01/31/2013 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB28 | |
| HB40 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 28 | TELECONFERENCED | |
| *+ | HB 40 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
January 31, 2013
8:04 a.m.
MEMBERS PRESENT
Representative Gabrielle LeDoux, Co-Chair
Representative Benjamin Nageak, Co-Chair
Representative Neal Foster
Representative Kurt Olson
Representative Lora Reinbold
Representative Harriet Drummond
MEMBERS ABSENT
Representative Bob Herron
COMMITTEE CALENDAR
HOUSE BILL NO. 28
"An Act exempting solicitations or voluntary agreements to
provide ambulance, emergency, or fire department services from
regulation as insurance."
- MOVED HB 28 OUT OF COMMITTEE
HOUSE BILL NO. 40
"An Act establishing a municipal tax exemption for certain farm
structures."
- MOVED CSHB 40(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 28
SHORT TITLE: FIRE AND EMERGENCY MEDICAL SERVICES
SPONSOR(s): REPRESENTATIVE(s) FEIGE
01/16/13 (H) PREFILE RELEASED 1/7/13
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) CRA
01/31/13 (H) CRA AT 8:00 AM BARNES 124
BILL: HB 40
SHORT TITLE: MUNICIPAL TAX EXEMPTION: FARM USE LAND
SPONSOR(s): REPRESENTATIVE(s) HUGHES
01/16/13 (H) PREFILE RELEASED 1/7/13
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) CRA
01/31/13 (H) CRA AT 8:00 AM BARNES 124
WITNESS REGISTER
REPRESENTATIVE ERIC FEIGE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Speaking as the sponsor, presented HB 28.
MICHAEL PASCHALL, Staff
Representative Eric Feige
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 28, answered questions
on behalf of the sponsor, Representative Feige.
MIKE TVENGE, City Administrator
City of Delta Junction
Delta Junction
POSITION STATEMENT: Testified in support of HB 28.
JEFF TUCKER, Fire Chief
North Star Volunteer Fire Department;
Past President, Alaska Fire Chiefs Association (AFCA)
North Pole, Alaska
POSITION STATEMENT: Related AFCA's support for HB 28.
MARTY HESTER, Deputy Director
Division of Insurance
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Testified that the Division of Insurance
has no objection to the language of HB 28.
REPRESENTATIVE SHELLEY HUGHES
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HB 40.
GINGER BLAISDELL, Staff
Representative Shelley Hughes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 40, provided
information on HB 40.
STEVE VAN SANT, State Assessor
Division of Community and Regional Affairs
Department of Commerce, Community & Economic Development (DCCED)
Anchorage, Alaska
POSITION STATEMENT: During hearing of HB 40, answered
questions.
DON DYER
Economic Development Director
Department of Economic Development
Matanuska-Susitna Borough
Palmer, Alaska
POSITION STATEMENT: Characterized HB 40 as a significant help
for farmers.
LARRY DEVILBISS, Mayor
Matanuska-Susitna Borough
Palmer, Alaska
POSITION STATEMENT: Testified in support of HB 40.
ACTION NARRATIVE
8:04:23 AM
CO-CHAIR BENJAMIN NAGEAK called the House Community and Regional
Affairs Standing Committee meeting to order at 8:04 a.m.
Representatives Olson, Reinbold, Drummond, LeDoux, and Nageak
were present at the call to order. Representative Foster
arrived as the meeting was in progress.
HB 28-FIRE AND EMERGENCY MEDICAL SERVICES
8:05:58 AM
CO-CHAIR NAGEAK announced that the first order of business would
be HOUSE BILL NO. 28, "An Act exempting solicitations or
voluntary agreements to provide ambulance, emergency, or fire
department services from regulation as insurance."
8:06:13 AM
REPRESENTATIVE ERIC FEIGE, Alaska State Legislature, speaking as
the sponsor of HB 28, paraphrased from the following written
statement [original punctuation provided]:
HB 28 addresses an issue important to many
organizations: Money.
It is great to be able to look to someone, such as the
State of Alaska, for money. However, even if money is
available for projects, such as buying new equipment
or repairing a building, money is very rarely
available for operating expenses.
Fire Departments, ambulance services, and other
emergency service organizations often struggle to keep
the doors open. In many communities, the power to levy
taxes often provides sufficient funding to operate
these departments. When it doesn't, or isn't an
option, organizations turn to other types of sources
for money. Sometimes it's a pancake supper or a fish
fry. Maybe it's a bake sale or some other project. How
about BINGO? In different communities, different
things work. The problem with these types of
activities is they take even more of the emergency
volunteer's time. Time they need to spend training and
responding to emergencies.
Donations also are very helpful. But, it is becoming
increasing difficult to convince people to give money
to an organization.
One alternative to encourage people to help support
fire and EMS services in the community is to offer a
"no charge" policy to those that give to the
organization. Unfortunately, such a simple concept is
considered insurance in Alaska and subject to numerous
laws and regulations.
If you just charge the individual for an ambulance
transport, it's not a problem. But, if you ask for
money up front to keep gas in the ambulance and the
station heated in exchange for not charging the
individual if you transport them it's insurance and
subject to all of the regulations of the Division of
Insurance.
In a similar situation, a community that has no fire
department might want to start one. Often,
organizations charge if they have to come help you.
Others ask for donations. In some areas, you might
hear it referred to it as a subscription. In a
subscription department, if you pay in advance to
receive the service, then the organization that agrees
to provide you with that service doesn't charge you
additional fees, you are providing insurance if others
are charged for the service.
This bill is fairly simple, it exempts municipalities
and community non-profit organizations from regulation
if they receive money in advance and then don't charge
for services offered to those that give donations.
Our intent is to provide a mechanism for an
organizations to entice donations and financial
support by allowing them to waive fees to those that
provide an agreed upon level of financial support in
advance of the possibility that services might be
provided at some time in the future. There is no
guarantee that the organization will be able to
provide the needed services, just as there is no
guarantee now.
This bill simply allows the organization, if it so
choses, to waive its fees to those that support the
organization and keep the doors open, the lights on,
the building heated, and fuel in the trucks - without
being regulated by the Division of Insurance.
I am happy to answer any questions you may have.
REPRESENTATIVE FEIGE then disclosed that he started the
Chickaloon Fire Service Department, of which he is currently the
chief. He noted that the Chickaloon Fire Department is a
subscription department that provides a basic level of fire
service for the Chickaloon community.
8:10:24 AM
CO-CHAIR LEDOUX inquired as to how the fire departments came to
know that [subscription service] is considered insurance and
should be regulated by the Division of Insurance.
REPRESENTATIVE FEIGE stated that the [Chickaloon Fire
Department] had no idea that subscription service wasn't
something it could do and other fire departments, including
Deltana and Salcha, did it as well. Representative Feige
clarified that HB 28 simply exempts [ambulance, emergency, or
fire department services] from regulation as insurance. In
further response, Representative Feige said that the violation
was brought to the attention of the Chickaloon Fire Department
in discussions with other departments. He noted that the
Division of Insurance really hasn't contacted the [Chickaloon
Fire Department] about this.
8:12:51 AM
MICHAEL PASCHALL, Staff, Representative Eric Feige, Alaska State
Legislature, began by disclosing that he is the assistant chief
and secretary to the Rural Deltana Fire Department, which could
be impacted by this legislation. In response to Co-Chair
LeDoux, Mr. Paschall clarified that the City of Delta Junction
asked the Division of Insurance for an interpretation [of the
subscription service] and the division responded that it was
insurance, and thus couldn't continue.
8:13:40 AM
REPRESENTATIVE DRUMMOND inquired as to how a subscription fire
and ambulance service works.
REPRESENTATIVE FEIGE explained that volunteer fire departments
have operating expenses for which they have to raise funds.
Under the subscription method, people would sign up and pay a
fee to the fire department; the fee would be good for perhaps a
year. In Chickaloon, the fire department would respond/provide
services to those who subscribed and paid the fee. The
Chickaloon Fire Department also decided to respond to all wild
land fires in the community. Although only responding to those
calls from subscribers is a liability, it reflects the reality
that it costs money to keep equipment in a state of readiness.
8:15:02 AM
REPRESENTATIVE DRUMMOND related her understanding that
frequently the cost of ambulance service is reimbursed to those
individuals with medical insurance. However, if HB 28 passes
and there is no charge to the individual with medical insurance
for receiving ambulance service, then there would be no
reimbursement by their medical insurance company.
MR. PASCHALL clarified that the scenario is one in which there
is an agreement between the individual patient and the insurance
company. He further clarified that the most common scenario in
this type of arrangement is one in which only the individual is
released from paying. With the ambulance service, the insurance
company is charged and from whom the funds are collected because
they are a third party. Again, it's a fundraising mechanism, he
remarked.
8:16:28 AM
REPRESENTATIVE FOSTER inquired as to whether this method of
raising funds is fairly common in other states.
MR. PASCHALL informed the committee that the subscription
service is actually how most fire departments started in the
late 1700s. The situation is one in which the interpretation of
Alaska statute has been that [subscription service] is
insurance. The intent of HB 28 is to allow organizations to
continue [subscription service] without having to bond, hire an
insurance agent, a broker, etcetera. He specified that this
exemption is for small nonprofit municipal organizations not for
private companies.
8:17:49 AM
CO-CHAIR LEDOUX asked whether other states have a statute such
as this. If so, have insurance companies attempted to avoid
reimbursing for ambulance service, she further asked.
MR. PASCHALL answered that he wasn't familiar with such
situations, but noted that he hasn't done extensive research on
that. He suggested that representatives of the North Star Fire
Department and the Division of Insurance may be able to provide
an answer.
8:18:46 AM
REPRESENTATIVE REINBOLD thanked the sponsor and his staff for
starting and being a part of volunteer fire service. She asked
whether the volunteer fire departments have to have insurance.
MR. PASCHALL explained that the departments maintain a certain
level of insurance and HB 28 doesn't impact that. This
legislation only impacts the fee transaction between a donor to
the department and someone who later becomes a customer of the
department, HB 28 doesn't pertain to any of the rules that
govern the insurance of the organization itself.
8:22:01 AM
CO-CHAIR NAGEAK opened public testimony on HB 28.
8:22:45 AM
The committee took an at-ease from 8:22 a.m. to 8:24 a.m.
8:24:22 AM
MIKE TVENGE, City Administrator, City of Delta Junction, began
by relating the mayor and city council's support for HB 28. He
informed the committee that in 2008 when the city learned of the
subscription service and insurance conflict, it made an inquiry
to the Division of Insurance. Upon request, the division made a
clear legal response to the city that resulted in the city
amending its ordinance to reflect the state's position. After
amending the ordinance, there was an approximate 50 percent
decrease in voluntary donations. The aforementioned is why the
City of Delta Junction asked its representative to introduce
legislation addressing the matter. The intent of HB 28 is to
assist volunteer emergency services in the collection of revenue
to continue providing these volunteer services. Mr. Tvenge
opined that HB 28 could help smaller communities across the
state.
8:25:52 AM
JEFF TUCKER, Fire Chief, North Star Volunteer Fire Department;
Past President, Alaska Fire Chiefs Association (AFCA), related
AFCA's support for HB 28. With regard to the medical insurance
question, Mr. Tucker explained that nationally the subscription
fees typically pay for the upfront personal costs of the
individual, but third party billing of the insurance companies
is typical. This just relieves the obligation of the individual
to pay the insurance, he further explained.
8:26:48 AM
CO-CHAIR LEDOUX posed a situation in which the fire department
bills the insurance company for an individual who isn't
obligated to pay the insurance company. If the insurance
company pays the fire department, she asked whether the fire
department reimburses the funds to the individual who had a
subscription.
MR. PASCHALL explained that it's a situation in which an
individual who lives in a rural community supports the local
fire/ambulance service through a donation. In return, the
fire/ambulance service doesn't hold the individual personally
responsible for the charges, but will bill the insurance
company. The aforementioned typically isn't a formal written
contract for a defined service with a specified fee, which is
what the insurance laws were written to address. He further
clarified that this is not a situation regarding how to regulate
the provision of specific services for specific fees at certain
rates rather the individual is being rewarded for helping the
community provide a service on an ongoing basis. The fact that
a third party insurance company is involved is merely a result
of the fact that the individual has insurance that provides
medical transport coverage. The risk for the [fire/ambulance
service] is that some individuals have such insurance and some
do not. In most of these cases the cost of running a call is
relatively small, while the operating costs makeup the bulk of
the expenses.
8:30:54 AM
MARTY HESTER, Deputy Director, Division of Insurance, Department
of Commerce, Community & Economic Development, related that the
Division of Insurance does not have any objection to the
language in HB 28.
8:31:21 AM
CO-CHAIR NAGEAK closed public testimony.
8:31:35 AM
MR. PASCHALL closed by characterizing HB 28 as a good bill that
helps organizations with a current practice and refines the
statute as necessary.
8:32:05 AM
CO-CHAIR LEDOUX moved to report HB 28 out of committee [with
individual recommendations and the accompanying fiscal notes].
There being no objection, HB 28 was reported from the House
Community and Regional Affairs Standing Committee.
8:32:41 AM
The committee took an at-ease from 8:32 a.m. to 8:35 a.m.
HB 40-MUNICIPAL TAX EXEMPTION: FARM USE LAND
8:35:22 AM
CO-CHAIR NAGEAK announced that the final order of business would
be HOUSE BILL NO. 40, "An Act establishing a municipal tax
exemption for certain farm structures."
8:35:36 AM
REPRESENTATIVE SHELLEY HUGHES, Alaska State Legislature,
speaking as the sponsor of HB 40, began by highlighting the
beginnings of agriculture in Alaska and the potential for
increased agriculture in the state. The purpose of HB 40 is to
strengthen agriculture in the state even though it's currently a
small sector of the state's economy. This legislation, HB 40,
would provide municipalities the option to exempt specific food
storage and production buildings for those farmers who derive at
least 10 percent of their income from farming activities. The
aforementioned would benefit farmers by relieving the tax
burden. Furthermore, it would benefit Alaskans because
residents would have increased access to locally grown food.
Representative Hughes told the committee that the need for HB 40
came to light after learning from farmers that at the end of the
harvest season they were turning produce back into the soil
because it was too expensive to pay the taxes to store it.
Therefore, residents lose the opportunity for that produce to be
available for purchase. Moreover, the less local food there is
in Alaska, the more food from the Lower 48 must be transported
to Alaska. The food from the Lower 48 is likely to have been
harvested seven to nine days before it reaches store shelves in
Alaska, and thus that food has lost some of its nutritional
value.
8:39:57 AM
GINGER BLAISDELL, Staff, Representative Shelley Hughes, Alaska
State Legislature, explained that HB 40 is fairly specific in
its municipal tax exemption of farm food storage and production
buildings for which at least 50 percent of the building must be
used for farm food storage and production. The building has to
be owned or leased by an individual that is actively engaged in
farming. This exemption also includes dairy production and
milking facilities. However, HB 40 does not include slaughter
houses, basic ranching, or fishing.
8:42:08 AM
CO-CHAIR LEDOUX moved to adopt CSHB 40, Version 28-LS0229\N,
Bullard, 1/28/13, as the working document.
CO-CHAIR LEDOUX objected for purposes of discussion.
8:42:54 AM
REPRESENTATIVE FOSTER acknowledged that it's an optional
program, but asked if there has been any opposition to HB 40,
including from the Alaska Municipal League (AML) or any
communities.
REPRESENTATIVE HUGHES said that she was not aware of any
opposition, but deferred to her staff.
MS. BLAISDELL informed the committee that she has placed calls
to AML, but not heard from them. However, she said she has
spoken with many city officials in various locations and the
local assessors are very much in favor of HB 40. In fact, the
Matanuska-Susitna Borough is drafting a resolution in support of
HB 40.
8:44:20 AM
REPRESENTATIVE REINBOLD spoke positively regarding HB 40, but
acknowledged that the exemption will result in
municipalities/boroughs receiving less money from taxes. She
then asked if the Matanuska-Susitna Borough is okay with that
reduction in tax revenue.
REPRESENTATIVE HUGHES related that her region is fine with the
proposal as they deem it as important enough to provide relief
to the farmers.
8:45:37 AM
REPRESENTATIVE REINBOLD highlighted that HB 40 has a zero fiscal
note.
8:45:45 AM
CO-CHAIR LEDOUX pointed out that the language of HB 40 is
permissive as it uses the term "may."
8:46:13 AM
REPRESENTATIVE DRUMMOND, speaking as a recent Anchorage Assembly
member, related that although a property tax exemption may be
optional, there is great difficulty in not offering it.
Therefore, she expressed interest in the comments of
municipalities and boroughs in the state. She opined that as a
member of a borough assembly she would question whether the
significant amount of tax burden not received by the local
government will be shared with the remaining property taxpayers
in the borough or wiped from the books. She explained that the
senior property tax exemption and disabled veteran's property
tax exemption in Anchorage has been offered for 25-30 years.
Although initially the state reimbursed communities for those
property tax exemptions, the state began to reimburse less and
less until the state doesn't reimburse any of the exemptions.
For Anchorage, the total of those property tax exemptions is
around $25 million, which is a sum that can't be ignored by the
municipal governing body. Therefore, that $25 million is shared
among all the other property taxpayers in the municipality and
costs each municipal resident a little more to provide these
exemptions. She inquired as to the amount of property tax this
would total were all the farmers who qualified took advantage of
the proposed exemption.
REPRESENTATIVE HUGHES reminded the committee that [Version N]
specifies that farming activity must constitute at least 10
percent of the farmer's income, which is a protection from
abuse. She recalled that the amount of property tax the
Matanuska-Susitna Borough wouldn't receive were HB 40 to pass is
estimated to be $3.5 million.
MS. BLAISDELL informed the committee that under the original
legislation, which specified that to qualify for the proposed
exemption 50 percent of the food storage or production building
had to be used for farming, the state assessor estimated that
property tax in the Matanuska-Susitna Borough to be about $3.6
million. However, in Version N the qualification was changed
to require the food storage or production building to be used
almost exclusively for farming, and thus the estimated tax
exemption may be less than anticipated under the original
version. She related that Fairbanks felt the impact of the
proposed exemption would be negligible and Delta Junction
doesn't tax the farming industry so there would be no fiscal
impact to them.
8:52:05 AM
CO-CHAIR LEDOUX pointed out that the legislation uses the term
"person" rather than "individual." Therefore, she surmised that
if an individual formed a LLC or S corporation and [its
building] was used exclusively for farming activity, even if the
income from the LLC didn't constitute more than 10 percent of
the individual's gross income the exemption would still be
available to the LLC.
REPRESENTATIVE HUGHES replied yes, it would be 10 percent of the
LLC's income.
8:53:10 AM
REPRESENTATIVE FOSTER inquired as to who determines that a
person derives at least 10 percent of their income from farming
activity.
MS. BLAISDELL related her belief that it would be the local
assessor.
8:54:30 AM
STEVE VAN SANT, State Assessor, Division of Community and
Regional Affairs, Department of Commerce, Community & Economic
Development (DCCED), explained that typically the local assessor
calculates whether 10 percent of the person's yearly gross
income is from farming activity. However, the farmer has the
option of letting the state assessor's office know whether the
farming income reaches 10 percent of the farmer's yearly gross
income. He estimated that about half a dozen farmers send their
income tax returns to the state assessor's office rather than
the local assessor.
8:55:13 AM
CO-CHAIR NAGEAK opened public testimony.
8:55:24 AM
DON DYER, Economic Development Director, Department of Economic
Development, Matanuska-Susitna Borough, related that the cost of
property tax is a large portion of the cost for farming,
particularly for dairies. Dairies operate with a very thin
profit margin and thus the proposed tax exemption would make
them more profitable and provide an incentive to expand. Mr.
Dyer, as an owner of a vegetable farm, related that because of
Alaska's weather, one of the significant costs is storage that
will keep vegetables from freezing until they're sold.
Therefore, HB 40 would be a significant help with that.
8:57:08 AM
LARRY DEVILBISS, Mayor, Matanuska-Susitna Borough, began by
noting that he was the director of the Division of Agriculture
for a few years. He then stated his support for HB 40 as it
provides another strategic tool to incentivize and increase food
production in the state. He was supportive of it being an
optional exemption, which if administered as the other property
tax exemptions would be by an application process during which
it's scrutinized closely. With regard to the senior and
veteran's property tax exemptions, Mayor DeVilbiss reminded the
committee that those are mandatory exemptions. The proposal in
HB 40 is an optional and flexible tool for which he has heard no
negative feedback. He informed the committee that although a
resolution in support of HB 40 is on the Matanuska-Susitna
Borough's upcoming agenda, he expressed the need to ensure that
the use of the term "person" does include those farmers who
operate as an LLC, which is the case for most farmers.
8:59:32 AM
CO-CHAIR NAGEAK closed public testimony.
8:59:48 AM
MS. BLAISDELL pointed out the following changes encompassed in
Version N. In Version N, the term "individual" was changed to
"person" at the request of farmers and Legislative Legal
Services. The term "individual" means that a single person owns
and operates the farm and its structures and would've been the
only people eligible under HB 40. In Version N, the use of the
term "person" means that the legislation applies to individuals,
LLCs, and other types of financial corporations such as S
corporations. While that language change broadens who could
benefit from the legislation, the sponsor felt the change was
important because of the current structure of farming
organizations.
9:01:27 AM
CO-CHAIR LEDOUX withdrew her objection to the adoption of
Version N. [There being no further objection, CSHB 40, Version
28-LS0229\N, Bullard, 1/28/13, was adopted as the working
document.]
9:01:37 AM
CO-CHAIR LEDOUX moved to report CSHB 40, Version 28-LS0229\N,
Bullard, 1/28/13, out of committee [with individual
recommendations and the accompanying fiscal notes]. There being
no objection, CSHB 40(CRA) was reported from the House Community
and Regional Affairs Standing Committee.
9:02:12 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:02 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 28 ver A.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 28 |
| HB 28-DCCED-DOI-01-26-13.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 28 |
| HB 28 SPONSOR STATEMENT Emergency Service Subscriptions.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 28 |
| HB 28 Insurance Chapter 21 Select Statutes.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 28 |
| HB 28 Support Letter AFCA.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 28 |
| HB 40 ver U.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 40 |
| HB 40 Farm Food Storage sponsor statement.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 40 |
| HB 40-DCCED-DCRA-01-25-13.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 40 |
| HB 40 Farm Food Storage CS Comparison.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 40 |
| HB 40 AS 29.45.050.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 40 |
| CSHB 40 ver N draft.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 40 |
| HB 28 Tri Valley Program News Miner.pdf |
HCRA 1/31/2013 8:00:00 AM |
HB 28 |