Legislature(2007 - 2008)HOUSE FINANCE 519
04/11/2007 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB67 | |
| HB178 | |
| HB155 | |
| HB212 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 155 | TELECONFERENCED | |
| + | HB 158 | TELECONFERENCED | |
| + | HB 178 | TELECONFERENCED | |
| + | HB 212 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 67 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 11, 2007
1:46 p.m.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 1:46:28 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Harry Crawford
Representative Les Gara
Representative Mike Hawker
Representative Reggie Joule
Representative Mike Kelly
Representative Mary Nelson
Representative Bill Thomas, Jr.
MEMBERS ABSENT
Representative Richard Foster
ALSO PRESENT
Suzanne Cunningham, Staff, Representative Meyer; Norman
Cohen, Staff, Representative Max Gruenberg; Representative
Max Gruenberg; Eleanor Wolfe, Staff, Representative Kurt
Olson; Pat Davidson, Legislative Auditor, Legislative Audit
Division, Legislative Affairs Agency; Rob Meyers, Staff,
Representative Peggy Wilson; Paula Scavera, Legislative
Liaison, Department of Labor and Workforce Development;
Representative Anna Fairclough; Curtis McQueen, Director,
Corporate Affairs, Eklutna Incorporated; Jim Arneson, Land
and Regulatory Manager, Eklutna Incorporated; Pat Gamble,
President and CEO, Alaska Railroad Corporation
PRESENT VIA TELECONFERENCE
Mike Black, Director, Community Advocacy, Department of
Commerce, Community and Economic Development; Doug North,
President, Alaska Pacific University, Harry McDonald, Board
of Trustees, Alaska Pacific University; Bob Minz, Alaska
Pacific University; Douglas Griffin, Director, Alcoholic
Beverage Control Board, Department of Public Safety; Dennis
Fenerty, Groh Eggers, LLC; Dan Alex, Chief, Eklutna
SUMMARY
HB 67 "An Act relating to an optional exemption from
municipal property taxes on certain residences of
law enforcement officers."
CSHB 67 (FIN) was REPORTED out of Committee with a
"no recommendation" and with zero fiscal note #1
by the Department of Commerce, Community and
Economic Development.
HB 155 "An Act extending the termination date of the
Alcoholic Beverage Control Board; and providing
for an effective date."
CSHB 155 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and with a new fiscal
note by the Department of Public Safety.
HB 158 "An Act providing for the licensing and regulation
of private investigators and private investigator
agencies; and providing for an effective date."
HB 158 was scheduled but not heard.
HB 178 "An Act relating to the Governor's Committee on
Employment of People with Disabilities; and
providing for an effective date."
CSHB 178(HES) was REPORTED out of Committee with a
"do pass" recommendation and with a new zero
fiscal note by the Department of Labor and
Workforce Development.
HB 212 "An Act authorizing the transfer of land from the
Alaska Railroad Corporation to Eklutna, Inc.; and
providing for an effective date."
HB 212 was heard and HELD in Committee for further
consideration.
1:47:25 PM
HOUSE BILL NO. 67
"An Act relating to an optional exemption from
municipal property taxes on certain residences of law
enforcement officers."
Vice Chair Stoltze MOVED to ADOPT the work draft for HB 67,
labeled 25-LS-0314\F, Cook, 4/10/07. There being NO
OBJECTION, it was so ordered.
1:48:44 PM
SUZANNE CUNNINGHAM, STAFF, REPRESENTATIVE MEYER, explained
the three major changes to HB 67 depicted in the new CS.
Section 1 provides that property of a private, nonprofit
four-year college is also exempt from taxation except for
cases when there is a private lessor of the property. This
treatment is consistent with the way the University of
Alaska is treated.
1:49:10 PM
Ms. Cunningham explained that Section 2 was added by request
and provides for an optional tax exemption for fraternal
society orders or associations. Section 3 was worked on by
Representative Gruenberg's office and addresses previous
concerns raised by Representative Gara.
NORMAN COHEN, STAFF, REPRESENTATIVE MAX GRUENBERG, explained
the changes to Section 3. He pointed to a change on page 4,
which limits a parcel owned by a law enforcement officer to
one exemption. If two or more individuals own the parcel,
the exemption depends on the percentage owned by the law
enforcement officer. The individuals can decide between
themselves how the exemption is distributed. Other changes
were made to give municipalities more discretion in how they
decide which area is to be tax exempt. Municipalities can
also decide which law enforcement officers are eligible for
the exemption.
Mr. Cohen referred to page 4, lines 13 and 14, which gives
the municipality the ability to place additional criteria
when determining which areas to include for the exemption
and how large to make them.
1:54:27 PM
Representative Hawker referred to Section 1 and asked which
property tax payers would benefit from the proposed change.
Ms. Cunningham listed Alaska Pacific University (APU) and
Sheldon Jackson College. Representative Hawker wondered how
much monetary relief they would be receiving. Ms.
Cunningham explained that under AS 29.45.030 there is a
property tax exemption for property used exclusively for
nonprofit, religious, charitable, cemetery, hospital, or
educational purposes. The new language clarifies that if
the property of four-year, private, nonprofit institutions
is leased, the lessor is liable for municipal property tax.
Representative Hawker inquired if the taxing authority would
have to make up for waived taxes. He wondered if the
liability would then fall upon other taxpayers of the
community. Ms. Cunningham referred to a section under the
mandatory property tax exemption that allows the
municipality to seek revenue from the state. Representative
Hawker expressed interest in knowing the amount of the
potential lost revenue by allowing Sheldon Jackson and APU
to be tax exempt.
Co-Chair Meyer asked if this is a local option.
REPRESENTATIVE MAX GRUENBERG, co-sponsor, reported that
Section 1 was not optional.
1:58:05 PM
Representative Crawford wondered about the impact on Wayland
Baptist University in his district. He asked about the
effect of this legislation on the property tax cap.
MIKE BLACK, DIRECTOR, COMMUNITY ADVOCACY, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, explained that
if a class of property tax is removed, the balance of
revenue needing to be generated would be passed on to other
taxpayers in Anchorage. He thought that there was no state
reimbursement to make up for the loss. He said there would
be no effect on the municipal tax cap.
Representative Hawker requested a dollar amount.
Mr. Black related that some university-owned vacant
properties would be removed from the tax roll. He could not
state a dollar amount.
Representative Hawker wondered about the relationship
between vacant property and Alaska Pacific University (APU).
Mr. Black reported that the properties are held in title by
APU, although they are not attached to the campus.
HARRY MCDONALD, BOARD OF TRUSTEES, ALASKA PACIFIC
UNIVERSITY, clarified that no tax has ever been paid on
those properties. Representative Hawker asked by what
authority APU has been exempt.
DOUG NORTH, PRESIDENT, ALASKA PACIFIC UNIVERSITY, explained
the university's 501(c)3 status as a non-profit educational
institution from 1959 until 2005.
2:03:08 PM
BOB MINZ, TRUSTEE, ALASKA PACIFIC UNIVERSITY, added that
there is a provision in state law whereby an entity that has
never paid tax, is excluded from having to pay.
Representative Hawker asked why this bill is needed. Bob
Minz replied that in 2006 the municipal assessor changed the
interpretation. Representative Hawker asked what the change
in interpretation was. Mr. Minz responded that in 2006 and
2007 the municipality decided that APU property was taxable.
Representative Hawker asked how much money was involved.
Mr. Minz replied that the 2006 taxes are in dispute. A
clarification of state law would solve the problem.
2:05:13 PM
Representative Gruenberg inquired if the Mat-Su property was
left in trust. Mr. Minz replied said he is not sure which
property is being referred to. Representative Gruenberg
clarified that he is referring to a homestead that was left
to the university. Mr. Minz related that APU only leases
that property. Representative Gruenberg concluded it would
not be covered by the bill. Mr. Minz said that is correct.
Representative Gruenberg questioned about a specific piece
of APU property that is being rented out. Mr. Minz replied
that in 2007 the tax exemption for the Spine Institute
building was withdrawn while the remaining exemptions were
continued.
2:07:03 PM
Co-Chair Chenault asked if University of Alaska (UA) land is
involved. Ms. Cunningham said the provisions pertaining to
UA lands are untouched by this legislation.
Co-Chair Chenault asked if it would be optional for
municipalities to allow exemptions. Ms. Cunningham said
that Section 2 of the bill is optional. Co-Chair Chenault
referred to a letter from Shane Horan (copy on file) voicing
concern about exemptions for UA leasehold interests and
fraternal orders.
Co-Chair Chenault declared a conflict of interest stating
that he is a member of Moose and Elks clubs.
Co-Chair Chenault voiced concern about pressure on
municipalities regarding exemptions. He questioned if the
time is right. He pointed out that it would cost the Kenai
Borough $25,000 for the exemptions. He stated concern about
exempting properties at a time of budget tightening. He
agreed with the police officer exemption.
2:11:23 PM
Co-Chair Meyer noted that the amendments regarding the
fraternal orders were proposed in another committee. Vice
Chair Stoltze addressed the appropriateness of those
exemptions. He pointed out that fraternal orders often
function as community centers. He expressed comfort with
the optional exemptions.
Representative Gara pointed out that there are hundreds of
good reasons for property tax exemptions. He noted on page
2, line 22, property used exclusively for nonprofit
religious, charitable, cemetery, hospital, and educational
purposes are already exempted. He spoke in favor of those
exemptions as well as college property exemptions. He
questioned the need for Section 2 and wondered why current
law is not adequate.
2:17:14 PM
Mr. North explained the curricular relationship between APU
and the Spine Institute, which leases their property. He
spoke to the current exemptions for AU and APU. The
question is how to level the playing field among the various
colleges and universities in the state.
Representative Gara spoke highly of APU, however, he
questioned the favoritism of one group of doctors over
another regarding taxes.
Mr. McDonald explained how APU operating costs are handled.
He clarified that the doctors are not getting the tax break,
the university is. Mr. North added that the amount is
$200,000 per year.
2:20:26 PM
Ms. Cunningham addressed Representative Gara's concern.
Page 1 outlines properties that are exempt from property
tax. Subparagraph (a) states that the properties are exempt
from taxation except that a privately sold contract or other
interest in the property is taxable to the extent of the
interest. That language was included at the request of the
municipal attorney's office so that a lessor would be liable
for tax purposes.
Representative Gruenberg added that the Spine Institute is
not tax free. He asked what the educational relationship is
between APU and the Spine Institute. Mr. North described
the internship relationship, curriculum, and adjunct
recruitment. He referred to an educational agreement
between the Spine Institute and APU (copy on file.)
Representative Gara clarified that the doctors pay municipal
business tax and state corporate tax. He concluded that
currently the building would be taxed unless the law is
changed.
Mr. Minz reported that currently there is a dispute with APU
as to whether that property should be taxed.
2:24:35 PM
Representative Hawker questioned exemptions for fraternal
orders and maintained that voters should have a chance to
voice an opinion. He stated concern about the assembly
changing taxes without the voice of the people. He
suggested language to allow voters to have a say. Vice
Chair Stoltze thought that was a reasonable request.
2:26:37 PM
Representative Gruenberg said he would accept a friendly
amendment to that effect. Co-Chair Chenault also agreed.
Representative Hawker clarified that his concern is only
with Section 2.
Representative Hawker MOVED to ADOPT Conceptual Amendment
#1:
ADD to Section 2.
Incorporate language similar to that found in Sec.
29.45.050(a) A municipality may exclude or exempt or
partially exempt residential property from taxation by
ordinance ratified by the voters at an election.
This would incorporate the concept into the exemption
taxation of the property of a fraternal society, order,
or association that is exempt from federal taxes.
Vice Chair Stoltze OBJECTED.
Representative Hawker clarified "an election" would allow
the municipality to decide which election.
2:29:36 PM
Representative Gara pointed out that charitable
organizations are exempt already. This amendment applies to
organizations that wish to exempt non-charitable-use
property. He maintained that the issue is not clear.
Vice Chair Stoltze WITHDREW his OBJECTION.
Conceptual Amendment #1 was ADOPTED.
Representative Gruenberg stated a conflict of interest in
that he is a member of the Lions' Club.
Co-Chair Meyer noted a zero fiscal note by the Department of
Commerce, Community and Economic Development.
2:32:58 PM
Representative Hawker reported reservations about imposing
unfunded mandates on municipalities. He agreed with
Representative Gara's concern regarding exemptions for
commercial enterprises. He said he would have to vote
against the bill because he is against additional property
tax in Anchorage.
2:34:35 PM
Representative Gara spoke to properties used by religious
groups. He objected to Section 2, which would expand that
exemption to properties used for profit by religious groups.
He stated no support for Section 2 of the bill.
Co-Chair Meyer summarized that that would be true only after
voter approval.
Representative Gruenberg thought Section 2 would not cover
the shopping center idea because commercial use is not one
of the six items listed there. Representative Gara agreed.
2:36:29 PM
Vice Chair Stoltze MOVED to REPORT CSHB 67 (FIN), as
amended, out of Committee with individual recommendations
and the accompanying fiscal note. There being NO OBJECTION,
it was so ordered.
CSHB 67 (FIN) was REPORTED out of Committee with a "no
recommendation" and with zero fiscal note #1 by the
Department of Commerce, Community and Economic Development.
2:38:03 PM
HOUSE BILL NO. 178
"An Act relating to the Governor's Committee on
Employment of People with Disabilities; and providing
for an effective date."
ROB MEYERS, STAFF, REPRESENTATIVE PEGGY WILSON, explained
that the bill is at the request of the Governor's Committee
on Employment and Rehabilitation of People with
Disabilities. Congress has changed the requirements
recently and this bill would change Alaska statute to comply
with those requirements. He explained the changes to the
bill such as meeting times and the makeup of the council.
Co-Chair Meyer asked about the zero fiscal note from the
Department of Labor.
PAULA SCAVERA, LEGISLATIVE LIAISON, DEPARTMENT OF LABOR,
reported that the fiscal note was done to show that there
was a cost from federal receipts. Federal receipt authority
is no longer needed. Co-Chair Meyer requested that the
fiscal note be dated. Ms. Scavera said she would see to it.
2:42:26 PM
Vice Chair Stoltze MOVED to REPORT CSHB 178 (FIN) out of
committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 178 (HES) was REPORTED out of Committee with a "do
pass" recommendation and with a new zero fiscal note by the
Department of Labor and Workforce Development.
2:43:14 PM
At ease.
2:45:39 PM
HOUSE BILL NO. 155
"An Act extending the termination date of the Alcoholic
Beverage Control Board; and providing for an effective
date."
ELEANOR WOLFE, STAFF, REPRESENTATIVE KURT OLSON, related
that the bill extends the sunset date of the Alcoholic
Beverage Control (ABC) Board for six years at the
recommendation of the Legislative Budget and Audit Committee
(LB&A).
2:47:36 PM
DOUGLAS GRIFFIN, DIRECTOR, ALCOHOLIC BEVERAGE CONTROL BOARD,
DEPARTMENT OF PUBLIC SAFETY, related the Board's process of
complying with LB&A's recommendations. He explained about
the process of securing funding for those improvements. He
explained the make up and duties of the ABC Board.
Vice Chair Stoltze questioned if there is a plan to increase
the size of the board to include rural members. Mr. Griffin
noted that there was interest brought out by the transition
report to look at broader geographical representation to
include at least one rural member. There was also some
discussion about expanding the size of the board, which
would take further action.
2:52:05 PM
Representative Hawker spoke to audit items (copy on file.)
He felt that items one to three were profound and indicative
of weaknesses of paramount importance. He questioned if
improvements have been made and recommended a shortened
sunset date.
PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT
DIVISION, LEGISLATIVE AFFAIRS AGENCY, noted that they had
not updated the audit. She noted that the recommendation
was for a maximum of six years, which is less than the
statutory authority for eight years.
Representative Hawker questioned if Ms. Davidson would
recommend a six-year period given the seriousness of the
concerns. Ms. Davidson noted that there are two
alternatives to following up on concerns, one is to shorten
the termination date; the other would be for a request to do
a follow-up. The six-year recommendation only speaks to
whether the board should continue to exist. Representative
Hawker ascertained that priority be given to statutory
deadline audits.
2:56:42 PM
In response to a question by Representative Crawford, Ms.
Davidson noted that the recommendation addresses six items.
Sometimes procedures were in place, but not followed; at
other times procedures were not in existence, such as in
data base access. There is a process for municipal refunds,
but it was not followed.
Representative Joule noted the recent audit date and asked
if it would be difficult to see if items were being
addressed. He pointed out that there is a new
administration and questioned if there could be a
conditional six-year extension with a two-year review. Ms.
Davidson noted that a lack of segregation of duties in
Fairbanks will take some time to address. She felt that
most issues could be addressed within a year. She
acknowledged that there is a backlog and those with
statutory deadlines have priority. She suggested that an
audit request would take two years.
3:02:03 PM
Representative Joule questioned if the ABC Board is short
staffed. Ms. Davidson clarified that there are
responsibilities that can be reallocated between staff.
Ms. Wolfe explained that they were aware of the issues and
were advised that they would be addressed by the current
administration.
Mr. Griffin did not know of other legislation to address the
audit problems.
In response to a question by Representative Kelly, Ms.
Davidson explained that the last audit had eight
recommendations, most of which have been implemented. The
outstanding issue was security over the database. Ms.
Davidson observed that the same executive director is in
charge, but that the Board has just been moved to the
Department of Public Safety. She did not know the makeup of
the Board.
Representative Kelly continued to express concerns.
3:07:01 PM
Ms. Davidson explained that the Department of Public Safety
and Board had responded separately to the concerns and both
indicated support for the recommendations and indicated that
they would be addressed.
In response to a question by Vice Chair Stoltze, Ms.
Davidson noted that a survey resulted in positive responses
regarding law enforcement and community groups' opinion of
how well the ABC Board was doing. There was some concern
about enforcement activities because there is unequal
enforcement across the state. Businesses in Juneau and
Fairbanks are inspected within four years, while Kenai only
has a 50% chance of inspection.
3:11:14 PM
Representative Hawker asked about the priority for
legislative audits based on who made the request. Ms.
Davidson noted that no priority was given regarding
individual legislators versus committees.
Representative Kelly commented that even three years would
be a long time. He expressed concern with a three-year
extension.
Co-Chair Meyer noted that some issues would take a couple of
years. Ms. Davidson noted that a three-year extension would
occur in 2010, which is when they are required to have an
audit. She related the time frame needed.
Representative Kelly suggested that a three-year extension
would send a strong signal.
3:15:10 PM
Representative Hawker MOVED to ADOPT Conceptual Amendment 1:
Change the date on line 5 from June 30, "2013" to
"2010."
There being NO OBJECTION, it was so ordered.
Representative Gara asked about the removal of the voting
ability of the director. Ms. Davidson explained that
recommendation was based on a policy standpoint.
Co-Chair Meyer mentioned that a new fiscal note would be
needed.
3:18:13 PM
Vice Chair Stoltze MOVED to REPORT HB 155. There being NO
OBJECTION, it was so ordered.
CSHB 155 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a new fiscal note by the
Department of Public Safety.
3:19:58 PM
HOUSE BILL NO. 212
"An Act authorizing the transfer of land from the
Alaska Railroad Corporation to Eklutna, Inc.; and
providing for an effective date."
REPRESENTATIVE ANNA FAIRCLOUGH, co-sponsor, introduced the
bill. She explained that Eklutna has had a quarry with a
stockpile of unusable material for a number of years. This
legislation would authorize the Alaska Railroad Corporation
(ARRC) to transfer its interest in the 48-acre quarry back
to Eklutna, Inc. Issues on the conditional use process have
yet to be worked out. She requested support for the bill to
"right a wrong".
Vice Chair Stoltze agreed that this issue needs to be
resolved.
3:22:13 PM
CURTIS MCQUEEN, DIRECTOR CORPORATE AFFAIRS, EKLUTNA
INCORPORATED, related the history of the Alaska Railroad
Corporation's relationship with Eklutna, Inc. He looked
forward to resolving the issue.
JIM ARNESON, LAND AND REGULATORY MANAGER, EKLUTNA
INCORPORATED, explained how the land management agreement
was reached.
Mr. McQueen related support from Mayor Begich as well as
many others.
Representative Hawker asked about who will end up owning the
$1 million worth of inventory. Mr. McQueen explained the
conditional use process used. He spoke of support from the
railroad.
Vice Chair Stoltze described the importance of Eklutna's
holdings and their commitment to education.
3:29:03 PM
PATRICK GAMBLE, PRESIDENT & CEO, ALASKA RAILROAD
CORPORATION, related the history of the problems and
business issues surrounding the quarry. He shared how he
learned of the village's perspective about the issue and the
need for a cultural solution. He spoke of his journey to
acquaint himself with Eklutna's concerns. He gave an
example of the give and take during the process of transfer.
He testified in support of HB 212.
Vice Chair Stoltze pointed out that the Commissioner of
Commerce is a member of the Board of Directors.
3:35:05 PM
DENNIS FENERTY, GROH EGGERS, LLC, stated that his firm
represents Wells Fargo. He related that Wells Fargo owns
adjoining land to the railroad. A spur bisects Wells
Fargo's parcel. He wondered if the railroad will be
finished with the spur after the rock has been extracted.
He stated concern that the bill not take action that would
affect the spur.
DAN ALEX, CHIEF, EKLUTNA, offered to answer questions.
3:39:16 PM
Representative Hawker asked if the $2 million rock triggers
any section 7(i) Alaska Native Claims Settlement Act (ANCSA)
consequences for Cook Inlet Region, Incorporated (CIRI).
Mr. McQueen reported that they have worked very close with
CIRI, which supports the cultural approach. CIRI has worked
closely with Eklutna on a river restoration project.
Mr. Arneson thought that in 1998 or 1999 Congress changed
the law regarding section 7(i) to exempt gravel from sharing
amongst corporations. Representative Hawker wondered if
there are any residual consequences for Cook Inlet. Mr.
Arneson could not say.
3:43:41 PM
Co-Chair Chenault suggested that further questions be asked
of the organizations involved.
HB 212 was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 3:43 PM.
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