02/22/2001 08:04 AM House CRA
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ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
February 22, 2001
8:04 a.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
HOUSE BILL NO. 24
"An Act relating to use of certain borough revenues for a
tourism marketing campaign."
- MOVED CSHB 24(EDT) OUT OF COMMITTEE
HOUSE BILL NO. 118
"An Act relating to a mandatory exemption from municipal taxes
on certain residences; and providing for an effective date."
- MOVED HB 118 OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 24
SHORT TITLE:BOROUGH REVENUES FOR TOURISM
SPONSOR(S): REPRESENTATIVE(S)WHITAKER
Jrn-Date Jrn-Page Action
01/08/01 0030 (H) PREFILE RELEASED 12/29/00
01/08/01 0030 (H) READ THE FIRST TIME -
REFERRALS
01/08/01 0030 (H) EDT, CRA
02/08/01 (H) EDT AT 5:00 PM CAPITOL 124
02/08/01 (H) Moved CSHB 24(EDT) Out of
Committee
02/08/01 (H) MINUTE(EDT)
02/12/01 0296 (H) EDT RPT CS(EDT) NT 4DP 3NR
02/12/01 0296 (H) DP: JAMES, DYSON, CRAWFORD,
MCGUIRE;
02/12/01 0296 (H) NR: MORGAN, MASEK, GREEN
02/12/01 0296 (H) FN1: ZERO(CED)
02/21/01 0392 (H) COSPONSOR(S): HALCRO
02/22/01 (H) CRA AT 8:00 AM CAPITOL 124
BILL: HB 118
SHORT TITLE:SR. CIT./VETERAN PROPERTY
SPONSOR(S): REPRESENTATIVE(S)WHITAKER
Jrn-Date Jrn-Page Action
02/07/01 0267 (H) READ THE FIRST TIME -
REFERRALS
02/07/01 0267 (H) CRA
02/22/01 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE JIM WHITAKER
Alaska State Legislature
Capitol Building, Room 411
Juneau, Alaska 99801
POSITION STATEMENT: Testified as sponsor of HB 24 and HB 118.
LORI BACKES, Staff
to Representative Whitaker
Alaska State Legislature
Capitol Building, Room 411
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions regarding HB 118.
STEVE VAN SANT, State Assessor
Division of Community and Business Development
Department of Community & Economic Development
550 West 7th Avenue, Suite 1790
Anchorage, Alaska 99501-3510
POSITION STATEMENT: Testified on HB 118.
ACTION NARRATIVE
TAPE 01-11, SIDE A
Number 0001
CO-CHAIR CARL MORGAN called the House Community and Regional
Affairs Standing Committee meeting to order at 8:04 a.m.
Representatives Morgan, Meyer, Scalzi, and Guess were present at
the call to order. Representatives Halcro, Murkowski, and
Kerttula arrived as the meeting was in progress.
HB 24-BOROUGH REVENUES FOR TOURISM MARKETING
CO-CHAIR MORGAN announced that the first order of business would
be HOUSE BILL NO. 24, "An Act relating to use of certain borough
revenues for a tourism marketing campaign." [Before the
committee is CSHB 24(EDT).]
Number 0092
REPRESENTATIVE JIM WHITAKER, Alaska State Legislature, testified
as sponsor of HB 24. Simply, HB 24 allows for a local option
regarding the usage of bed taxes. He offered to answer any
questions from the committee.
Number 0240
CO-CHAIR MEYER inquired as to what communities would be impacted
by this bill. He related his understanding that Anchorage would
not be impacted by this bill.
REPRESENTATIVE WHITAKER affirmed that he shared Co-Chair Meyer's
understanding. He recalled that there are about eight
communities that would be impacted by this legislation.
Number 0385
BRETT CARLSON, Northern Alaska Tour Company, testified via
teleconference. Although HB 24 is a simple bill, it does
address an important issue for the visitor industry. He
explained that since the 1970s small visitor industry businesses
in communities throughout Alaska have relied on their local
destination marketing organizations in order to help them
compete in the increasingly competitive market place. These
local destination marketing organizations are typically funded
through a local tax, which is often a bed tax. Such taxes are
often collected with the specific intent to help small
businesses compete in the travel industry. However, Title 29
has the potential to create a situation, in 11 organized
boroughs, in which a visitor tax that was enacted to fund the
industry cannot be used for that purpose. He explained that
Title 29 grants second class boroughs, where the problem would
be the greatest, a nonareawide economic development power.
However, most of the bed taxes in the second class boroughs have
been enacted on an areawide basis. He returned to Title 29 and
pointed out that it says a nonareawide power cannot be used to
spend an areawide tax and therein lies the challenge. This
issue has come up in Fairbanks. This legislation would solve
the problem. He echoed earlier comments that HB 24 would merely
provide an option to the local communities. Mr. Carlson urged
support of HB 24, which has support throughout the state. He
informed the committee that Alaska Travel Industry Association
(ATIA) has passed a resolution in support of HB 24 and the
Anchorage Convention and Visitors Bureau is supportive of HB 24.
In regard to Co-Chair Meyer's earlier comments, Mr. Carlson
pointed out that HB 24 would indirectly benefit unified
municipalities in that marketing done by any community in the
state would benefit gateway communities, such as Anchorage. He
indicated that allowing other communities to contribute to
statewide marketing programs is also beneficial to the [unified
municipalities].
Number 0802
DEBBIE TILSWORTH, Riverboat Discovery; Chair, Local Chapter of
the Fairbanks Travel Industry, testified via teleconference.
She remarked on the timeliness of HB 24. As [Fairbanks] looks
to increasing funding in the travel industry, Fairbanks has a
number of challenges. One of the challenges is to become
involved in the borough's budgeting process this year. However,
that is not allowed under the current [statute]. Therefore, she
indicated the need to move HB 24 along in a timely fashion in
order to allow the Fairbanks North Star Borough mayor and
assembly to approve funding for destination marketing in the
fiscal year 2002.
CO-CHAIR MORGAN asked if anyone on the teleconference in
Fairbanks was opposed to this legislation. There was an
indication that everyone in the Fairbanks Legislative
Information Office was supportive of the bill.
REPRESENTATIVE HALCRO referred to line 5 of CSHB 24(EDT) and the
language "sales tax levied upon room rentals". He assumed that
language referred to hotel, motel, and bed and breakfast room
rentals not a rental apartment. He asked if there should be any
concern with the broad title.
REPRESENTATIVE WHITAKER explained that the title was changed due
to a concern that the original title was too broad and thus was
tightened to the current language. Representative Whitaker said
that he wasn't opposed to tightening the title further to
specify "bed tax revenues." Representative Whitaker indicated
his ambivalence toward the title.
REPRESENTATIVE HALCRO asked if Fairbanks has a tax on the
monthly apartment rental.
REPRESENTATIVE WHITAKER replied no.
REPRESENTATIVE HALCRO specified that his concern is in regard to
someone renting apartments and whether a portion of that [tax]
revenue should be used for tourism marketing.
REPRESENTATIVE WHITAKER acknowledged that [issue] could be
raised if [an apartment rental] tax was in place. He said,
"Knowing my own borough, ... I would be very surprised if that
ever happened."
Number 1075
REPRESENTATIVE KERTTULA asked if Representative Whitaker had
reviewed the March 17, 2000, memorandum from Tamara Cook,
Director, Legal and Research Services, Legislative Affairs
Agency, which addresses the issue as to whether the Fairbanks
North Star Borough has the power to conduct a campaign under
Title 29.
REPRESENTATIVE WHITAKER said that he had reviewed the
aforementioned memorandum. He explained that the memorandum
responds to whether the Fairbanks North Star Borough may use
proceeds from a bed tax for a tourism marketing campaign, to
which Ms. Cook replied no. That is the situation under existing
law and thus this legislation would attempt to correct that
situation.
REPRESENTATIVE KERTTULA asked, "Do you think that, then, covers
the issue of whether it [the Fairbanks North Star Borough] has
the power under [AS] 29.35.210, ... the broader scope issue."
REPRESENTATIVE WHITAKER replied yes.
REPRESENTATIVE MURKOWSKI asked if the common vernacular used is
"bed tax."
REPRESENTATIVE WHITAKER replied yes.
REPRESENTATIVE MURKOWSKI remarked that it would be more
straightforward if it were referred to as a "bed tax," although
she believes the point is understood.
Number 1255
CO-CHAIR MEYER moved to report CSHB 24(EDT) out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, CSHB 24(EDT) was reported from
the House Community and Regional Affairs Standing Committee.
HB 118-SR. CIT./VETERAN PROPERTY TAX EXEMPTION
CO-CHAIR MORGAN announced that the next order of business would
be HOUSE BILL NO. 118, "An Act relating to a mandatory exemption
from municipal taxes on certain residences; and providing for an
effective date."
Number 1370
REPRESENTATIVE JIM WHITAKER, Alaska State Legislature, testified
as sponsor of HB 188. He explained that current statute
provides a property tax exemption for Alaska's senior citizens,
disabled veterans, widows, and widowers who are 60 years of age.
He further explained, "A one-time filing is allowed for 'non-
senior residential property tax exemption,' that is: disabled
veterans, widows, and widowers are allowed to file for an
exemption one time whereas senior citizens are required to file
yearly." This can be a significant imposition in some cases.
For example, an elderly woman in Fairbanks had not filed her
property tax exemption for several years. This woman was
evicted and her property was taken by the borough. This woman
was unable to understand the process. This legislation would
simply allow local municipalities to establish their own
procedure for senior property tax exemption filing.
Number 1501
REPRESENTATIVE MURKOWSKI related her understanding that only
senior citizens have to apply on an annual basis. However, the
sponsor statement says, "current Alaska Statute requires the
recipient of the senior citizen, disabled veteran and widow and
widower's exemption to file an application each year in order to
qualify."
REPRESENTATIVE WHITAKER answered that the sponsor statement is
correct.
REPRESENTATIVE MURKOWSKI then related her understanding that all
of the aforementioned groups have to apply each year.
REPRESENTATIVE WHITAKER agreed.
REPRESENTATIVE MURKOWSKI asked if the municipalities currently
have the option to only require the disabled veterans or senior
citizens to apply once.
REPRESENTATIVE WHITAKER replied no. Currently, this [annual
filing requirement] is mandated by state law and thus is not a
local option.
REPRESENTATIVE MURKOWSKI surmised then that HB 118 would allow
disabled veterans, senior citizens, and widows and widowers to
only file once.
Number 1650
LORI BACKES, Staff to Representative Whitaker, Alaska State
Legislature, explained that HB 118 doesn't change or mandate
that municipalities set their application process in any
particular timeframe. This legislation provides municipalities
with the option to establish the filing requirements for their
local area. In response to Representative Murkowski, Ms. Backes
agreed that HB 118 applies to the statute that requires this
property tax exemption and thus covers all three categories
[disabled veterans, senior citizens, and widows and widowers].
REPRESENTATIVE MURKOWSKI inquired as to the municipal assessors
offices' opinion of HB 118.
MS. BACKES noted that she has spoken with the state assessors as
well as [Fairbanks's] local borough assessors, who don't have a
problem with this. Originally, there was discussion regarding
requiring a one-time filing. In regard to the notion of having
the filing requirements be a local option, [the assessors] have
not yet responded to that.
Number 1805
STEVE VAN SANT, State Assessor, Division of Community and
Business Development, Department of Community & Economic
Development, testified via teleconference. The original bill
included a one-time filing. He noted that Ms. Backes took some
of the comments from the assessors and inserted the established
procedures and deadlines for the application, which he believes
helped the assessors with some of their concerns. Mr. Van Sant
informed the committee that the "2000 Alaska Taxable," which
includes an overview of the senior citizen, disabled veteran
property tax exemption program for the tax year 2000, is
available. For tax year 2000, this $28.2 million program had
about 16,600 applicants, of which about 15,000 were senior
citizens and about 1,700 were disabled veterans. Currently,
senior citizens and disabled veterans are required to file
annually. He pointed out that the annual filing requirement for
disabled veterans will probably remain such, even under HB 118,
because the percentage of disability does change.
Number 1918
MR. VAN SANT informed the committee that one area of concern for
the assessors is the change located on page 2, lines 5-7, which
refers to timely filing. The requirement of filing within the
assessment year has been removed and it seems that these
individuals can file in any year for any prior year. In such a
case it would be difficult for assessors to make observations
regarding whether the property met the exemption criteria in
prior years. Mr. Van Sant informed the committee that the
preferred language would be as follows: "If a failure to timely
file the initial application, no later than March 31 of the
assessment year." Such language would be more beneficial to
[the assessors].
MR. VAN SANT also informed the committee of the situation in
which applicants to this program move or sell their property or
die and the assessors office is not made aware of these changes.
Therefore, the property would remain exempt until the assessor
is made aware of the aforementioned changes. He expressed the
need to include language specifying that when a property becomes
ineligible for the exemption, a lien will attach for the taxes
of the prior years. Thus, the taxes wouldn't be exempted during
the time the property was ineligible for the exemption.
REPRESENTATIVE KERTTULA inquired as to what the lien would be
for.
MR. VAN SANT explained that there are often trusts; however,
they often don't let the assessors office know that the
individual is no longer eligible for the property tax exemption.
There have been cases that have [been in exempt status, although
that was not correct due to some change] for three to five
years. This would allow the taxes to accrue from the time of
ineligibility to the current date and thus the taxes would be
due for all the prior years.
REPRESENTATIVE KERTTULA asked if that is the current law.
MR. VAN SANT replied yes.
REPRESENTATIVE KERTTULA asked if Mr. Van Sant is concern that
the assessors would not receive the notice and thus need more
statutory authority to get a lien.
MR. VAN SANT explained, "It's more of a notice to applicants
that should the property become ineligible that the prior years'
taxes will be owed on the property and will become a lien." In
further response to Representative Kerttula, Mr. Van Sant didn't
have any suggestions to change HB 118, but he did offer to work
with the sponsor in order to develop some language.
REPRESENTATIVE KERTTULA asked if this was something that
[assessors] could just do without having to change the bill.
MR. VAN SANT said he was not sure that it would be necessary to
change HB 118 if the record reflects that intent. He remarked,
"We could put it in the initial applications."
Number 2138
REPRESENTATIVE KERTTULA clarified:
I think you already have the power. I mean,
certainly, when you're ineligible to receive the
exemption you can't get it. If you've died, its going
to go to your estate, or trust, or whatever. So, at
that point, the only tricky part for you may be that
you wouldn't have that filing to trigger your
knowledge every year, but I think you certainly have
the statutory ability to file a lien if you haven't
gotten your proper taxes.
REPRESENTATIVE SCALZI referred to the following language: "Each
municipality shall, by ordinance, establish procedures and
deadlines", which he identified as the local option. Therefore,
if the local assessor has problems with filing deadlines, or
timelines, or payment problems "they" should be able to
[correct] that themselves. He said he didn't see that being of
concern for the state.
MR. VAN SANT remarked that the assessors sometimes have very
little political clout with these exemptions. Although he
wanted to agree with Representative Scalzi's assessment, he
indicated that political pressure can push [the assessors] "out
in the outfield."
Number 2242
CO-CHAIR MEYER turned to the intent of the program, which he
understood to be to encourage and reward Alaska's elderly to
continue to live in Alaska. He expressed concern that if these
people were allowed to file [for this property tax exemption]
once every five years, what would prevent abuse. Abuse being a
situation in which an individual keeps his/her property and
rents out that property that has the property tax exemption
while he/she actually lives elsewhere. He commented that
perhaps this is a concern for the local government.
MR. VAN SANT informed the committee that this program began in
1973 with 911 applicants and less than $200,000 was exempted.
Originally, the program had a $10,000 annual income requirement
for eligibility. In 1985 the language referring to the disabled
veterans and the widows and widowers was added to the program.
Currently, the assessor's office uses the annual filing as a
preliminary indication as to whether individuals are living on a
property. Although this doesn't catch everyone, a return
address that is outside the state can alert the assessor's
office to investigate. Often, a neighbor will call and complain
that an individual isn't living on the property continually,
which would also prompt investigation. Mr. Van Sant estimated
that those abusing the program are small in number, perhaps less
than 2-3 percent. He pointed out that there will be no
methodology for the assessor to uncover [abuse of the program]
unless someone informs the assessor's office. He noted that
there could be authority placed with the assessor such that when
the assessor believes someone is taking advantage of the
program, the assessor could begin an investigation.
CO-CHAIR MEYER inquired as to the requirement for eligibility
for this program.
MR. VAN SANT explained that the program requires an individual
to be 65 years or older, or a disabled veteran with a 50 percent
[or greater] disability as of January 1 of the assessment year
for which the exemption is sought. Furthermore, the property
has to be the primary place of abode. Mr. Van Sant informed the
committee that the Alaska Association of Assessing Officers has
drafted a voluntary standard that basically mirrors the language
for the senior longevity bonus, which requires 180 residency in
the house in order to maintain the exemption. He pointed out
that if any parts, there being several, of the standard are not
met, the assessor would launch an investigation and probably
deny the exemption. He expressed the hope that the voluntary
standard would be brought into regulation within a few years.
Number 2505
REPRESENTATIVE MURKOWSKI surmised that although there is a
voluntary standard, HB 118 would make it a local option for the
municipalities to establish these [requirements]. Therefore,
Fairbanks could say there is no requirement that the individual
be in the home for any length of time while Anchorage could
require residency in the home for 185 days. She asked if that
is correct.
MR. VAN SANT agreed with Representative Murkowski's conclusion.
He pointed out that if HB 118 passed, the [Assessor's Office]
would suggest all municipalities adopt the voluntary standards.
REPRESENTATIVE KERTTULA pointed out that HB 118 doesn't touch
the primary residence and abode section of the [existing]
statute. This legislation just changes the application and the
form. She clarified that HB 118 would not allow, by municipal
ordinance, an individual to live outside of the state and apply
for the property tax exemption. Representative Kerttula asked
if she was correct.
MR. VAN SANT indicated that Representative Kerttula was correct;
this legislation is aimed at the application.
REPRESENTATIVE MURKOWSKI turned to the concern raised regarding
retroactivity and Mr. Van Sant's suggestion to insert language
regarding when an individual files the initial application. She
asked if Mr. Van Sant is concerned that an individual could
simply say that he/she didn't know about the exemption, although
he/she had lived on the property for five years and thus receive
a rebate on the taxes for the past five years.
MR. VAN SANT said that is the exact concern. Currently, the
statute says that an individual, good reason, can make an
application within the year, even if it is late, and the
governing body can direct the assessor to accept the application
as a timely file for that year. The legislation eliminates the
language "that year" and thus the concern is borne. He pointed
out that there are individuals who, on an annual basis, request
an exemption for prior years and under this [legislation] that
might be appropriate.
REPRESENTATIVE KERTTULA remarked, "I'm not certain I see
anything wrong with that. You've got somebody that completely
qualifies and for one reason or another -- is too elderly or
infirm or just doesn't know about it. It still looks like this
is within your statutory authority to not allow it, but at least
it gives you the option of being able to take into account those
cases of true hardship." She asked if that would be accurate;
that [HB 118] would provide the [assessor with the] ability to
go back and review it whereas that would not be the case now.
MR. VAN SANT replied yes.
Number 2768
REPRESENTATIVE WHITAKER pointed out that the committee has to
decide whether a state law should preclude a local governing
body from making the types of decisions being discussed.
REPRESENTATIVE SCALZI announced that he is in favor of HB 118.
He echoed earlier comments regarding the difficult situation
that the [current statutes] can create when an individual
doesn't file in a timely fashion. He emphasized the state's
responsibility to protect the mandate for senior citizens and
veterans; this [legislation] is an expansion of the program at
the local level. Furthermore, the revenues are local and don't
impact the state. In conclusion, Representative Scalzi
remarked, "If we always keep in mind local options good,
mandates are bad -- we can go on that premise there."
CO-CHAIR MEYER commented that he and Representative Scalzi would
have to realize that they are wearing their "state hat."
However, the senior citizen property tax that was an unfunded
state mandate was of concern in Anchorage because it amounts to
about $50 million per year. Co-Chair Meyer noted his support of
HB 118.
Number 2953
REPRESENTATIVE MURKOWSKI moved to report HB 118 out of committee
with individual recommendations and the accompanying zero fiscal
note. There being no objection, HB 118 was reported from the
House Community and Regional Affairs Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:52 a.m.
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