Legislature(1993 - 1994)

02/28/1994 01:30 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                        February 28, 1994                                      
                            1:30 P.M.                                          
                                                                               
  TAPE HFC 94 - 42, Side 1, #000 - end.                                        
  TAPE HFC 94 - 42, Side 2, #000 - end.                                        
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson  called the House  Finance Committee meeting                 
  to order at 1:30 P.M.                                                        
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson               Representative Hoffman                         
  Co-Chair MacLean              Representative Martin                          
  Vice-Chair Hanley             Representative Navarre                         
  Representative Brown          Representative Parnell                         
  Representative Grussendorf    Representative Therriault                      
  Representative Foster                                                        
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative   Cynthia   Toohey;  Jan   Hansen,  Director,                 
  Division  of Public  Assistance,  Department  of Health  and                 
  Social  Services; Thomas  C.  Williams, Director,  Permanent                 
  Fund Division, Department of Revenue;  Crystal Smith, Alaska                 
  Municipal    League,    Juneau;   David    Kamrath,   Staff,                 
  Representative Harley Olberg.                                                
                                                                               
  SUMMARY                                                                      
  HB 331    An  Act  relating  to  claims  on  permanent  fund                 
            dividends   for   defaulted    public   assistance                 
            overpayment.                                                       
                                                                               
            HB 331  was reported out  of Committee with  a "do                 
            pass" recommendation and with two fiscal notes  by                 
            the Department of Health and Social Services dated                 
            2/22/94 and one zero fiscal note by the Department                 
            of Revenue dated 2/22/94.                                          
  HB 397    An  Act  relating to  the  power to  levy property                 
            taxes in second class cities.                                      
                                                                               
            HB  397   was  held   in  Committee   for  further                 
            consideration.                                                     
  HOUSE BILL 394                                                               
                                                                               
       "An Act relating to limited partnerships; and providing                 
                                                                               
                                1                                              
                                                                               
                                                                               
       for an effective date."                                                 
                                                                               
  Co-Chair Larson informed  the Committee that the  sponsor of                 
  HB 394  requested that it be waived from this Committee.  He                 
  asked members to consider the waiver.                                        
  CONTRACT  BETWEEN  THE  STATE OF  ALASKA  AND  THE CAMBRIDGE                 
  ENERGY RESEARCH                                                              
                                                                               
  Co-Chair  Larson provided  the Committee  with the  contract                 
  agreement  between  the  State  of  Alaska,  Senate  Finance                 
  Committee and the House Finance  Committee and the Cambridge                 
  Energy Research Associates,  Inc. for  an amount of  $15,750                 
  dollars.  [Attachment #1].   Representative Larson requested                 
  that   the  Committee   review  the   contract   for  future                 
  consideration.                                                               
  SENATE BILL 206                                                              
                                                                               
       "An Act relating to real property transfers."                           
                                                                               
  Co-Chair Larson provided the Committee with a copy of SB 206                 
  and asked  if the Committee objected to introducing the bill                 
  as  a  House  Finance  Committee   bill.    There  being  NO                 
  OBJECTIONS, it was so ordered.                                               
  HOUSE BILL 331                                                               
                                                                               
       "An Act relating to claims  on permanent fund dividends                 
       for defaulted public assistance overpayment."                           
                                                                               
  REPRESENTATIVE CYNTHIA  TOOHEY explained that  HB 331  would                 
  give  the  Department  of Health  and  Social  Services, the                 
  administrative authority to garnish permanent fund dividends                 
  of   individuals  who   have   received  public   assistance                 
  overpayment and are delinquent in repaying that debt.                        
                                                                               
  She added  that  frequently  persons  receiving  overpayment                 
  agree to repay the debt but fail  to do so.  If a person  is                 
  still  on  public  assistance the  person's  benefit  can be                 
  reduced as a  means of collection,  but if a  person is  off                 
  assistance,  collection becomes  difficult.   The Department                 
  currently   has  over   $1  million   in   delinquent  debt.                 
  Collection through the  court system  can be time  consuming                 
  and costly.   HB 331  would allow the  Department to  pursue                 
  collection in the  same manner  in which delinquent  student                 
  loans are  pursued.   Representative Toohey  added that  the                 
  legislation is  supported by  the Department  of Health  and                 
  Social Services.                                                             
                                                                               
  JAN  HANSEN,   DIRECTOR,  DIVISION  OF   PUBLIC  ASSISTANCE,                 
  DEPARTMENT OF HEALTH  AND SOCIAL SERVICES, advised  that the                 
                                                                               
                                2                                              
                                                                               
                                                                               
  amount  of  debt  referenced  in  the  proposed  legislation                 
  originates  from  closed  cases  estimated  to   total  $500                 
  thousand dollars.                                                            
                                                                               
  Representative Brown  questioned the  number of  persons who                 
  would  receive  an overpayment  as  a  result of  an  agency                 
  mistake.  Ms.  Hansen replied that  last year the number  of                 
  errors within the  Aide to Families with  Dependant Children                 
  (AFDC) program  was 204.   These  cases were  due to  client                 
  error although 106 resulted from agency error.  She stressed                 
  that recuperation resulting from an agency error is mandated                 
  by federal regulations.                                                      
                                                                               
  Representative   Parnell   asked   if   there   are    other                 
  administrative agencies  which allow  a "Rite of  Execution"                 
  from the court, following a judgement  on the Permanent Fund                 
  Dividend allocation.                                                         
                                                                               
  THOMAS  C.  WILLIAMS,  DIRECTOR,  PERMANENT  FUND  DIVISION,                 
  DEPARTMENT  OF  REVENUE,  responded  that  there  are  other                 
  agencies with that authority; the  Alaska Commission on Post                 
  Secondary  Education  has  an   identical  provision.     In                 
  addition,   Child  Support   Enforcement   can  service   an                 
  administrative  levy  to  collect.   Representative  Parnell                 
  asked which agencies  supercede one  another.  Mr.  Williams                 
  stated that the Alaska Statutes define a priority listing.                   
                                                                               
  Representative Hanley clarified the  order of prioritization                 
  according to Alaska Statute 43.23.065 (b).                                   
                                                                               
       1.   Child support.                                                     
       2.   Court ordered restitution.                                         
       3.   Student loans.                                                     
       4.   Court ordered fines.                                               
       5.   Debt owed to an individual agency.                                 
                                                                               
  Representative   Hanley   understood   that   the   proposed                 
  legislation would  be placed  in category  #5; Mr.  Williams                 
  agreed.                                                                      
                                                                               
  Representative Brown asked the length of time the Department                 
  of Health and Social Services would  need to determine if an                 
  overpayment had been made.  Ms.  Hansen explained it usually                 
  occurs  quickly, although time  limits are established which                 
  the  Department  cannot  exceed.     The  limits  have  been                 
  established by federal mandates.                                             
                                                                               
  Ms. Hansen pointed out that in order to turn an account over                 
  for garnishment, the  Department is  required to notify  the                 
  person, giving  them the opportunity to appeal and repay the                 
  overpayment back.  The length of  the process depends on the                 
  volume of claims being handled by the Department.                            
                                                                               
                                3                                              
                                                                               
                                                                               
  Representative Brown asked if the proposed legislation would                 
  affect  the  Adult  Public Assistance  Program  (APA).   Ms.                 
  Hansen  replied  that  the  legislation  was  drafted   with                 
  collection  terms  for  the Food  Stamp  and  AFDC programs.                 
  Currently, overpayment are  not being  collected on the  APA                 
  program.  In  the future, if  overpayment claims were to  be                 
  established in that program, then it would be affected.                      
                                                                               
  Representative  Martin questioned  the fiscal  costs to  the                 
  Permanent  Fund  Division.    Mr.  Williams  explained  that                 
  processing  costs  would depend  upon  the number  of levies                 
  received.  Ms.  Hansen pointed out  there would be no  extra                 
  charge  to  the Department  of  Health and  Social Services.                 
  Currently, there is a  staff person whose function it  is to                 
  collect overpayment.                                                         
                                                                               
  Representative  Hanley  MOVED  to  report   HB  331  out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.   There  being NO OBJECTIONS,  it                 
  was so ordered.                                                              
                                                                               
  HB  331  was reported  out  of  Committee with  a  "do pass"                 
  recommendation and with  two fiscal notes by  the Department                 
  of  Health  and Social  Services  dated 2/22/94  and  a zero                 
  fiscal note by the Department of Revenue dated 2/22/94.                      
  HOUSE BILL 397                                                               
                                                                               
       "An Act relating to the power to levy property taxes in                 
       second class cities."                                                   
                                                                               
  DAVID  KAMRATH, STAFF,  REPRESENTATIVE OLBERG,  provided the                 
  Committee  with  Amendment #1  [Attachment  #2] which  would                 
  limit  second  class cities  to  a  two percent  tax  of the                 
  assessed value of the property to be taxed.                                  
                                                                               
  Co-Chair MacLean asked why Amendment #1 would repeal Section                 
  could be raised  through city council meetings  as presently                 
  done in first class cities.   Representative Navarre pointed                 
  out,  under  this authorization,  raising  taxes to  the new                 
  level  would  create  a disincentive  for  organizing  a new                 
  borough.  He added his concern regarding the individual city                 
  councils raising second class taxation to twenty mils.                       
                                                                               
  Mr.  Kamrath responded  to  Representative Martin's  inquiry                 
  regarding "personal  and real property  taxation" explaining                 
  that personal property could be taxed  only by a decision of                 
  the  local  municipality.   The  proposed  legislation would                 
  guarantee local government taxation decisions.                               
                                                                               
                                                                               
                                4                                              
                                                                               
                                                                               
  (Tape Change, HFC 94-42, Side 2).                                            
                                                                               
  Representative Hanley pointed out  that repealing Section #2                 
  as proposed in Amendment #1, would delete local flexibility.                 
                                                                               
                                                                               
  Co-Chair  Larson  commented  on  the   potential  effect  of                 
  taxation  by  local communities  with  oil and  gas pipeline                 
  property within their bourndaries.                                           
                                                                               
  Representative  Brown  understood  that  the  oil  and   gas                 
  pipeline property tax  was a  separate statute from  regular                 
  property taxation.  Co-Chair Larson replied that all oil and                 
  gas  facilities  would  be  assessed  by  the  same  policy,                 
  however, organized municipalities may tax  up to twenty (20)                 
  mils.  Representative  Brown pointed  out that the  proposed                 
  legislation  would allow a second class  city to further use                 
  state revenues from pipeline property tax.  She advised that                 
  the fiscal note should be revised  to indicate the impact on                 
  state revenue.                                                               
                                                                               
  Representative Martin recommended the continuance of levy of                 
  taxes "by  referendum" which would allow citizens a voice in                 
  the taxation.   Mr. Kamrath  stated that first  class cities                 
  and home rule  districts have the  potential of milage  rate                 
  being raised  to thirty (30) mils.   He added  that city and                 
  borough  governments establish the rate.  It is not directly                 
  decided  by  the local  citizens  through their  election of                 
  those  officials.   Representative Martin  pointed  out that                 
  Anchorage has established a milage rate cap.                                 
                                                                               
  Representative   Martin  MOVED   to   adopt  Amendment   #1.                 
  Representative  Martin  MOVED  TO   AMEND  Amendment  #1  by                 
  restoring  [BY  REFERENDUM] to  the  context of  Section #1.                 
  Representative  Hoffman   OBJECTED  to   the  amendment   to                 
  Amendment #1.                                                                
                                                                               
  Representative Parnell  asked if  second class  cities would                 
  have a prohibition of funds.  Co-Chair Larson explained that                 
  citizens   decide   this   issue  from   a   voting   power.                 
  Representative  Hoffman  stated  that  second  class  cities                 
  generally do not consider imposing a property tax because of                 
  the amount of paper work imposed to collect the extra funds.                 
  Committee members continued discussion regarding the levy of                 
  property   taxes  by   first   and   second  class   cities.                 
  Representative Hanley  pointed out that  Amendment #1  would                 
  provide  more  authority  in   delegating  taxation  to  the                 
  individual city councils.                                                    
                                                                               
  Co-Chair MacLean advised that the amended Amendment #1 might                 
  not allow the  local government proper authority  to provide                 
  required services and revenues.                                              
                                                                               
                                5                                              
                                                                               
                                                                               
  Co-Chair Larson summarized the amended amendment which would                 
  propose a referendum to allow  the city council the  ability                 
  to levy taxes, increasing  the amount from five (5)  mils to                 
  twenty  (20)   mils.    Representative  Hoffman   urged  the                 
  Committee  to oppose  the amendment.   Representative Martin                 
  felt that  the amendment  would take  away local  referendum                 
  powers  of  the  second  class  cities.    Co-Chair  MacLean                 
  interjected her concern with the effect on education for the                 
  second   class   cities  as   most   of  them   are  REAA's.                 
  Representative  Navarre  OBJECTED  to  the  MOTION  to amend                 
  Amendment #1.                                                                
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Hanley, Martin, Parnell, Therriault.                     
                                                                               
       OPPOSED:       Foster,  Grussendorf, Hoffman,  Navarre,                 
  Brown,                   MacLean, Larson.                                    
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  Representative Martin MOVED  to RESCIND his MOTION  to adopt                 
  Amendment #1.  There being NO OBJECTION, it was so ordered.                  
                                                                               
  Representative Hoffman MOVED to adopt Amendment #1.                          
                                                                               
  Discussion  followed  regarding  Amendment   #1.    Co-Chair                 
  MacLean felt that to  incorporate as a second class  city, a                 
  petition should be   signed by the voters when  the property                 
  tax proposal is placed  on the ballot.  She  MOVED to delete                 
  Section #2 of Amendment #1.   Mr. Kamrath explained that the                 
  Division   of  Legal   Service's  Director,   Tamara  Cooke,                 
  recommended including Section #2 of the amendment.                           
                                                                               
  CRYSTAL SMITH, ALASKA MUNICIPAL LEAGUE (AML), JUNEAU, stated                 
  that  the Alaska Municipal League  supports the intent of SS                 
  HB 397, which  would remove the  limitation on the power  of                 
  second class cities  to levy property  taxes.  She spoke  to                 
  the amendment asking for more time to consider the  changing                 
  circumstances which  the  amendment  would  initiate.    She                 
  understood  that  the amendment  would  preclude  any future                 
  adjustment to service the cap.                                               
                                                                               
  Co-Chair MacLean clarified that  the amendment would provide                 
  a petition for the new second class cities incorporation and                 
  it  would  be on  the  property  tax ballot  proposal.   The                 
  legislation would allow second class cities to determine the                 
  appropriate property tax rate and remove arbitrary limits on                 
  their ability to generate revenue locally.                                   
                                                                               
  Co-Chair Larson requested the  bill be held in  Committee in                 
                                                                               
                                6                                              
                                                                               
                                                                               
  order to  provide time  for the  Alaska Municipal League  to                 
  provide the Committee information regarding:                                 
                                                                               
       1.   The  ramifications  of   repealing  the  levy   of                 
            property taxes by referendum; and                                  
                                                                               
       2.   Restrictions   for   cities   at   the   time   of                 
            incorporation  which would  result  in levies  and                 
            types of taxes.                                                    
                                                                               
  Co-Chair  MacLean  MOVED  to RESCIND  the  motion  to delete                 
  Section #2 of Amendment #1 until  AML has the opportunity to                 
  consider the above concerns.                                                 
                                                                               
  Representative Brown requested  more detailed information on                 
  the loss of  any revenue  to the  State as a  result of  the                 
  proposed legislation.                                                        
                                                                               
  Representative  Parnell  interjected  his  concern with  the                 
  legality  of  the "policy  call"  to  be made  by  Committee                 
  members on the referendum issue.                                             
                                                                               
  SS HB 397 was HELD in Committee for further consideration.                   
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:00 P.M.                                           
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                        February 28, 1994                                      
                            1:30 P.M.                                          
                                                                               
  TAPE HFC 94 - 42, Side 1, #000 - end.                                        
  TAPE HFC 94 - 42, Side 2, #000 - end.                                        
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Larson  called the House Finance  Committee meeting                 
  to order at 1:30 P.M.                                                        
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson               Representative Hoffman                         
  Co-Chair MacLean              Representative Martin                          
  Vice-Chair Hanley             Representative Navarre                         
  Representative Brown          Representative Parnell                         
  Representative Grussendorf    Representative Therriault                      
  Representative Foster                                                        
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative   Cynthia   Toohey;  Jan   Hansen,  Director,                 
                                                                               
                                7                                              
                                                                               
                                                                               
  Division  of  Public  Assistance, Department  of  Health and                 
  Social  Services; Thomas  C.  Williams, Director,  Permanent                 
  Fund Division, Department of  Revenue; Crystal Smith, Alaska                 
  Municipal    League,    Juneau;   David    Kamrath,   Staff,                 
  Representative Harley Olberg.                                                
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 331    An  Act  relating  to  claims  on  permanent  fund                 
            dividends   for   defaulted    public   assistance                 
            overpayment.                                                       
                                                                               
            HB 331 was  reported out of  Committee with a  "do                 
            pass" recommendation and with two  fiscal notes by                 
            the Department of Health and Social Services dated                 
            2/22/94 and one zero fiscal note by the Department                 
            of Revenue dated 2/22/94.                                          
                                                                               
  HB 397    An  Act  relating to  the  power to  levy property                 
            taxes in second class cities.                                      
                                                                               
            HB  397   was  held   in  Committee  for   further                 
            consideration.                                                     
                                                                               
  HOUSE BILL 394                                                               
                                                                               
       "An Act relating to limited partnerships; and providing                 
       for an effective date."                                                 
                                                                               
  Co-Chair Larson informed  the Committee that the  sponsor of                 
  HB  394 requested that it be waived from this Committee.  He                 
  asked members to consider the waiver.                                        
                                                                               
  CONTRACT  BETWEEN  THE  STATE OF  ALASKA  AND  THE CAMBRIDGE                 
  ENERGY RESEARCH                                                              
                                                                               
  Co-Chair Larson  provided  the Committee  with the  contract                 
  agreement  between  the  State  of  Alaska,  Senate  Finance                 
  Committee and the House Finance  Committee and the Cambridge                 
  Energy Research Associates,  Inc. for  an amount of  $15,750                 
  dollars.   [Attachment #1].  Representative Larson requested                 
  that   the   Committee  review   the  contract   for  future                 
  consideration.                                                               
                                                                               
  SENATE BILL 206                                                              
                                                                               
       "An Act relating to real property transfers."                           
                                                                               
  Co-Chair Larson provided the Committee with a copy of SB 206                 
  and asked  if the Committee objected to introducing the bill                 
  as  a  House  Finance  Committee   bill.    There  being  NO                 
  OBJECTIONS, it was so ordered.                                               
                                                                               
                                8                                              
                                                                               
                                                                               
  HOUSE BILL 331                                                               
                                                                               
       "An Act relating to claims  on permanent fund dividends                 
       for defaulted public assistance overpayment."                           
                                                                               
  REPRESENTATIVE CYNTHIA TOOHEY  explained that  HB 331  would                 
  give  the  Department  of Health  and  Social  Services, the                 
  administrative authority to garnish permanent fund dividends                 
  of   individuals   who  have   received   public  assistance                 
  overpayment and are delinquent in repaying that debt.                        
                                                                               
  She  added  that  frequently  persons receiving  overpayment                 
  agree to repay the debt  but fail to do so.  If  a person is                 
  still  on  public  assistance the  person's  benefit  can be                 
  reduced as a  means of  collection, but if  a person is  off                 
  assistance, collection  becomes difficult.   The  Department                 
  currently   has  over   $1   million  in   delinquent  debt.                 
  Collection through the  court system  can be time  consuming                 
  and costly.   HB 331  would allow the  Department to  pursue                 
  collection in the  same manner  in which delinquent  student                 
  loans are  pursued.   Representative Toohey  added that  the                 
  legislation is  supported by  the Department  of Health  and                 
  Social Services.                                                             
                                                                               
  JAN  HANSEN,   DIRECTOR,  DIVISION  OF   PUBLIC  ASSISTANCE,                 
  DEPARTMENT OF HEALTH  AND SOCIAL SERVICES, advised  that the                 
  amount  of  debt  referenced  in  the  proposed  legislation                 
  originates  from   closed  cases  estimated  to  total  $500                 
  thousand dollars.                                                            
                                                                               
  Representative Brown  questioned the number  of persons  who                 
  would  receive  an overpayment  as  a  result of  an  agency                 
  mistake.  Ms.  Hansen replied that  last year the number  of                 
  errors within the  Aide to Families with  Dependant Children                 
  (AFDC) program  was 204.   These  cases were  due to  client                 
  error although 106 resulted from agency error.  She stressed                 
  that recuperation resulting from an agency error is mandated                 
  by federal regulations.                                                      
                                                                               
  Representative   Parnell   asked   if   there   are    other                 
  administrative agencies which  allow a  "Rite of  Execution"                 
  from the court, following a judgement  on the Permanent Fund                 
  Dividend allocation.                                                         
                                                                               
  THOMAS  C.  WILLIAMS,  DIRECTOR,  PERMANENT  FUND  DIVISION,                 
  DEPARTMENT  OF  REVENUE,  responded  that  there  are  other                 
  agencies with that authority; the  Alaska Commission on Post                 
  Secondary  Education  has   an  identical  provision.     In                 
  addition,   Child  Support   Enforcement   can  service   an                 
  administrative  levy  to  collect.   Representative  Parnell                 
  asked which agencies  supercede one  another.  Mr.  Williams                 
                                                                               
                                9                                              
                                                                               
                                                                               
  stated that the Alaska Statutes define a priority listing.                   
                                                                               
  Representative Hanley clarified  the order of prioritization                 
  according to Alaska Statute 43.23.065 (b).                                   
                                                                               
       1.   Child support.                                                     
       2.   Court ordered restitution.                                         
       3.   Student loans.                                                     
       4.   Court ordered fines.                                               
       5.   Debt owed to an individual agency.                                 
                                                                               
  Representative   Hanley   understood   that   the   proposed                 
  legislation would  be placed  in category  #5; Mr.  Williams                 
  agreed.                                                                      
                                                                               
  Representative Brown asked the length of time the Department                 
  of Health and Social Services would  need to determine if an                 
  overpayment  had been made.  Ms. Hansen explained it usually                 
  occurs quickly,  although time limits are  established which                 
  the  Department  cannot  exceed.     The  limits  have  been                 
  established by federal mandates.                                             
                                                                               
  Ms. Hansen pointed out that in order to turn an account over                 
  for garnishment, the  Department is  required to notify  the                 
  person, giving them the opportunity to  appeal and repay the                 
  overpayment back.  The length of  the process depends on the                 
  volume of claims being handled by the Department.                            
                                                                               
  Representative Brown asked if the proposed legislation would                 
  affect  the  Adult  Public Assistance  Program  (APA).   Ms.                 
  Hansen  replied  that  the   legislation  was  drafted  with                 
  collection  terms  for  the Food  Stamp  and  AFDC programs.                 
  Currently, overpayment are  not being  collected on the  APA                 
  program.  In  the future, if  overpayment claims were to  be                 
  established in that program, then it would be affected.                      
  Representative  Martin questioned  the fiscal  costs  to the                 
  Permanent  Fund  Division.    Mr.  Williams  explained  that                 
  processing  costs  would depend  upon  the number  of levies                 
  received.  Ms.  Hansen pointed out  there would be no  extra                 
  charge  to  the Department  of  Health and  Social Services.                 
  Currently, there is a  staff person whose function it  is to                 
  collect overpayment.                                                         
                                                                               
  Representative  Hanley  MOVED  to  report   HB  331  out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.   There  being NO OBJECTIONS,  it                 
  was so ordered.                                                              
                                                                               
  HB  331  was reported  out  of  Committee with  a  "do pass"                 
  recommendation and with  two fiscal notes by  the Department                 
  of  Health and  Social  Services dated  2/22/94  and a  zero                 
  fiscal note by the Department of Revenue dated 2/22/94.                      
                                                                               
                               10                                              
                                                                               
                                                                               
  HOUSE BILL 397                                                               
                                                                               
       "An Act relating to the power to levy property taxes in                 
       second class cities."                                                   
                                                                               
  DAVID KAMRATH,  STAFF, REPRESENTATIVE  OLBERG, provided  the                 
  Committee  with  Amendment  #1 [Attachment  #2]  which would                 
  limit  second  class cities  to  a  two percent  tax  of the                 
  assessed value of the property to be taxed.                                  
                                                                               
  Co-Chair MacLean asked why Amendment #1 would repeal Section                 
  could be raised  through city council meetings  as presently                 
  done in first class cities.   Representative Navarre pointed                 
  out,  under  this authorization,  raising  taxes to  the new                 
  level  would  create  a disincentive  for  organizing  a new                 
  borough.  He added his concern regarding the individual city                 
  councils raising second class taxation to twenty mils.                       
                                                                               
  Mr.  Kamrath responded  to  Representative Martin's  inquiry                 
  regarding "personal and  real property taxation"  explaining                 
  that personal property could be taxed  only by a decision of                 
  the  local municipality.    The  proposed legislation  would                 
  guarantee local government taxation decisions.                               
                                                                               
  (Tape Change, HFC 94-42, Side 2).                                            
                                                                               
  Representative Hanley  pointed out that repealing Section #2                 
  as proposed in Amendment #1, would delete local flexibility.                 
                                                                               
                                                                               
  Co-Chair  Larson  commented  on   the  potential  effect  of                 
  taxation  by  local communities  with  oil and  gas pipeline                 
  property within their bourndaries.                                           
                                                                               
  Representative  Brown  understood  that  the  oil   and  gas                 
  pipeline property tax  was a  separate statute from  regular                 
  property taxation.  Co-Chair Larson replied that all oil and                 
  gas  facilities  would  be  assessed  by  the  same  policy,                 
  however, organized municipalities may tax  up to twenty (20)                 
  mils.  Representative  Brown pointed  out that the  proposed                 
  legislation would allow a  second class city to  further use                 
  state revenues from pipeline property tax.  She advised that                 
  the fiscal note should be revised  to indicate the impact on                 
  state revenue.                                                               
                                                                               
  Representative Martin recommended the continuance of levy of                 
  taxes "by referendum" which would allow citizens a voice  in                 
  the taxation.   Mr. Kamrath  stated that first  class cities                 
  and home  rule districts have  the potential of  milage rate                 
  being raised to  thirty (30) mils.   He added that  city and                 
                                                                               
                               11                                              
                                                                               
                                                                               
  borough governments establish  the rate.  It is not directly                 
  decided  by  the local  citizens  through their  election of                 
  those  officials.   Representative Martin  pointed out  that                 
  Anchorage has established a milage rate cap.                                 
                                                                               
  Representative   Martin  MOVED   to   adopt  Amendment   #1.                 
  Representative  Martin  MOVED  TO  AMEND   Amendment  #1  by                 
  restoring  [BY  REFERENDUM] to  the  context of  Section #1.                 
  Representative   Hoffman  OBJECTED   to  the   amendment  to                 
  Amendment #1.                                                                
                                                                               
  Representative Parnell  asked if  second class  cities would                 
  have a prohibition of funds.  Co-Chair Larson explained that                 
  citizens   decide   this   issue   from  a   voting   power.                 
  Representative  Hoffman  stated  that  second  class  cities                 
  generally do not consider imposing a property tax because of                 
  the amount of paper work imposed to collect the extra funds.                 
  Committee members continued discussion regarding the levy of                 
  property   taxes  by   first   and   second  class   cities.                 
  Representative  Hanley pointed  out that Amendment  #1 would                 
  provide  more  authority  in  delegating   taxation  to  the                 
  individual city councils.                                                    
                                                                               
  Co-Chair MacLean advised that the amended Amendment #1 might                 
  not allow the  local government proper authority  to provide                 
  required services and revenues.                                              
                                                                               
  Co-Chair Larson summarized the amended amendment which would                 
  propose a referendum  to allow the city  council the ability                 
  to levy taxes, increasing  the amount from five (5)  mils to                 
  twenty  (20)   mils.    Representative  Hoffman   urged  the                 
  Committee to  oppose the amendment.   Representative  Martin                 
  felt that  the amendment  would take  away local  referendum                 
  powers  of  the  second  class  cities.    Co-Chair  MacLean                 
  interjected her concern with the effect on education for the                 
  second   class   cities  as   most   of  them   are  REAA's.                 
  Representative  Navarre  OBJECTED  to  the  MOTION to  amend                 
  Amendment #1.                                                                
                                                                               
  A roll call vote was taken on the MOTION.                                    
                                                                               
       IN FAVOR:      Hanley, Martin, Parnell, Therriault.                     
                                                                               
       OPPOSED:       Foster,  Grussendorf, Hoffman,  Navarre,                 
  Brown,                   MacLean, Larson.                                    
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  Representative Martin MOVED  to RESCIND his MOTION  to adopt                 
  Amendment #1.  There being NO OBJECTION, it was so ordered.                  
                                                                               
  Representative Hoffman MOVED to adopt Amendment #1.                          
                                                                               
                               12                                              
                                                                               
                                                                               
  Discussion  followed  regarding  Amendment  #1.     Co-Chair                 
  MacLean felt that to  incorporate as a second class  city, a                 
  petition should be   signed by the voters when  the property                 
  tax  proposal is placed on the ballot.   She MOVED to delete                 
  Section #2 of Amendment #1.   Mr. Kamrath explained that the                 
  Division  of   Legal  Service's   Director,  Tamara   Cooke,                 
  recommended including Section #2 of the amendment.                           
                                                                               
  CRYSTAL SMITH, ALASKA MUNICIPAL LEAGUE (AML), JUNEAU, stated                 
  that the Alaska  Municipal League supports the  intent of SS                 
  HB 397, which  would remove the  limitation on the power  of                 
  second class cities  to levy property  taxes.  She spoke  to                 
  the amendment  asking for more time to consider the changing                 
  circumstances  which the  amendment  would  initiate.    She                 
  understood that  the  amendment would  preclude  any  future                 
  adjustment to service the cap.                                               
                                                                               
  Co-Chair MacLean clarified that  the amendment would provide                 
  a petition for the new second class cities incorporation and                 
  it  would  be on  the  property  tax ballot  proposal.   The                 
  legislation would allow second class cities to determine the                 
  appropriate property tax rate and remove arbitrary limits on                 
  their ability to generate revenue locally.                                   
                                                                               
  Co-Chair  Larson requested the bill be  held in Committee in                 
  order to  provide time  for the Alaska  Municipal League  to                 
  provide the Committee information regarding:                                 
                                                                               
       1.   The  ramifications   of  repealing  the   levy  of                 
            property taxes by referendum; and                                  
                                                                               
       2.   Restrictions   for   cities   at   the   time   of                 
            incorporation  which  would result  in  levies and                 
            types of taxes.                                                    
                                                                               
  Co-Chair  MacLean  MOVED  to RESCIND  the  motion  to delete                 
  Section #2 of Amendment #1 until  AML has the opportunity to                 
  consider the above concerns.                                                 
                                                                               
  Representative Brown requested more detailed information  on                 
  the loss  of any  revenue to the  State as  a result  of the                 
  proposed legislation.                                                        
                                                                               
  Representative  Parnell  interjected  his concern  with  the                 
  legality of  the  "policy  call" to  be  made  by  Committee                 
  members on the referendum issue.                                             
                                                                               
  SS HB 397 was HELD in Committee for further consideration.                   
                                                                               
  ADJOURNMENT                                                                  
                                                                               
                                                                               
                               13                                              
                                                                               
                                                                               
  The meeting adjourned at 3:00 P.M.                                           
                                                                               
                                                                               
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