02/20/2007 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB67 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 67 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 20, 2007
8:03 a.m.
MEMBERS PRESENT
Representative Anna Fairclough, Co-Chair
Representative Gabrielle LeDoux, Co-Chair
Representative Nancy Dahlstrom
Representative Mark Neuman
Representative Kurt Olson
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 67
"An Act relating to an optional exemption from municipal
property taxes on certain residences of law enforcement
officers."
- MOVED CSHB 67(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 67
SHORT TITLE: MUNI PROP TAX EXEMPTION FOR POLICE HOMES
SPONSOR(s): REPRESENTATIVE(s) GRUENBERG, CHENAULT
01/16/07 (H) PREFILE RELEASED 1/5/07
01/16/07 (H) READ THE FIRST TIME - REFERRALS
01/16/07 (H) CRA, FIN
02/06/07 (H) CRA AT 8:00 AM CAPITOL 124
02/06/07 (H) Heard & Held
02/06/07 (H) MINUTE(CRA)
02/20/07 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
NORMAN COHEN, Staff
to Representative Max Gruenberg
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 67, answered
questions.
CONRAD JACKSON, Staff
to Representative Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 67, explained
Amendment 2.
STEVE VAN SANT, State Assessor
Division of Community Advocacy
Department of Commerce, Community, & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During hearing of HB 67, answered
questions.
SHANE HORAN, Assessor
Kenai Peninsula Borough
Soldotna, Alaska
POSITION STATEMENT: Testified on HB 67.
ACTION NARRATIVE
CO-CHAIR ANNA FAIRCLOUGH called the House Community and Regional
Affairs Standing Committee meeting to order at 8:03:53 AM.
Representatives Fairclough, Dahlstrom, Neuman, and Olson were
present at the call to order. Representatives LeDoux, Cissna,
and Salmon arrived as the meeting was in progress.
HB 67-MUNI PROP TAX EXEMPTION FOR POLICE HOMES
8:04:20 AM
CO-CHAIR FAIRCLOUGH announced that the only order of business
would be HOUSE BILL NO. 67, "An Act relating to an optional
exemption from municipal property taxes on certain residences of
law enforcement officers."
CO-CHAIR FAIRCLOUGH, upon determining no one wished to testify,
closed public testimony.
8:05:00 AM
REPRESENTATIVE NEUMAN moved that the committee adopt Amendment
1, labeled 25-LS0314\A.1, Cook, 2/14/07, which read:
Page 1, line 14:
Delete all material.
Insert "ordinance must contain a definition of
"law enforcement officer" that includes only some or
all positions identified in the definition of "peace
officer" set out in AS 01.10.060 or in the definition
of "police officer" set out in AS 18.65.290. The
ordinance must"
8:06:05 AM
NORMAN COHEN, Staff to Representative Max Gruenberg, Alaska
State Legislature, spoke on behalf of Representative Gruenberg,
a joint prime sponsor. In response to Co-Chair Fairclough, Mr.
Cohen confirmed that Amendment 1 was requested by Representative
Gruenberg.
8:06:21 AM
There being no objection, Amendment 1 was adopted.
8:06:32 AM
REPRESENTATIVE OLSON drew attention to and offered [Amendment
2]. He related that he has met with both joint prime sponsors,
who aren't in opposition to Amendment 2.
8:08:27 AM
REPRESENTATIVE NEUMAN moved that the committee adopt Amendment
2, as follows [original punctuation provided]:
Amend AS 29.45.050 by adding a new subsection to read:
(t)A municipality may by ordinance exempt from
taxation the property of a fraternal society, order or
association that is exempt from federal taxes under 26
U.S.C. 501(c)(8) or (10) (Internal Revenue Code) if
property is used predominantly for one or more of the
following purposes:
(1) religious;
(2) charitable;
(3) scientific;
(4) literary;
(5) educational; or
(6) fraternal.
8:09:27 AM
CONRAD JACKSON, Staff to Representative Olson, Alaska State
Legislature, pointed out that Amendment 2 falls under AS
29.45.050, which is the optional portion of the property tax
statute. Therefore, the exemption in new subsection (t) would
be completely optional for taxing authorities throughout the
state.
8:09:51 AM
REPRESENTATIVE DAHLSTROM opined that this legislation seems to
be similar to legislation passed last year regarding a religious
organization with quite a few properties. She recalled that it
was fairly contentious. She inquired as to any examples of what
groups would be covered under new subsection (t) and the number
of properties it might entail.
MR. JACKSON specified that the Loyal Order of the Moose, the
Fraternal Order of Eagles, and the Benevolent Protective Order
of the Elks (Elks) are a few examples of organizations that
would be impacted. He informed the committee that from the Elks
association within Alaska, he learned that it contributes $1.366
million when including cash, non-cash, miles driven, and
volunteer hours. With regard to the number of properties
statewide, Mr. Jackson said he didn't know and deferred to the
state assessor for such information.
REPRESENTATIVE DAHLSTROM asked if a municipality in which such
an organization [is granted this exemption] would expect the
legislature to help it recover the funds that were lost because
of the exemption.
MR. JACKSON reiterated that Amendment 2 inserts [the exemption]
in the optional portion of statute and thus it's not an unfunded
mandate. Therefore, he expressed hope that if a municipality
chooses to offer the proposed exemption, it wouldn't come to the
state for reimbursement.
8:12:31 AM
STEVE VAN SANT, State Assessor, Division of Community Advocacy,
Department of Commerce, Community, & Economic Development, said
that after reviewing the service organizations in the state he
has determined that there are about 61 properties with a total
value of $22.8 million. If all of those properties were
exempted, the taxes lost to municipalities, based on last year's
mill rates, would amount to about $323,000. In further response
to Representative Dahlstrom, Mr. Van Sant related that no
municipalities reported any scientific, literary, or education
organizations.
8:14:02 AM
REPRESENTATIVE DAHLSTROM remarked that she is supportive of HB
67, although she said she's not completely comfortable with
Amendment 2 and potential unintended consequences.
8:14:28 AM
REPRESENTATIVE NEUMAN asked if Representative Olson would accept
a friendly amendment to Amendment 2 to include senior centers,
many of which are hanging on by a thread.
REPRESENTATIVE OLSON related his understanding that in the Kenai
Peninsula Borough, the senior centers don't pay taxes at this
time.
MR. VAN SANT confirmed that most senior centers pay taxes,
although those in Kenai are exempt under city ownership.
8:16:47 AM
CO-CHAIR LEDOUX inquired as to the difference between a
501(c)(3) organization and a 501(c)(8) or (10) organization.
MR. JACKSON related that in the Internal Revenue System (IRS)
Code 501(c)(8) organizations are defined, as follows:
(8) Fraternal beneficiary societies, orders, or
associations -
(A) operating under the lodge system or for the
exclusive benefit of the members of a fraternity
itself operating under the lodge system, and
(B) providing for the payment of life, sick,
accident, or other benefits to the members of such
society, order, or association or their dependents.
MR. JACKSON then related that in the IRS Code 501(c)(10)
organizations are defined, as follows:
(10) Domestic fraternal societies, orders, or
associations, operating under the lodge system -
(A) the net earnings of which are devoted
exclusively to religious, charitable, scientific,
literary, educational, and fraternal purposes, and
(B) which do not provide for the payment of life,
sick, accident, or other benefits.
8:18:13 AM
CO-CHAIR LEDOUX inquired as to whether any 501(c)(8) or (10)
organizations would be allowed to discriminate on the basis of
sex, color, or other ways.
MR. JACKSON related his understanding that nationwide anyone is
eligible to join fraternal organizations, subject to the
organization's initiation process and membership application.
REPRESENTATIVE OLSON reiterated that Amendment 2 isn't intended
to mandate anything, but rather merely provides a tool for
political subdivisions.
CO-CHAIR FAIRCLOUGH expressed concern with the amendment to
Amendment 2, which seems inconsistent with federal code.
8:21:35 AM
CO-CHAIR LEDOUX inquired as to why Amendment 2 wouldn't include
501(c)(3) corporations for which there is no requirement for
insurance and isn't really a membership organization such as the
501(c)(8) and (10) organizations.
REPRESENTATIVE OLSON answered that the intent of Amendment 2 was
to keep [the exemption] fairly tight. He informed the committee
that to his knowledge the maximum possible exposure is a little
over $300,000 if every political subdivision of the state
offered [the exemption proposed in Amendment 2].
8:22:40 AM
REPRESENTATIVE NEUMAN referred to the "may" language in
Amendment 2, which is optional language that allows
municipalities more freedom at the local level. He said he is
in favor of local governments making such decisions.
CO-CHAIR FAIRCLOUGH related her understanding that 501(c)(3)
organizations already qualify for the exemptions.
8:24:05 AM
CO-CHAIR LEDOUX surmised then that if 501(c)(3) organizations
are already exempted, then senior centers wouldn't need to be
included as they are 501(c)(3) organizations.
CO-CHAIR FAIRCLOUGH recalled that Mr. Van Sant related earlier
that some senior centers aren't 501(c)(3) organizations and are
paying taxes.
MR. VAN SANT explained that currently in order to qualify for an
exemption under AS 29.45.030(a)(3), the organization must be a
501(c)(3). However, not all senior centers are used for
charitable purposes and in fact, senior centers on the Kenai
Peninsula are owned by the city and thus fall under a different
exemption.
CO-CHAIR LEDOUX asked if currently 501(c)(3) organizations are
already exempted from property taxes.
MR. VAN SANT replied no, not all 501(C)(3) organizations are
exempt. In order to be exempt an organization must be a
501(c)(3) and the property must be used for a charitable use.
8:26:22 AM
REPRESENTATIVE CISSNA opined that Amendment 2 would change the
entire conversation of the idea embodied in HB 67. Therefore,
she expressed her opposition to Amendment 2.
8:28:03 AM
CO-CHAIR LEDOUX asked if the Alaska Municipal League (AML) has
weighed in on Amendment 2.
CO-CHAIR FAIRCLOUGH replied no. Co-Chair Fairclough announced
that although the public hearing on HB 67 had previously been
closed, she would re-open it to allow the following witness to
testify.
8:28:34 AM
SHANE HORAN, Assessor, Kenai Peninsula Borough, said that he
appreciates the optional nature of HB 67 and Amendment 2,
although it does place some pressure on the municipalities to
adopt such. Mr. Horan clarified that the senior centers in the
Kenai Peninsula Borough are currently exempted under the
community purpose exemption under AS 29.45.050. As indicated
earlier, these organizations are typically established as
501(c)(3) charitable organizations although some may not qualify
for the exemption because the [property] isn't used exclusively
for a charitable purpose. With regard to the fraternal
501(c)(8) organizations, he expressed reservations because the
Kenai Peninsula Borough currently has 14 such organizations
which equate to about $2 million in assessed value. At 12 mills
that equates to about $25,000 in taxes. He reminded the
committee that these organizations are usually exclusive to
their members.
CO-CHAIR FAIRCLOUGH, upon determining no one else wished to
testify, again closed public testimony.
8:31:23 AM
REPRESENTATIVE SALMON related his belief that 501(c)(3)
organizations should be included in Amendment 2.
REPRESENTATIVE DAHLSTROM objected for discussion purposes.
REPRESENTATIVE OLSON reiterated that he met with the joint prime
sponsors regarding Amendment 2. He specified that he didn't
intend for Amendment 2 to thwart the process of HB 67, and
therefore if that's the case, he said he would pull Amendment 2.
8:33:03 AM
CO-CHAIR LEDOUX noted her agreement with including 501(c)(3)
organizations.
REPRESENTATIVE OLSON withdrew Amendment 2.
8:34:10 AM
REPRESENTATIVE DAHLSTROM moved to report HB 67, as amended, out
of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, CSHB
67(CRA) was reported from the House Community and Regional
Affairs Standing Committee.
The committee took an at-ease from 8:34 a.m. to 8:35 a.m.
8:36:57 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:36 a.m.
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