liaison,  Alaska   Housing  Finance                                                               
Corporation, echoed earlier testimony  that Section 1 [of Version                                                               
V] is not included  in [Version H] and thus there  is no longer a                                                               
threshold  level.   He explained  that initially  the bill  was a                                                               
repeal of  the entire program.   There were concerns  of fairness                                                               
because there  are no limitations  on the income of  the borrower                                                               
and the  size of the  loan.  There were  some loans in  excess of                                                               
$300,000  and  $400,000.    As  a  compromise,  AHFC  proposed  a                                                               
threshold for  the 1 percent issue  to apply.  The  idea was that                                                               
any portion  of any  loan that was  above the  threshold wouldn't                                                               
receive the  benefit of the 1  percent discount.  In  the Senate,                                                               
AHFC suggested that the $250,000  [threshold] was reasonable with                                                               
the current housing market.                                                                                                     
                                                                                                                                
CO-CHAIR MORGAN announced that the  committee would recess to the                                                               
call of the Chair.  The committee was in recess at 9:55 a.m.                                                                    
                                                                                                                                
[The recording  on Tape 02-26  ends and  a new tape  was inserted                                                               
upon reconvening.]                                                                                                              
                                                                                                                                
TAPE 02-27, SIDE A                                                                                                              
                                                                                                                                
CO-CHAIR  MORGAN  reconvened  the House  Community  and  Regional                                                               
Affairs    Standing    Committee    meeting   at    11:35    a.m.                                                               
Representatives Meyer, Morgan,  Halcro, Scalzi, Murkowski, Guess,                                                               
and Kerttula  were present at the  call to order.   The committee                                                               
returned to discussion of HCS CSSB 181, Version H.                                                                              
                                                                                                                                
Number 0050                                                                                                                     
                                                                                                                                
MR. BITNEY  continued discussion of  the threshold.   He informed                                                               
the   committee  that   the  Senate   discussed  not   supporting                                                               
legislation that would  repeal the program.  "It was  felt that a                                                               
threshold level  for the 1  percent was a reasonable  approach to                                                               
try to  limit how far  up the 1 percent  discount can go  on some                                                               
larger loans,"  he said.   He  announced that  the aforementioned                                                               
will be  an issue  for the  sponsor.  However,  [Version H]  is a                                                               
good bill that  amends an existing program in order  to provide a                                                               
provision for AHFC to attempt  to develop some teacher housing in                                                               
small  communities.   He  pointed  out that  the  only change  in                                                               
regard to the  teacher program can be found on  page 2, Section 2                                                               
[of  Version  H],  which  clarifies   that  the  teacher  program                                                               
receives the  1 percent discount.   This clarification  was added                                                               
after discussions with  the Attorney General's office.   He noted                                                               
that Section 1  [of Version H] allows current loans  in the rural                                                               
program  to  have  the  option  to refinance  their  loans.    He                                                               
explained  that  because  the  loan  program  is  a  creature  of                                                               
statute, there is no authorization  in statute for people to have                                                               
the  option  to  refinance  as afforded  to  those  under  bonded                                                               
programs or conventional programs.                                                                                              
                                                                                                                                
Number 0355                                                                                                                     
                                                                                                                                
CO-CHAIR  MEYER  related  his   understanding  that  [Version  H]                                                               
basically  guts the  original intent  of the  bill, which  was to                                                               
eliminate the entire  program.  He inquired as to  the reason the                                                               
program was  started.  He also  inquired as to the  intent of the                                                               
program.                                                                                                                        
                                                                                                                                
MR. BITNEY explained that the  program has been around since 1979                                                               
or 1980 and began as a  teacher housing program.  The program was                                                               
created  under  the  old  Department   of  Community  &  Regional                                                               
Affairs.  As  the program became more of a  home loan program, it                                                               
was  intended to  offer a  1 percent  interest rate  discount for                                                               
rural communities,  where the cost  of housing is higher,  and to                                                               
ensure  that there  were home  loans in  these communities  where                                                               
conventional underwriting  standards don't apply for  things such                                                               
as well and septic.                                                                                                             
                                                                                                                                
MR. BITNEY  recalled the sponsor  statement, which  discussed the                                                               
repeal  of the  program based  on the  findings of  a legislative                                                               
audit.  That audit found that  the original intent of the program                                                               
has  changed  in  that  as time  has  passed,  more  conventional                                                               
financing  options  are  available  in these  communities.    Mr.                                                               
Bitney said  that AHFC viewed the  audit as good in  terms of its                                                               
basic findings.   However,  some of the  findings didn't  seem to                                                               
take  into  consideration  some  factors in  cost  such  as  land                                                               
prices.  "But  what we pointed out to Senate  Finance was is what                                                               
has  also  happened at  Alaska  Housing  since this  program  got                                                               
started ...  is that there's  become an expectation, on  the part                                                               
of  the state,  that  Alaska  Housing makes  money  to provide  a                                                               
dividend  every year.   That's  become a  very paramount  mission                                                               
statement," he highlighted.   In fact, the  missions and measures                                                               
clearly  states that  the  legislature wants  AHFC  to provide  a                                                               
dividend.    Last year  this  program  made  $20 million  in  net                                                               
income.   Therefore, this program  has become an  important piece                                                               
in AHFC's ability to generate  profit.  Mr. Bitney explained that                                                               
the concern  with the repeal  was that eliminating the  1 percent                                                               
discount would  result in  these loans  going to  other secondary                                                               
purchasers  that  are  large   national  organizations  with  the                                                               
conventional taxable mortgage rate.   Without having this program                                                               
in place, AHFC will lose significant amounts of business.                                                                       
                                                                                                                                
CO-CHAIR  MEYER  referred  to   a  spreadsheet  included  in  the                                                               
committee  packet,  which illustrates  that  for  the true  rural                                                               
areas  the program  seems  to  work well.    However, the  larger                                                               
[rural] communities  such as Ketchikan  and Kodiak show  that the                                                               
houses  are  getting  into  the  higher  price  range,  which  he                                                               
surmised  was the  problem with  the Senator  [who sponsored  the                                                               
legislation].    He surmised  that  the  Senator feels  that  the                                                               
program was  never intended for  people with an annual  income of                                                               
over $60,000 and who could qualify for houses over $200,000.                                                                    
                                                                                                                                
MR.   BITNEY   said   that   the   aforementioned   is   a   fair                                                               
characterization of the sponsor's concern.                                                                                      
                                                                                                                                
Number 0785                                                                                                                     
                                                                                                                                
CO-CHAIR MEYER offered the possibility  of capping the population                                                               
size rather than capping the dollar amount.                                                                                     
                                                                                                                                
MR. BITNEY  reiterated the concern  that limiting the  areas that                                                               
can  participate  the  loan   would  [essentially]  downsize  the                                                               
business activity  and volume.   Mr. Bitney explained  that these                                                               
loans are  funded from a revolving  fund that has a  limited pool                                                               
of resources to  handle the loan demand.  If  the program is made                                                               
larger, then the  funds won't be available to  handle such demand                                                               
without some  infusion of cash.   Moreover, limiting  the program                                                               
disqualifies  areas, some  of which  are  where the  bulk of  the                                                               
business activity occurs.   Although that is a  policy call, AHFC                                                               
would lose business volume with the limitations.                                                                                
                                                                                                                                
CO-CHAIR MEYER  pointed out that  capping the amount  at $200,000                                                               
also seems to limit business.   Co-Chair Meyer related his belief                                                               
that AHFC was Okay with Senator  Donley's bill when it arrived in                                                               
the House.                                                                                                                      
                                                                                                                                
MR. BITNEY  clarified that  AHFC supported  a threshold  of about                                                               
$250,000  based on  the cost  of new  construction in  Anchorage,                                                               
which is  about $220,000.   However, AHFC isn't  comfortable with                                                               
the $200,000 threshold contained in [CSSB 181(FIN)am].                                                                          
                                                                                                                                
Number 1036                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS inquired  as  to why  the  definition of  a                                                               
small community  couldn't be determined by  whether the community                                                               
is  connected  to  the  rail/road   system.    She  characterized                                                               
Soldotna  and  Kenai  as some  of  Alaska's  larger  communities.                                                               
Representative  Guess requested  explanation as  to how  limiting                                                               
the program would lose the state money.                                                                                         
                                                                                                                                
MR.  BITNEY pointed  out that  a vast  majority of  activity with                                                               
this program  is located  on the Kenai  Peninsula.   He explained                                                               
that the program  is applied to qualified loans  outside the city                                                               
limits of Soldotna, Kenai, and Homer.                                                                                           
                                                                                                                                
REPRESENTATIVE GUESS surmised, "If  we played with the population                                                               
another way that would lose the  state money, but by limiting the                                                               
amount of money it wouldn't lose the state money."                                                                              
                                                                                                                                
MR. BITNEY answered:                                                                                                            
                                                                                                                                
     If we  disqualified those areas ...  the threshold that                                                                    
     we're suggesting ...  is in relationship to  how high a                                                                    
     loan you  can go for  the 1 percent discount  to apply.                                                                    
     So, ...  you can  still take out,  for example  in this                                                                    
     case, a  $300,000 loan but  you would lose  the benefit                                                                    
     of the 1  percent discount for the portion  of the loan                                                                    
     above $250,000.   So,  you'd have  a blended  rate loan                                                                    
     ....  The interest rate  to the borrower is still going                                                                    
     to beat our  competition in that example.   So, we feel                                                                    
     that because just in the  competitive nature between us                                                                    
     and  the other  secondaries, we'll  still get  the loan                                                                    
     because we'll  have a better  rate.  But in  this case,                                                                    
     the  borrower will  pay  a little  bit  more than  they                                                                    
     otherwise  would've because  they're  getting a  higher                                                                    
     interest rate for that portion above the threshold.                                                                        
                                                                                                                                
REPRESENTATIVE  GUESS inquired  as to  the limit  on the  taxable                                                               
loan program.                                                                                                                   
                                                                                                                                
MR. BITNEY replied that there are limits on the taxable loan.                                                                   
                                                                                                                                
Number 1252                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS pointed  out that  the current  bill has  a                                                               
zero  fiscal note.   She  inquired  as to  how [AHFC's]  dividend                                                               
would be impacted by the $200,000 cap.                                                                                          
                                                                                                                                
MR. BITNEY  said that threshold  level would probably  generate a                                                               
little more income because any  loan above the threshold will pay                                                               
a little  higher rate.   In terms of the  bill as a  whole, there                                                               
are  some offsetting  factors  to the  potential  increase.   For                                                               
example, [the rural HALF (housing  assistance loan fund) program]                                                               
would probably  experience an  increase in  income.   The teacher                                                               
housing program will probably experience  a drop in activity with                                                               
some of that  activity increasing as people become  more aware of                                                               
the program.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUESS asked  whether the  current [HALF]  program                                                               
provides a dividend to the state per statute.                                                                                   
                                                                                                                                
MR. BITNEY  explained that  AHFC's dividend is  based on  the net                                                               
income of  the corporation, which totaled  $96 million, including                                                               
the  $7 million  windfall from  Bank  of America  in fiscal  year                                                               
2001.  This  [HALF] program amount to $20.3  million.  Therefore,                                                               
[the HALF] program provided $20.3 million of the dividend.                                                                      
                                                                                                                                
Number 1386                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO  remarked  that  he  found  the  sponsor's                                                               
letter included in the committee  packet as completely insulting.                                                               
He read  the following statement  from that letter:   "Failure to                                                               
pass  SB 181  sends  the  message that  although  you are  asking                                                               
Alaskan workers to pay an income  tax, you are not willing to cap                                                               
housing loan subsidies at reasonable  levels."  Recalling when SB                                                               
181  was   in  committee  last  Tuesday,   Representative  Halcro                                                               
stressed that the  committee didn't like the  original version of                                                               
SB  181 because  of the  intent.   "The  intent of  the bill  was                                                               
specifically  to take  a slap  at  rural Alaska,"  Representative                                                               
Halcro charged.   Aside from  that, this program  contributes $20                                                               
million  to AHFC's  annual dividend.    This is  money the  state                                                               
needs.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  HALCRO  stressed  that  AHFC is  a  business  and                                                               
questioned  why the  legislature  is dabbling  in the  day-to-day                                                               
business of AHFC.  Representative  Halcro said that he didn't see                                                               
the  need to  cap  populations.   He  noted  his  support of  the                                                               
amended  Version [H].   Representative  Halcro  stated, "I'm  not                                                               
going to  entertain any  discussion or  support any  measure that                                                               
puts back  in some of  the controls or the  caps that was  in the                                                               
original  version."   He questioned  what isn't  fair about  this                                                               
program.  Representative Halcro expressed  the need to put on the                                                               
record what the  legislation is:  an ideological  attack on AHFC.                                                               
He concluded by reiterating his support of Version H.                                                                           
                                                                                                                                
Number 1557                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SCALZI  concurred  with  Representative  Halcro's                                                               
remarks.   He recalled that there  was a similar "shot"  taken at                                                               
the  Alaska fisheries  revolving  loan  program, which  generates                                                               
between $12-$18 million annually.   Representative Scalzi related                                                               
his belief that  there are good reasons for the  AHFC program and                                                               
the revolving  loan program.  Representative  Scalzi informed the                                                               
committee  that  he received  the  following  information from  a                                                               
realtor  in  Anchorage.   In  Anchorage  there is  the  Anchorage                                                               
Neighborhood  Housing  Program  for  income-driven  borrowers  to                                                               
borrow the  20 percent  necessary for  a good  down payment.   In                                                               
Anchorage there  is also  the Officer Next  Door Program  and the                                                               
Teacher Next  Door Program that  forgives 50 percent of  the loan                                                               
of an officer  or teacher that stays at the  location under which                                                               
the  loan was  taken.    He clarified  that  the Municipality  of                                                               
Anchorage offers  such generous  programs because  its population                                                               
base affords  it the  ability to  do so.   However,  rural Alaska                                                               
doesn't  have  the  population   base  to  offer  such  programs.                                                               
Representative Scalzi announced his support of [Version H].                                                                     
                                                                                                                                
Number 1706                                                                                                                     
                                                                                                                                
CO-CHAIR MEYER  related his belief  that Senator  Donley's intent                                                               
in introducing SB 181 is due  to his belief that the state should                                                               
review how  it spends money  before asking for  additional money.                                                               
He  pointed out  that the  spreadsheet specifies  that there  are                                                               
nine properties,  which can be  houses or  investment properties,                                                               
[for which the  loan] amounts to over $350,000.   One has to have                                                               
a fairly  good income to afford  a house of that  size.  Co-Chair                                                               
Meyer  recalled  that AHFC's  testimony  has  explained that  the                                                               
legislation generates  more revenue  for the state  because those                                                               
buying houses  that [are more than  the cap] would have  to pay a                                                               
higher  rate on  the amount  over  the specified  cap.   Co-Chair                                                               
Meyer related his belief that  Senator Donley has good intentions                                                               
[with SB 181] because it will  generate more money for the state,                                                               
and furthermore  the legislation  seems to  bring the  program in                                                               
line with  the original  intent of the  program.   Co-Chair Meyer                                                               
announced  that   he  liked  the  teacher   housing  program  and                                                               
expressed  concern  that  sending  the legislation  back  to  the                                                               
Senate with only the provisions  dealing with the teacher housing                                                               
program could [kill] the bill.   Therefore, this good bill should                                                               
be salvaged such that both bodies accept it.                                                                                    
                                                                                                                                
CO-CHAIR  MORGAN agreed  that the  intent  of the  bill is  good.                                                               
Essentially, the bill has been  redirected in order to accomplish                                                               
some movement.   He pointed  out that  this isn't a  giveaway but                                                               
rather a loan.                                                                                                                  
                                                                                                                                
Number 1848                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI  said that  she didn't  find the  cap so                                                               
offensive,  and furthermore  she  felt that  the numbers  provide                                                               
AHFC  the justification  for setting  the  cap at  $250,000.   In                                                               
attempting to  determine the reason  one would have  to eliminate                                                               
the program,  Representative Murkowski  said that she  didn't see                                                               
that  much  abuse.    Although   one  might  expect  the  smaller                                                               
communities  where the  cost of  construction is  much higher  to                                                               
fall  in the  $300,000 category,  that isn't  the case.   In  the                                                               
smaller communities  where the loan  is utilized, it  is utilized                                                               
at  the lower  end.   Representative Murkowski  related that  she                                                               
didn't have  a problem  with a  cap so long  as it  was set  at a                                                               
realistic  level, which  she indicated  would be  $250,000.   She                                                               
said that it's important to move  out this bill today in order to                                                               
forward the teacher provisions.                                                                                                 
                                                                                                                                
REPRESENTATIVE GUESS  inquired as to whether  other AHFC programs                                                               
have caps and if so, what is the cap.                                                                                           
                                                                                                                                
MR.  BITNEY answered  that  the main  program  is the  tax-exempt                                                               
first-time   homebuyer  program   that  has   an  interest   rate                                                               
equivalent  to that  for the  rural program.   However,  the with                                                               
allowing that  program to be  available in the same  locations as                                                               
the [HALF  program] is problematic because  the tax-exempt first-                                                               
time homebuyer  program specifies  a limit on  the income  of the                                                               
borrower and the  price of the home.   [These limitations] result                                                               
in  two-thirds  of the  tax-exempt  program  money going  to  the                                                               
Municipality of Anchorage area.                                                                                                 
                                                                                                                                
REPRESENTATIVE  GUESS commented  that perhaps  she was  remiss in                                                               
initially  attempting to  rush this  bill through.   Furthermore,                                                               
the teacher part of the bill is very important.                                                                                 
                                                                                                                                
Number 2257                                                                                                                     
                                                                                                                                
DAN  FAUSKE,  CEO/Executive   Director,  Alaska  Housing  Finance                                                               
Corporation,  informed the  committee  that the  two largest  and                                                               
most  successful housing  programs in  America are  controlled by                                                               
the Internal  Revenue Service  (IRS) not  the U.S.  Department of                                                               
Housing  and  Development  (HUD).    Furthermore,  the  caps  and                                                               
limitations  are placed  on programs  by the  federal government.                                                               
He explained that the tax-exempt  first-time homebuyer program is                                                               
a  cap that  was initiated  and  is administered  by the  federal                                                               
government.  If this is a  fairness issue, then everyone needs to                                                               
work  together  to  get   things  accomplished  through  Alaska's                                                               
congressional  legislators.   He  noted that  although "we"  were                                                               
successful in having  the caps raised, the caps  were only raised                                                               
in Anchorage not  rural Alaska.  The vast  majority of tax-exempt                                                               
first-time homebuyer  loans are in  urban Alaska and the  rest of                                                               
the state is  basically prohibited due to the  [federal] caps and                                                               
limitations.                                                                                                                    
                                                                                                                                
MR.  FAUSKE  turned to  the  rural  areas  and commented  that  a                                                               
$400,000  home [loan  in rural  Alaska]  is an  exception.   When                                                               
looking at  the list of loans,  houses at the $400,000  level are                                                               
in the minority.   Moreover, one must keep in  mind the amount of                                                               
work  a  [$400,000] house  generates  in  the community  and  the                                                               
amount of  money spent on  that house  that returns to  the state                                                               
based on AHFC's dividends.   Therefore, Mr. Fauske said he didn't                                                               
view [the $400,000  house] as bad business but  rather someone in                                                               
a  rural area  taking  advantage  of an  available  program.   He                                                               
commented that  an admirable  compromise has  been worked  out on                                                               
the bill.                                                                                                                       
                                                                                                                                
MR. FAUSKE pointed  out that AHFC is held to  energy standards by                                                               
state law.   He  expressed his belief  that it  isn't appropriate                                                               
for federal institutions to not  adhere to anything but the local                                                               
building code,  especially in this  time of  heightened awareness                                                               
with regard to energy consumption.   Mr. Fauske noted his support                                                               
of  the program,  although he  acknowledged the  need to  reach a                                                               
compromise.  He  said he felt that a compromise  had been reached                                                               
with the $250,000  cap.  In closing, Mr.  Fauske recommended that                                                               
the cap  be set as high  as possible, within reason,  in order to                                                               
generate business.                                                                                                              
                                                                                                                                
Number 2468                                                                                                                     
                                                                                                                                
CO-CHAIR  MEYER   moved  that  the  committee   adopt  conceptual                                                               
Amendment 1, which reads as follows:                                                                                            
                                                                                                                                
     Page 1, line 1, following "Act":                                                                                         
          Insert "relating to and increasing the interest                                                                     
       rate on that portion of a loan for a single family                                                                     
      house or owner-occupied duplex in a small community                                                                     
     that exceeds $250,000;"                                                                                                  
                                                                                                                                
     Page 2, line 16, following "AS 18.56.420.":                                                                                
          Insert "However, under this subsection, the                                                                       
       interest rate on that portion of a loan for small                                                                    
      community housing for a single-family house or owner-                                                                 
      occupied duplex that exceeds $250,000 is the same as                                                                  
     the interest rate determined under AS 18.56.098(f)(1)                                                                  
     - (14)."                                                                                                               
                                                                                                                                
REPRESENTATIVE SCALZI objected.                                                                                                 
                                                                                                                                
CO-CHAIR MORGAN mentioned that the  amendment may require a title                                                               
change.                                                                                                                         
                                                                                                                                
CO-CHAIR  MEYER  explained  that  he is  offering  the  amendment                                                               
because he  believes that everyone  supports the  teacher housing                                                               
provision.   However, he said  he believes that returning  to the                                                               
Senate  without  some cap  would  result  in losing  the  teacher                                                               
housing provision.  Furthermore,  AHFC has testified that raising                                                               
the cap to $250,000 would generate more revenue.                                                                                
                                                                                                                                
REPRESENTATIVE  KERTTULA  related  that she  didn't  believe  the                                                               
committee had  made a mistake  when the section  being reinserted                                                               
was originally  deleted.   For those  loans over  $250,000, there                                                               
would  be a  blended rate.   She  pointed out  that the  movement                                                               
seems to  be in  the area  of $250,000  loans.   Furthermore, the                                                               
cost for  construction in  rural Alaska is  going to  continue to                                                               
rise.   Representative Kerttula  posed a  situation in  which the                                                               
[cap] is  set at $250,000.   In such a situation,  would there be                                                               
the risk  of some  of those  loans going  to other  programs, she                                                               
asked.                                                                                                                          
                                                                                                                                
MR. BITNEY  said that  AHFC would  remain below  the rate  of the                                                               
national  organizations for  quite  some time.   Therefore,  AHFC                                                               
assumed  that it  would maintain  almost  all of  the loans  AHFC                                                               
currently receives.  However, some loans  may choose to go with a                                                               
national  organization  in order  to  avoid  dealing with  energy                                                               
efficiency restrictions  required with AHFC.   Although it's hard                                                               
to  measure the  risk, Mr.  Bitney acknowledged  that some  loans                                                               
will be lost due to the AHFC requirements.                                                                                      
                                                                                                                                
Number 2659                                                                                                                     
                                                                                                                                
REPRESENTATIVE SCALZI specified that just  less than 4 percent of                                                               
the homes  on the  Kenai Peninsula are  above the  $250,000 mark.                                                               
Since  4 percent  doesn't amount  to much,  Representative Scalzi                                                               
announced  that he  didn't support  the amendment.   Furthermore,                                                               
Representative  Scalzi informed  the  committee  that the  Kodiak                                                               
annexation  failed  largely  because   those  folks  [outside  of                                                               
Kodiak] would be exempted from this program.                                                                                    
                                                                                                                                
REPRESENTATIVE  HALCRO noted  his  agreement with  Representative                                                               
Scalzi.   Representative Halcro inquired  as to how  the $250,000                                                               
cap would affect AHFC's income.                                                                                                 
                                                                                                                                
MR.  FAUSKE answered  that he  felt that  AHFC would  continue to                                                               
capture the majority of the loans  based on a 1 percent reduction                                                               
with a cap  of $250,000.  Furthermore, those  people with persons                                                               
buying a $300,000-$325,000 home  would still find it advantageous                                                               
to use  an AHFC loan.   Therefore,  the assumption was  that [the                                                               
cap] would enhance the program rather than harm it.                                                                             
                                                                                                                                
REPRESENTATIVE  HALCRO asked  if there  have been  any complaints                                                               
with this loan program.                                                                                                         
                                                                                                                                
MR.  FAUSKE replied  no.   However, in  Kenai AHFC  addressed the                                                               
Kenai City  Council because people  were moving outside  the city                                                               
limits  not only  because of  the loan  program but  also because                                                               
people were getting  "more bang for their buck."   The tax-exempt                                                               
first-time  homebuyer program  is actually  [utilized more]  than                                                               
the  rural  home  program  in  certain  areas.    The  discussion                                                               
resulted in  the city council  passing a resolution  stating that                                                               
it wanted to  see a [rural home program] as  a statewide program.                                                               
Mr.  Fauske  related that  the  industry  has not  had  concerns.                                                               
Although the  Boundary Commission  had concerns, AHFC  dealt with                                                               
those issues.   In response to Representative  Halcro, Mr. Fauske                                                               
said that  those with current  loans would  not be impacted  by a                                                               
cap.                                                                                                                            
                                                                                                                                
TAPE 02-27, SIDE B                                                                                                              
                                                                                                                                
REPRESENTATIVE GUESS inquired as  to whether a $250,000 threshold                                                               
would work for awhile or will this have to be revisited soon.                                                                   
                                                                                                                                
MR. FAUSKE answered  that he assumed that this  threshold will be                                                               
revisited.   He  predicted that  a $250,000  threshold should  be                                                               
appropriate  for the  next  couple  of years  unless  there is  a                                                               
significant change in the economy.                                                                                              
                                                                                                                                
MR. BITNEY  pointed out  that if  this legislation  passed, there                                                               
would be a  threshold in statute as well as  the population caps,                                                               
which is  the issue  that is usually  revisited frequently.   For                                                               
example, it  will probably be  another year or two  before Bethel                                                               
reaches the  6,500 population  threshold for  areas off  the road                                                               
system.  Therefore,  he predicted that there  will be legislation                                                               
dealing with the population threshold before the loan threshold.                                                                
                                                                                                                                
Number 2849                                                                                                                     
                                                                                                                                
CO-CHAIR MEYER  said that Representative  Guess has a  good point                                                               
and  had he  thought of  it he  would have  tied the  cap to  the                                                               
Consumer Price  Index (CPI).   However,  it's probably  better to                                                               
revisit this every couple of years.                                                                                             
                                                                                                                                
REPRESENTATIVE GUESS pointed  out that there is only  one CPI for                                                               
the state, the one used for Anchorage.                                                                                          
                                                                                                                                
Number 2795                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  suggested that  perhaps the cap  should be                                                               
bumped  up so  that this  issue won't  have to  be revisited  for                                                               
another 5-6  years.   He noted  his support  of changing  the cap                                                               
from $250,000 to $300,000.                                                                                                      
                                                                                                                                
CO-CHAIR   MORGAN,  determining   that  there   was  no   further                                                               
discussion  on  the  amendment, asked  if  Representative  Scalzi                                                               
maintained his objection.                                                                                                       
                                                                                                                                
REPRESENTATIVE SCALZI replied yes.                                                                                              
                                                                                                                                
A roll  call vote was  taken.  Representatives  Murkowski, Guess,                                                               
and  Meyer voted  for  the adoption  of  conceptual Amendment  1.                                                               
Representatives  Kerttula,  Halcro,   Scalzi,  and  Morgan  voted                                                               
against  the  adoption of  conceptual  Amendment  1.   Therefore,                                                               
conceptual Amendment 1 failed by a vote of 3:4.                                                                                 
                                                                                                                                
Number 2722                                                                                                                     
                                                                                                                                
REPRESENTATIVE   MURKOWSKI  moved   that   the  committee   adopt                                                               
conceptual Amendment 2,  which is the same as  Amendment 1 except                                                               
that the cap is increased to $300,000.                                                                                          
                                                                                                                                
REPRESENTATIVE SCALZI objected.                                                                                                 
                                                                                                                                
CO-CHAIR MEYER noted  his support of conceptual  Amendment 2, but                                                               
reiterated  concern  that  the  bill will  [die]  in  the  Senate                                                               
without a cap.                                                                                                                  
                                                                                                                                
REPRESENTATIVE HALCRO said  that it's up to the  Senate to decide                                                               
whether or not to act on  something that has merit.  He expressed                                                               
an aversion to  include something so that the  teacher portion of                                                               
the  bill lives.    He noted  his support  of  the $300,000  cap,                                                               
although he  stressed that  it establishes  a bad  precedent when                                                               
the   legislature  tries   to  micromanage   agencies  that   are                                                               
responsible for providing a dividend.                                                                                           
                                                                                                                                
REPRESENTATIVE  GUESS commented  that care  should be  taken when                                                               
one body  tries to  do things  solely to  please the  other body.                                                               
Differences should be dealt with in conference committees.                                                                      
                                                                                                                                
MR. BITNEY, in response to  Co-Chair Meyer, said that whether the                                                               
cap is $250,000 or $300,000, it enhances the program.                                                                           
                                                                                                                                
REPRESENTATIVE  MURKOWSKI   agreed  with   Representative  Guess'                                                               
comments.   She explained that  she moved conceptual  Amendment 2                                                               
because of AHFC's testimony that it would enhance the program.                                                                  
                                                                                                                                
A roll call  vote was taken.   Representatives Halcro, Murkowski,                                                               
Guess, and Meyer  voted for the adoption  of conceptual Amendment                                                               
2.   Representatives Scalzi, Kerttula,  and Morgan  voted against                                                               
the adoption  of conceptual Amendment  2.   Therefore, conceptual                                                               
Amendment 2 passed by a vote of 4:3.                                                                                            
                                                                                                                                
Number 2450                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS   moved  that   the  committee   adopt  the                                                               
following amendment:                                                                                                            
                                                                                                                                
     Page 2, line 30, after "teacher"                                                                                       
          Insert "and educational professional"                                                                                 
                                                                                                                                
REPRESENTATIVE GUESS recalled testimony  during the House Special                                                               
Committee  on  Education  interim hearings  that  specified  that                                                               
there is  a shortage of  counselors and other professionals.   In                                                               
response to  Representative Murkowski, Representative  Guess said                                                               
she didn't believe  that every other reference  to teacher should                                                               
include   "and  educational   professional"  because   the  other                                                               
references are related to teacher housing.                                                                                      
                                                                                                                                
Number 2346                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SCALZI  inquired as  to  what  this would  really                                                               
accomplish for the teachers.                                                                                                    
                                                                                                                                
REPRESENTATIVE GUESS explained that  this language would allow an                                                               
entity to obtain  a break on providing teacher  housing, which is                                                               
a huge problem  in rural Alaska.  She pointed  out that in [rural                                                               
Alaska] there isn't housing to purchase.                                                                                        
                                                                                                                                
REPRESENTATIVE   SCALZI  related   his  understanding   that  any                                                               
residential property  would qualify.   He  pointed out  that only                                                               
duplexes  and  residential  property   qualify.    Therefore,  he                                                               
questioned why something specific for teachers is necessary.                                                                    
                                                                                                                                
REPRESENTATIVE GUESS  related her  understanding that it  was for                                                               
multi-family residences.                                                                                                        
                                                                                                                                
MR. BITNEY explained that the  residential portion of the program                                                               
is limited to  single family homes and duplexes.   Therefore, the                                                               
only  difference for  the teacher  portion  is that  multi-family                                                               
homes would  qualify for a  teacher housing project.   In further                                                               
response to  Representative Scalzi,  Mr. Bitney pointed  out that                                                               
the  definition  of  "teacher  housing"  specifies  that  teacher                                                               
housing  is  a  multi-family  residence   that  may  be  nonowner                                                               
occupied or owner  occupied.  The [teacher  housing provision] is                                                               
the only provision that can go beyond a duplex.                                                                                 
                                                                                                                                
REPRESENTATIVE  SCALZI posed  a  situation in  which the  teacher                                                               
moves out  of the residence  and the remaining residents  are not                                                               
[teachers].  In  such a situation, would the loan  remain in tact                                                               
or would it lose the 1 percent reduction rate.                                                                                  
                                                                                                                                
MR. BITNEY  answered that  under the  current language,  the loan                                                               
would stay  in tact,  but the  1 percent  discount would  be lost                                                               
from that point forward.                                                                                                        
                                                                                                                                
Number 2184                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI  related her understanding  that teacher                                                               
housing under  [Version H]  would mean  that only  a multi-family                                                               
residence could qualify [for this teacher housing loan].                                                                        
                                                                                                                                
MR. BITNEY explained that a  teacher buying a single-family house                                                               
would  do  so under  the  regular  portion  of the  program,  and                                                               
therefore there  wouldn't be  any limitation  on the  resale with                                                               
the interest rate.  The  benefit of the teacher [housing program]                                                               
is if  it's for  a tri-plex  or above,  but each  unit has  to be                                                               
occupied by  a certified teacher.   He pointed out  that language                                                               
to that effect is on page 2, lines 28-31.                                                                                       
                                                                                                                                
REPRESENTATIVE MURKOWSKI  posed a  situation in which  a six-plex                                                               
owner who isn't a teacher wanted to  live in one of the units [of                                                               
a building that had a teacher housing loan].                                                                                    
                                                                                                                                
MR. BITNEY  answered that the owner  couldn't live in one  of the                                                               
units  [if  the  six-plex  was under  a  teacher  housing  loan].                                                               
Therefore, if this owner was to  move in the entire complex would                                                               
lose eligibility for the teacher housing loan.                                                                                  
                                                                                                                                
The committee took an at-ease from 12:40 p.m. to 12:42 p.m.                                                                     
                                                                                                                                
Number 2026                                                                                                                     
                                                                                                                                
REPRESENTATIVE GUESS  moved to  adopt HCS  CSSB 181,  Version 22-                                                               
LS0488\H, Cook, 5/9/02, as the  working document.  There being no                                                               
objection, Version H was before the committee.                                                                                  
                                                                                                                                
Number 1991                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MURKOWSKI  moved  that the  committee  adopt  new                                                               
Amendment 1, which reads as follows:                                                                                            
                                                                                                                                
     Page 1, line 1, following "Act":                                                                                         
          Insert "relating to and increasing the interest                                                                     
       rate on that portion of a loan for a single family                                                                     
      house or owner-occupied duplex in a small community                                                                     
     that exceeds $300,000;"                                                                                                  
                                                                                                                                
     Page 2, line 16, following "AS 18.56.420.":                                                                                
          Insert "However, under this subsection, the                                                                       
       interest rate on that portion of a loan for small                                                                    
      community housing for a single-family house or owner-                                                                 
      occupied duplex that exceeds $300,000 is the same as                                                                  
     the interest rate determined under AS 18.56.098(f)(1)                                                                  
     - (14)."                                                                                                               
                                                                                                                                
[This was  formerly conceptual Amendment  2 moved and  adopted by                                                               
Representative Murkowski before the HCS was adopted.]                                                                           
                                                                                                                                
A roll  call vote was  taken.  Representatives  Murkowski, Guess,                                                               
Halcro,  and Meyer  voted for  the adoption  of new  Amendment 1.                                                               
Representatives Scalzi,  Kerttula, and  Morgan voted  against the                                                               
adoption of new Amendment 1.   Therefore, new Amendment passed by                                                               
a vote of 4:3.                                                                                                                  
                                                                                                                                
Number 1894                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GUESS   moved  that   the  committee   adopt  the                                                               
following amendment, Amendment 2:                                                                                               
                                                                                                                                
     Page 2, line 30, after "teacher"                                                                                       
          Insert "or educational professional"                                                                                  
                                                                                                                                
There being no objection, Amendment 2 was adopted.                                                                              
                                                                                                                                
Number 1730                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI  moved to  report HCS CSSB  181, Version                                                               
22-LS0488\H,  Cook,  5/9/02, as  amended  out  of committee  with                                                               
individual recommendations and the accompanying fiscal note.                                                                    
                                                                                                                                
REPRESENTATIVE HALCRO  objected for  the purposes  of discussion.                                                               
Representative  Halcro  expressed  concern  with  regard  to  the                                                               
immediate  effective  date  and  suggested giving  AHFC  time  to                                                               
change.  He proposed an effective date of January 1, 2003.                                                                      
                                                                                                                                
MR.  BITNEY  related  his  experience   that  when  there  is  an                                                               
effective date  on a change  to a  program, there is  generally a                                                               
run on business when the word  gets out about the effective date.                                                               
Therefore, extending  the effective  date provides more  time for                                                               
people to  be informed  about the effective  date and  thus there                                                               
might be  more of  a push  for some of  the upper-end  loans that                                                               
might be impacted by the threshold.                                                                                             
                                                                                                                                
MR.  BITNEY, in  response  to Co-Chair  Meyer,  agreed that  upon                                                               
adjournment there would be approximately  a month of time [before                                                               
the bill is signed].                                                                                                            
                                                                                                                                
REPRESENTATIVE  MURKOWSKI   pointed  out  that   eliminating  the                                                               
reference to the  effective date would mean  that the legislation                                                               
would  become effective  90  days after  the  governor signs  it.                                                               
Perhaps, this would be the best solution.                                                                                       
                                                                                                                                
Number 1612                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI  withdrew her  motion to move  Version H                                                               
as amended from  committee.  There being no objection,  it was so                                                               
ordered.                                                                                                                        
                                                                                                                                
REPRESENTATIVE   MURKOWSKI  moved   that   the  committee   adopt                                                               
Amendment 3, which reads as follows:                                                                                            
                                                                                                                                
     Page 3, line 22,                                                                                                           
          Delete Section 4                                                                                                      
                                                                                                                                
There being no objection, Amendment 3 was adopted.                                                                              
                                                                                                                                
Number 1580                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI  moved to  report HCS CSSB  181, Version                                                               
22-LS0488\H,  Cook,  5/9/02, as  amended  out  of committee  with                                                               
individual recommendations and the accompanying fiscal note.                                                                    
                                                                                                                                
REPRESENTATIVE SCALZI objected.                                                                                                 
                                                                                                                                
A roll  call vote was  taken.  Representatives  Murkowski, Guess,                                                               
Kerttula, Halcro, Meyer, and Morgan  voted to report HCS CSSB 181                                                               
as amended  from committee.  Representative  Scalzi voted against                                                               
to report  HCS CSSB  181 as amended  from committee.   Therefore,                                                               
HCS CSSB  181(CRA) was  reported out of  the House  Community and                                                               
Regional Affairs Standing Committee by a vote of 6:1.                                                                           
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Community  and Regional  Affairs Standing  Committee meeting  was                                                               
adjourned at 12:55 p.m.                                                                                                         
                                                                                                                                
                                                                                                                                

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