Legislature(2011 - 2012)HOUSE FINANCE 519
02/22/2012 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB279 | |
| HB56 | |
| HB216 | |
| HB264 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 56 | TELECONFERENCED | |
| + | HB 216 | TELECONFERENCED | |
| + | HB 253 | TELECONFERENCED | |
| + | HB 264 | TELECONFERENCED | |
| *+ | HB 302 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 279 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
February 22, 2012
1:39 p.m.
1:39:51 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 1:39 p.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative Les Gara
Representative Mark Neuman
Representative Tammie Wilson
MEMBERS ABSENT
Representative David Guttenberg
Representative Reggie Joule
ALSO PRESENT
Mike Sica, Staff, Representative Bob Lynn; Anne Carpeneti,
Assistant Attorney General, Legal Services Section-Juneau,
Criminal Division, Department of Law; Joe Michel, Staff,
Representative Bill Stoltze; Representative Peggy Wilson,
Sponsor; Representative Cathy Munoz, Sponsor; Bill Rotecki,
Member, Ketchikan Gateway Borough Assembly; Alan Wilson,
Chairman, Juneau Affordable Housing Commission; John
Harrington, Member, Ketchikan Gateway Borough, Planning
Commission and Economic Development Advisory Committee;
Fred Morino, Manager, D.J.G. Development, Juneau; Dave
Hanna, Owner, JLC Properties, Juneau.
PRESENT VIA TELECONFERENCE
Brian Balega, Fire investigator, Municipality of Anchorage
and President, Alaska Association of Fire and Arson
Investigators, Anchorage; John Bond, Deputy Fire Marshal
and Vice President, Alaska Association of Fire and Arson
Investigators, Anchorage; Jeff Tucker, Fire Chief, North
Star Fire Department and Former President, Alaska State
Fire Chiefs Association, North Pole; Leslie Houston,
Director, Division of Administrative Services, Department
of Corrections, Juneau; Douglas Moody, Public Defender
Agency, Department of Administration, Anchorage.
SUMMARY
HB 56 INCLUDE ARSON IN CRIMES OF CONSPIRACY
HB 56 was REPORTED out of committee with a "no
recommendation" and with one new indeterminate
fiscal note from the Department of Corrections,
one new zero fiscal note from the Department of
Public Safety, and one new zero fiscal note from
the Department of Law.
HB 216 REGULATIONS: INFORMATIVE SUMMARY/BILLS
CSHB 216(FIN) was REPORTED out of committee with
a "do pass" recommendation and with one new zero
impact fiscal note from the Office of the
Governor.
HB 253 CATHINONE BATH SALTS
HB 253 was SCHEDULED but not HEARD.
HB 264 MUNI PROPERTY TAX DEFERRAL: SUBDIVISIONS
CSHB 264(CRA) was REPORTED out of committee with
a "do pass" recommendation and with one new zero
fiscal note from the Department of Commerce,
Community and Economic Development.
HB 279 EXTENDING CERTAIN BOARDS & COMMISSIONS
CSHB 279(FIN) was REPORTED out of committee with
a "do pass" recommendation and with four new
fiscal impact notes from the Department of
Commerce, Community and Economic Development, one
new fiscal impact note from the Department of
Public Safety, and one new fiscal impact note
from Department of Natural Resources.
HB 302 REPEAL PICK-CLICK-GIVE AUDIT REQUIREMENT
HB 302 was SCHEDULED but not HEARD.
HOUSE BILL NO. 279
"An Act extending the termination dates of the Board
of Nursing, the Board of Dental Examiners, the Board
of Barbers and Hairdressers, the Big Game Commercial
Services Board, the Alcoholic Beverage Control Board,
and the Alaska Seismic Hazards Safety Commission; and
providing for an effective date."
1:40:16 PM
Co-Chair Stoltze pointed to the fiscal notes related to
each of the boards and commissions under the legislation.
Co-Chair Thomas MOVED to report CSHB 279(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSHB 279(FIN) was REPORTED out of committee with a "do
pass" recommendation and with four new fiscal impact notes
from the Department of Commerce, Community and Economic
Development, one new fiscal impact note from the Department
of Public Safety, and one new fiscal impact note from
Department of Natural Resources.
1:42:25 PM
AT EASE
1:43:46 PM
RECONVENED
HOUSE BILL NO. 56
"An Act making arson in the first degree and arson in
the second degree serious felonies for purposes of
application of the crime of conspiracy."
1:43:46 PM
MIKE SICA, STAFF, REPRESENTATIVE BOB LYNN, explained that
HB 56 added first and second degree arson to Alaska's
conspiracy statute. The sponsors believed that the
implementation of the bill closed a loophole in current law
and would act as strong deterrent to the serious crimes. He
provided a definition for conspiracy: "when two or more
people agree to commit a crime with at least one overt act
to further the conspiracy." He expounded that it would be
considered an overt act if two or more people agreed to set
fire to a building and one of the people bought a match to
further the crime.
Mr. Sica explained that arson in the first degree was a
class A felony; defined as an incident in which a person
intentionally damages property by fire explosion and
recklessly places another person, including the responders
in danger of serious injury. He delineated that under the
legislation conspiracy to commit arson would be a class B
felony. He detailed that arson in the second degree took
place when a person knowingly damages a building by fire or
explosion and was currently a class B felony; under the
legislation the crime would be changed to a class C felony.
He relayed that the bill was strongly supported by Alaska
fire departments, the Alaska Fire Chiefs Association, the
Alaska Peace Officers Association, and the Alaska
Association of Fire and Arson Investigators. The sponsors
felt that it was important to align charges for the offense
with other similar serious offenses.
1:46:13 PM
ANNE CARPENETI, ASSISTANT ATTORNEY GENERAL, LEGAL SERVICES
SECTION-JUNEAU, CRIMINAL DIVISION, DEPARTMENT OF LAW,
believed arson was a reasonable offense to add to the
definition of serious felony for conspiracy because the act
of making the agreement and intent to commit the crime made
it more likely for a crime to take place.
Vice-chair Fairclough asked about the number of arsons
committed annually. She wondered how the addition to
statute would impact Court System caseload.
Ms. Carpeneti replied that arson and conspiracy were not
common crimes. She referenced the decisions under the
conspiracy statute that had been enacted in the early 1980s
and explained that there had only been two or three cases.
She would follow up with the figure at a later time.
Vice-chair Fairclough hoped to understand the impact on the
Court System and the correctional facilities. She pointed
to incidents of personal property damage caused by arson
related to domestic violence and sexual assault.
Ms. Carpeneti referred to data showing that there had been
111 occurrences in Anchorage in 2009.
Co-Chair Stoltze asked whether the occurrences represented
suspicious fires or arsons. Mr. Sica responded that the
figure had been listed as arson under the Anchorage crime
rate statistics. Based on the figure he suspected there had
been hundreds of cases throughout the state.
Representative Doogan asked whether the provision included
under the bill would allow a person to be charged with
conspiracy without having committed arson. Ms. Carpeneti
replied in the affirmative. The conspiracy law allowed for
a separate charge for conspiracy to commit a crime even
though the target crime had not been committed.
1:49:54 PM
Co-Chair Stoltze pointed to the intent to commit murder as
another crime where intent was punishable. Ms. Carpeneti
agreed. She furthered that there were laws for attempt to
commit murder and laws that prohibited solicitation to
commit certain "unfinished" crimes. Current statute
included attempt, solicitation, and conspiracy to commit
crimes.
Representative Gara queried the difference between arson in
the first degree and arson in the second degree. Mr. Sica
replied that arson in the first degree involved recklessly
placing another person in danger of serious physical
injury.
Representative Gara asked for the definition of arson in
the second degree. Mr. Sica communicated that arson in the
second degree involved a person who knowingly damaged a
building by starting a fire or causing an explosion.
Representative Gara wondered whether a group of kids that
did not follow through with a crime after a conversation
about burning down an unoccupied house could be charged
with arson in the second degree under the legislation.
Ms. Carpeneti replied in the negative. She did not believe
the situation would fall under conspiracy either because
there had been no culpable mental state, no overt act, and
no furtherance of the conspiracy.
Representative Gara asked for verification that in order
for a crime to be categorized as conspiracy there had to be
discussion of a crime and at least one overt act towards
committing the crime. Ms. Carpeneti agreed. She reiterated
that there had to be discussion of a crime, intent, and an
overt act in furtherance of the crime.
1:52:14 PM
Representative Wilson referred to the hypothetical
situation presented by Representative Gara and asked
whether all of the kids would be charged with conspiracy if
only two out of the group followed through with the crime.
Ms. Carpeneti replied in the negative. She clarified that
the culpable mental state for conspiracy required intention
of the result. The act of talking about it or being present
when others are talking about it did not meet the elements
of conspiracy.
Vice-chair Fairclough asked whether HB 56 limited the
definition of arson to buildings. Mr. Sica replied that
arson in the first degree included any property. Under
current law, arson in the second degree related to
buildings only.
Ms. Carpeneti added that the statute relating to arson in
the first degree had existed since 1983.
Co-Chair Stoltze referred to a case in which a person had
lit a boat on fire that subsequently burnt down the
adjacent 100-year-old church. Ms. Carpeneti replied that
the incident fell under arson in the first degree.
Vice-chair Fairclough wondered whether the Department of
Law had concerns that the definition of arson in the second
degree was limited to buildings. Ms. Carpeneti was not
aware of any concerns, but noted that there may be fire
marshals with different opinions.
Co-Chair Stoltze noted there would be arson investigators
testifying on the legislation.
Representative Costello wondered whether starting a forest
fire applied to the law. Ms. Carpeneti responded that the
land qualified as property and it would be arson in the
first degree if the fire caused a person harm or the risk
of serious physical injury.
Representative Costello asked whether a camp fire that
resulted in a forest fire because it had not been properly
extinguished would fall under the law.
Ms. Carpeneti replied in the negative; accidentally or
negligently leaving a fire would not apply. She explained
that for conspiracy the intent for a fire to take place was
required, for arson in the first degree a person had to
intentionally damage property, and for arson in the second
degree a person had to knowingly damage a building.
1:55:43 PM
Representative Costello asked how the state dealt with
minors who committed a felony.
Ms. Carpeneti replied that minors under the age of 18 who
committed crimes were typically treated as juveniles; they
were charged with delinquent acts and were not charged with
or convicted of crimes. She relayed that there was an
automatic waiver for 16 and 17-year-olds who committed very
serious crimes.
Representative Gara queried whether minors were judged as
delinquents if they committed a lower level crime such as a
misdemeanor.
Ms. Carpeneti replied that for certain traffic offenses
juveniles could be charged and convicted, such as driving
under the influence; however, most offenses for kids under
the age of 18 were delinquent acts and did not result in
conviction.
BRIAN BALEGA, FIRE INVESTIGATOR, MUNICIPALITY OF ANCHORAGE
AND PRESIDENT, ALASKA ASSOCIATION OF FIRE AND ARSON
INVESTIGATORS, ANCHORAGE (via teleconference), voiced
strong support for the legislation. He believed that arson
was a valid concern for public safety in the state. He
stated that there were many cases in Alaska that were not
properly identified as arson. There were hundreds of fires
in Anchorage annually and because he was the sole
investigator he was only able to investigate an average of
50 to 60 fires per year. He detailed that approximately 25
of his cases in 2010 and 50 of his cases in 2011 had been
arson. He discussed that juvenile fire setting was a
concern; he had arrested 16 juveniles for arson and
wildland fires during the summer of 2009. He explained if
two people conspired to burn a building and one encouraged
the other to commit the crime, under current law it was
probable that only the person actually setting the fire
would be charged.
Mr. Balega believed that the legislation fixed a loophole
in the system and would deter fires by holding all involved
parties accountable for their actions. He opined that the
crime of arson affected all residents of the state on a
personal and financial level. In reference to a prior
question by Representative Wilson he responded that he
would look at holding the kids responsible for setting the
fire accountable, but he would look to determine whether
the other kids helped to plan or had participated in any
other way; he stressed that an overt act would include them
in the conspiracy. He thought the state's arson laws were
narrow in their application, given that they specifically
dealt with property and did not extend to cars and other
items. He had recently talked with the association's vice
president about modifying the arson in the third degree
law; currently setting a vehicle on fire on state or
municipal lands was a class C felony; however, if the
vehicle was in a person's private driveway the offender
could only be charged with something like criminal damage,
criminal mischief, or vandalism. He stressed that his
resources were limited and that there were many vehicle
fires in Anchorage that he had to rely on fire department
officers to deal with.
Mr. Balega explained that the issue of unattended camp
fires turning into wildland fires would most likely be
included in one of the crimes associated with forested
lands currently listed in statute; depending on its
severity the crime could reach the felony level. He
detailed that forested lands had civil attachments that
would allow for double restitution related to the
suppression and other activities of a fire.
2:04:28 PM
Co-Chair Stoltze recalled a prior conversation with Mr.
Balega and asked whether he believed the bill should be
amended. Mr. Balega replied that there had been discussion
about changing the law to apply to "propelled vehicles"
instead of "motor vehicles"; however, there had been
concern from a district attorney that the change may create
constitutional challenges on prior convictions. He wondered
whether DOL thought the law could be changed to read "motor
vehicle and/or propelled vehicle."
Co-Chair Stoltze communicated that the bill would remain as
it was. He communicated that work could be done to
determine another route for the additional item. He asked
whether Ms. Carpeneti concurred. Ms. Carpeneti agreed.
Representative Gara shared that he did not necessarily have
a problem with the bill, given that arson seemed to be
serious enough to fit in with conspiracy crimes. He
referred to the crime of aiding and abetting. He surmised
that a person was already covered under the aiding and
abetting crime if they purchased materials and provided
them to the arsonist. He surmised that conspiracy would
apply to all of the individuals that talked about
committing the crime; whereas, aiding and abetting covered
the person who purchased the materials.
Ms. Carpeneti replied in the affirmative. She expounded
that conspiracy applied to the individuals that talked
about the crime and intended for it to take place. She
explained that whether or not a person could be considered
an accomplice depended on the facts. Other offences
included solicitation and attempt. She discussed that the
harm in conspiracy is that the act of making the agreement
and intent to commit the crime make it more likely for a
crime to take place.
2:08:10 PM
Representative Gara asked for verification that aiding and
abetting resulted from an action, but that conspiracy
occurred when a person just agreed that something should
happen. Ms. Carpeneti replied that the explanation was
correct in most circumstances.
JOHN BOND, DEPUTY FIRE MARSHAL AND VICE PRESIDENT, ALASKA
ASSOCIATION OF FIRE AND ARSON INVESTIGATORS, ANCHORAGE (via
teleconference), spoke in support of the legislation. He
communicated that currently there was no way to charge a
person who conspired to commit arson if they did not
actually take any action related to the crime.
JEFF TUCKER, FIRE CHIEF, NORTH STAR FIRE DEPARTMENT AND
FORMER PRESIDENT, ALASKA STATE FIRE CHIEFS ASSOCIATION,
NORTH POLE (via teleconference), vocalized support for the
bill. The association felt that the legislation closed a
loophole in current statute and could provide a deterrent
for individuals who may consider committing arson.
LESLIE HOUSTON, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF CORRECTIONS (DOC), JUNEAU (via
teleconference), relayed that DOC would monitor its
database to determine whether there were any increases in
arson offences going forward.
Co-Chair Stoltze queried whether DOC had any expectations
or projections related to the indeterminate fiscal note.
Ms. Houston answered that it was not possible for the
department to have any projections at the present time.
There were currently twelve people incarcerated for arson
in the first degree, one person incarcerated for arson in
the second degree, and two people incarcerated for
attempted arson in the first degree. She explained that if
the legislation passed, the department would monitor the
incarceration rates to determine whether it led to any
significant increases to the prison population.
2:12:29 PM
DOUGLAS MOODY, PUBLIC DEFENDER AGENCY, DEPARTMENT OF
ADMINISTRATION, ANCHORAGE (via teleconference), did not
believe the bill would have a significant impact on the
department, given that there were not many arson or
conspiracy cases. He confirmed that in most cases involving
more than one arsonist the extra people involved were
charged with accomplice liability or aiding and abetting.
He did not expect additional cases if DOL made no changes
to its practices because the crime of conspiracy would just
get filed in with the arson cases. He acknowledged the
potential for a case increase and the possibility that
young people could get roped into conspiracy charges where
the extent of their involvement was not clear. He believed
that it would be difficult for a kid to prove that they did
not intend for a crime to actually happen after they had
been present when the idea had been hatched. He relayed
that proving intent was very difficult to discern because
intent could only be inferred, unless both parties
specifically stated that they planned to carry through with
the crime. He discussed that in the case of wildland fires
children could intend to start a fire, but not necessarily
to start a wildland fire. He elaborated that conspiracy
could just grow; there was the potential to apply the
charge to a large group of kids that did not really mean to
start a fire. He relayed that arson in the first degree was
automatically waived for 16 and 17-year-olds. Arson in the
second degree would only be automatically waived under
certain conditions (e.g. if a person used explosives or had
"priors").
2:17:26 PM
Representative Edgmon believed the bill might have more
impact on the juvenile justice system than previously
thought. He wondered whether there would be an impact to
the fiscal note. Mr. Sica was not aware of the bill having
an impact on the juvenile justice system.
Representative Edgmon pointed to prior testimony and
thought there could be potential costs due to increased
cases. He communicated that he could have been missing some
of the information on the issue.
Co-Chair Stoltze noted that it was the departments'
responsibility to provide fiscal notes if they believed a
bill would cause a financial impact.
Ms. Carpeneti confirmed that arson in the first degree was
an automatic waiver for 16 and 17-year-olds. She clarified
that the bill should not have a disparate impact on
juvenile justice procedures. She elaborated that there were
not many conspiracy prosecutions in Alaska potentially due
to a lack of evidence or conspiracies. She detailed that
"chest beating" by young kids was not the same as intent
for a crime to be committed. She agreed that it was
unlikely that a significant number of prosecutions would
result from the passage of the bill.
Representative Gara believed there were positive and
negative aspects of the conspiracy law. The negative
component was that a child would have a hard time
convincing a jury that they did not intend to commit
conspiracy. The positive aspect was that it was more likely
the prosecution would succeed if there was a conspiracy
law, given that there was a larger pool of people to
provide evidence.
2:21:23 PM
Mr. Moody explained that it all depended on the
perspective. The advantage of a conspiracy statute was that
it could be broad; the defendant did not have to be the
person that committed the act; an agreement that could be
inferred from conduct was all that was necessary. He did
not know whether there would be a substantial advantage
added related to "rolling individual defendants from the
group." He believed that the police were effective
investigators because they were capable of "rolling people"
during the course of their investigations.
Ms. Carpeneti added that the prosecution had to prove that
a person committed a crime beyond a reasonable doubt; the
defendant did not have to say or prove anything.
Co-Chair Stoltze CLOSED public testimony.
Representative Wilson discussed that it was hard to know
the impact of the bill when the number of arson cases were
not readily available.
Ms. Carpeneti replied that she could follow up with the
data. She referenced Leslie Houston's testimony that there
were twelve individuals currently incarcerated for arson in
the first degree and one incarcerated for second degree.
She thought it was fairly clear that Alaska did not have
many prosecutions for arson; the cases were difficult to
prove because many times the evidence was destroyed in the
fire.
Representative Wilson was concerned about the intent
portion of the conspiracy law. Ms. Carpeneti replied that
there was a provision in statute for renunciation of a
crime, which was a defense against the crime of arson.
2:26:03 PM
Representative Doogan found it almost impossible that there
was no legal recourse against someone who hired a person to
burn a building down. He understood that it could be easier
if the bill passed, but he opined that many things would be
easier in the criminal justice system if the law allowed
it. He believed the issue was a balancing act and discussed
whether the benefit outweighed the gain to individuals'
civil rights. He did not believe a solid case had been made
for the proposed change. He discussed that the legislature
had been stiffening up the penalties for many of the items
it had been presented with. He believed that at some point
the practice needed to be stopped and surmised that given
the facts and numbers that had been presented perhaps the
current bill was the place to start.
Co-Chair Stoltze remarked that the discussion was relevant.
Representative Gara referred to the federal government
conspiracy law "RICO" that had been passed in order to get
a person to come forward with information about a crime
(specifically related to mafia crime). He believed that the
legislature should take a look at the conspiracy law at
some point in the future. He believed that arson was
serious enough that it should fit under the conspiracy law.
He wondered whether all property crimes were second degree
felonies. He thought it could be possible to save money
related to jail time and prosecution on the second degree
arson cases.
Co-Chair Stoltze asked whether the charges related to the
value of property and also the risk of life.
Representative Gara clarified that risk of life fell under
arson in the first degree. He wondered whether the penalty
for arson in the second degree could be reduced for
properties that were worth a small amount.
Ms. Carpeneti replied that arson in the second degree dealt
with damages to a building from a fire or explosion. Arson
in the third degree related to exploding a vehicle and
criminally negligent burning related to crimes that caused
less damage. She communicated that statutes did not include
monetary values under the various arson crimes. She
furthered that criminally negligent burning in the second
degree occurred when a person with "the culpable mental
state of criminal negligence damages property by fire or an
explosion," which was a class A misdemeanor. Criminally
negligent burning in the first degree applied to
individuals who had a prior offence in the previous ten-
year period. She believed a crime that involved a small
amount of damage would be charged as a misdemeanor under
criminally negligent burning.
2:31:41 PM
Co-Chair Thomas MOVED to report HB 56 out of committee with
individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
HB 56 was REPORTED out of committee with a "no
recommendation" and with one new indeterminate fiscal note
from the Department of Corrections, one new zero fiscal
note from the Department of Public Safety, and one new zero
fiscal note from the Department of Law.
2:32:36 PM
AT EASE
2:34:50 PM
RECONVENED
HOUSE BILL NO. 216
"An Act relating to deadlines in bills directing the
adoption of regulations and to the informative summary
required for the proposed adoption, amendment, or
repeal of a regulation."
2:35:05 PM
Co-Chair Thomas MOVED to ADOPT proposed committee
substitute for HB 216, Work Draft 27-LS0701\S (Bannister,
2/22/12).
Co-Chair Stoltze OBJECTED for discussion.
JOE MICHEL, STAFF, REPRESENTATIVE BILL STOLTZE, explained
that the CS made three changes to the original bill. On
page 2, line 8 the words "furnishes or otherwise provides
a," were inserted. Language had been removed from page 2
line 12 through 13 that stated "that is posted on the
Alaska online public notice system or furnished in an
electronic format under AS 44.62.190 (a)." On Page 2, lines
14 through 16 the following language had been inserted:
"however, if under AS 42.62.190 (a) the notice is
published in a newspaper or trade or industry
publication or is broadcast, this subsection does not
require that the brief description otherwise required
by the subsection accompany the publication or the
broadcast."
Representative Doogan asked for further explanation of the
insertion and deletion on page 2.
Mr. Michel deferred the question to Representative Peggy
Wilson.
REPRESENTATIVE PEGGY WILSON, SPONSOR, introduced her staff.
She clarified that the addition required the department to
provide a brief description of the regulation in layman's
terms; however, the description would be excluded from
newspapers, state publications, and radio announcements
because charges were incurred on a per word, per line, and
per minute basis respectively.
Representative Neuman thought that the point of the bill
was to provide the public with a better understanding of
the changes in regulations. He understood that there was a
cost, but believed the public should be aware of changes in
regulations that could potentially impact them.
Representative Peggy Wilson explained that the bill dealt
with two frustrations relating to the process of creating
or changing state regulations: (1) state agencies often did
not write regulations in a timely fashion. She relayed that
on occasion regulations had not been completed by the time
the scheduled effective date arrived. She cited an example
related to Alaska's Clear and Equitable Share (ACES) and
explained that the regulations had not been finished five
years after the legislation had been implemented;
therefore, producers were not clear on what was required
under the law and it had presented difficulty when looking
at a proposed oil tax law (HB 110) the prior year. The bill
would help legislators and members of the public to
understand what the changes to proposed regulations meant;
(2) the bill would ensure that all new regulations and
changes to current regulations would be accompanied by a
brief descriptive summary written in layman's terms. The
sponsor had worked with community members, legislators, and
the Department of Law to develop clear and concise
language. Section 1 specified that the deadlines for
adopting and amending or appealing regulations were set by
departments and agencies, which would be included on fiscal
notes. She relayed that agencies would be held accountable
for meeting the deadlines and would be required to report
to a regulations review committee if the deadline was
missed; they would also be required to set a new deadline.
2:42:48 PM
Representative Peggy Wilson discussed that state boards
that met infrequently would not be subject to the
regulation review committee requirement. She listed
agencies that were required to meet the deadlines due to
frequent interactions with the public and legislature: the
Alaska Housing Finance Corporation, the Alaska Industrial
Development and Export Authority, the Alaska Public Offices
Commission, and the Alaska Oil and Gas Conservation
Commission. Language had been inserted in Section 2
specifying that the brief description was targeted at
emails and online notices. She reiterated that the bill had
removed the newspaper, trade or industry publications, and
broadcasting announcements from the requirements. She
expounded that a significant amount of communication
related to the issue was done via email and online.
Representative Peggy Wilson highlighted that Section 2
clarified that individuals could not take action against an
agency if they misunderstood the brief description that had
been provided. Sections 3 and 4 stated that the
requirements applied only to legislation filed after the
effective date of July 1, 2012.
Co-Chair Stoltze WITHDREW his OBJECTION. There being NO
further OBJECTION, Work Draft 27-LS0701\S was ADOPTED.
Representative Neuman discussed that many members of the
public received their information about regulation changes
from the media. He cited a specific case in his district
related to changes to animal cruelty regulations. He
wondered how people would know whether they were in
compliance with the law or how it would impact them.
Representative Peggy Wilson responded that people would be
informed much like they were currently, given that
newspaper and broadcast announcements would be required to
specify where the description was located. She added that
unfortunately the bill did not solve the problem entirely
because some areas did not have internet access. She
thought that individuals without internet could potentially
contact their legislators to receive the description.
Representative Neuman surmised that the point of excluding
the brief description from newspapers, state publications,
and radio announcements was to save the departments money.
Representative Peggy Wilson replied in the affirmative. She
explained that the description could get lengthier
dependent upon the subject matter, which could become
expensive to publish. She explained that they had not been
able to determine the exact cost, but the goal was to keep
the cost to a minimum. She added that the departments
already articulated the intent internally and adding the
description to the public notices should be relatively
simple.
2:48:42 PM
Co-Chair Stoltze ClOSED public testimony.
Representative Doogan thanked Representative Peggy Wilson
for bringing the bill forward. He supported legislation
that made government business more accessible to the
public.
Representative Neuman believed that the intent of the
legislation was to ensure that the public was informed. He
was concerned that the departments did not have to provide
the description in print. He opined that the change was a
step backwards.
Representative Peggy Wilson reiterated that the departments
would be required to provide the description online and in
emails and that the exclusion only applied to broadcast
information due to costs. The goal was to provide the
public with a better understanding of any changes.
Representative Neuman supported the bill, but believed that
the information should be included in the broadcast
announcements and print media as well.
Representative Tammy Wilson asked for a brief description
between print versus email.
Representative Peggy Wilson replied that there were three
exceptions including, newspapers, trader industry
publications, and broadcast. The description would be
included in emails and in published documents sent by mail.
The goal was to save the state money by not requiring the
departments to pay for publishing the description.
Co-Chair Stoltze supported the legislation.
Representative Peggy Wilson responded that the bill would
have to go through the Senate as well and she would change
the bill if the Senate was receptive to the idea of
including the description in print media.
2:55:26 PM
Co-Chair Thomas MOVED to report CSHB 216(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
Co-Chair Stoltze discussed the zero impact fiscal note from
the Office of Management and Budget.
CSHB 216(FIN) was REPORTED out of committee with a "do
pass" recommendation and with one new zero impact fiscal
note from the Office of the Governor.
2:55:51 PM
AT EASE
2:56:36 PM
RECONVENED
HOUSE BILL NO. 264
"An Act allowing a deferral of municipal property
taxes on the increase in the value of real property
attributable to subdivision of that property; and
providing for an effective date."
2:57:06 PM
REPRESENTATIVE CATHY MUNOZ, SPONSOR, explained that HB 264
would give municipalities the option to provide an
incentive to develop land for housing by deferring for up
to five years a property tax increase directly related to
the subdivision of a piece of property into three or more
lots. She elaborated that there was a limited land base in
Juneau, which resulted in limited new housing
opportunities. She detailed that when a developer purchased
a piece of land and began the subdivision process as soon
as the surveying and planning paperwork was filed the
property was reassessed at a rate that could be between 5
and 10 times the predevelopment cost before any work had
occurred on the property. She stressed that the issue was
an incredible disadvantage and disincentive for new housing
development especially in communities faced with limited
housing opportunities.
Representative Munoz continued to explain the legislation.
The bill would provide municipalities the flexibility to
defer increases in property taxes on subdivided parcels
until a lot was sold or until a residential or commercial
building was constructed on a plot of land. The local
government would be allowed to adopt an optional deferral
for all or a portion of the subdivided property and could
decide the terms of paying the tax deferral. She
communicated that supporters of the legislation believed
that it would provide an incentive for developing privately
owned property by holding taxes at the undeveloped land
value until improvements occurred that led to the
development or sale of the parcel. The land would then be
more valuable and capable of generating more revenue for
the local community.
Representative Munoz delineated that the purpose of the
bill was to encourage land development and more housing
opportunities and to let local governments decide whether a
property tax deferral would benefit the community. She was
sensitive to the concerns of local municipalities related
to exemption legislation and the passing on of unfunded
liabilities to cities; the bill would not impose the burden
on local municipalities. The sponsor had worked closely
with the Alaska Municipal League (AML). She expounded that
the deferral was optional and that property taxes would
ultimately be due when the property was sold or developed.
She informed the committee that the assistant state
assessor and others were available to testify.
Co-Chair Stoltze appreciated the process that had led to
the bill. He had been slightly disappointed that the bill
only included a deferral, but he understood that it had
been crafted carefully.
3:01:18 PM
Vice-chair Fairclough MOVED CSHB 264(CRA) as a working
document before the committee.
BILL ROTECKI, MEMBER, KETCHIKAN GATEWAY BOROUGH ASSEMBLY,
spoke in support of the legislation. He discussed that the
issue had come up as a suggestion when the borough had done
an economic development survey that included the housing
industry. He explained that local builders would be more
inclined to subdivide parcels before selling them if taxes
could be deferred for five years or until the property was
sold. He relayed that Ketchikan would face a housing
shortage if the local shipyard was awarded the contract to
build new state ferries or if new mining opportunities
arose. He elaborated that building housing to meet the
needs of any of the possibilities would take time. The
borough did not want individuals moving to the community to
have to commute from another location due to a lack of
housing options. He opined that under the legislation the
municipality would most likely gain rather than lose. He
furthered that the community could not lose tax revenue
that it did not already have, but the revenue would be
generated if the subdivision of property occurred.
3:04:30 PM
ALAN WILSON, CHAIRMAN, JUNEAU AFFORDABLE HOUSING
COMMISSION, voiced support for the bill. He relayed that
the Juneau Assembly had established the Juneau Affordable
Housing Commission in 2007 to address local housing issues.
The commission had worked on multiple items including
comprehensive planned issues, density overlays, free gravel
for site improvement, and other. He relayed that the
commission had looked at tools utilized by communities in
the Lower 48 that allowed them to develop a region or to
target specific types of housing; the deferral of property
taxes had been a strategy used by other communities.
Carrying costs over time was a burden to developers and
could result in a loss of property.
Mr. Wilson communicated that HB 264 was the first tool in
the toolbox that private developers could utilize directly.
The commission viewed the tax deferral as an economic
development tool versus a housing tool; however, anything
that would help address Juneau's housing vacancy rate that
was currently less than 1 percent would be beneficial.
Co-Chair Stoltze thought the problem was about a cash flow
issue; builders did not want to put out cash prior to
making money. Mr. Wilson replied in the affirmative.
Vice-chair Fairclough asked whether the commission had
asked the city assessor's office why the price of property
was increased immediately after it was subdivided and
whether it would consider stair-stepping the tax increase.
Mr. Wilson answered that the commission had asked the local
assessor why tax costs could not be deferred. The response
had been that according to state statute all property must
be valued fairly. He explained that a ten acre parcel could
be valued below a one acre parcel, but once the ten acre
property was subdivided the value and desirability of the
parcels increased.
Co-Chair Stoltze noted that there were a number of strong
state assessor laws. Mr. Wilson agreed.
3:09:09 PM
JOHN HARRINGTON, MEMBER, KETCHIKAN GATEWAY BOROUGH,
PLANNING COMMISSION AND ECONOMIC DEVELOPMENT ADVISORY
COMMITTEE, spoke in favor of the legislation. He relayed
that the entities had interviewed local business sectors
who had been developing economic development action plans.
The borough assembly had adopted approximately one-third of
the plans, one of which was the same proposal encompassed
in the bill. The assembly had been told that the proposal
was not legal under current law; therefore, the
introduction of the bill had received broad support.
Co-Chair Stoltze asked whether the borough had separate
property tax levies from the Cities of Ketchikan or Saxman.
Mr. Harrington replied in the negative.
Vice-chair Fairclough believed that the legislation
impacted several groups including the homebuilders and the
homeowners. She surmised that the homeowner would pay a
smaller amount of taxes depending on how quickly they
purchased a lot on a subdivided property and created a
different type of ownership from one where liens would be
placed on each lot based on tax deferred by the year. She
provided a scenario in which a ten acre lot was divided
into 10 parcels; only one of the lots sold in the first
year. She asked whether under the scenario the homeowner
would only be responsible for one year of deferred taxes in
their purchase price.
Mr. Harrington replied in the affirmative.
Vice-chair Fairclough had concerns about how the
repercussions of a developer that went bankrupt would
impact homestead property owners that carried the note
themselves. In the event of the bankruptcy she wondered
whether the homesteader would be responsible for any
deferred taxes on the subdivided parcel. She was concerned
that if a bank was responsible that it would be second in
line to the government take.
Mr. Harrington replied that he was not the appropriate
person to answer the question. He added that the situation
in the Ketchikan Gateway Borough involved landowners
interested in subdividing their properties. He explained
that the typical situation involved remaining land on
subdivided property that was developed at a later time and
did not match the look of the prior development. He
believed that it made much more sense to allow the
landowner time to implement a plan for the entire
development and to proceed systematically.
3:14:38 PM
Vice-chair Fairclough agreed, but surmised that the
homeowner could have $10,000 of additional costs built into
a property they were purchasing depending on the amount of
the deferred property tax. She understood that the bill
made the process easier for developers and that cities
would receive their share as well, but she had questions
remaining related to the homeowner.
Co-Chair Stoltze noted that subdivision costs were a big
revenue generator for the Municipality of Anchorage.
3:15:57 PM
FRED MORINO, MANAGER, D.J.G. DEVELOPMENT, JUNEAU, supported
the legislation. He believed the bill would provide a
positive economic impact statewide for homeowners,
municipalities, and developers.
3:16:37 PM
DAVE HANNA, OWNER, JLC PROPERTIES, JUNEAU, voiced support
for the bill. He referred to communication with
representatives from several banks who saw the bill as a
great incentive for development. He had worked with
multiple homebuilding associations including Alaska General
Contractors and everyone had been in favor of the proposal.
He addressed that AML had concerns but the entity believed
that given the bill's flexibility the proposal was tailored
to suit every city's needs; communities could use the
deferral as a tool to encourage development. The bill was
more than a cost saving measure; it could be used to steer
the desired development. He detailed that the incentives
could be offered to a developer who was willing to create
the lot sizes the city wanted or to include features like a
bus stop or a park.
Mr. Hanna believed the bill would help developers who were
"hanging out to dry." He explained that the development of
a subdivision was a drawn out, expensive process. He
communicated that people typically did not enter the
business without a good incentive and a healthy demand for
lots. He pointed to building cycles that occurred and
relayed that some developers looking to take advantage of a
good market were experiencing a significant financial
burden because the subdivision process was lengthy and the
market and demand fell before the lots could be sold. The
taxes were a tremendous disincentive for development and he
believed lessening the burden would be good for the
economy. He had submitted an example showing that if a
subdivision had been bought two years earlier than it
normally would have, it would be a net revenue increase to
the municipality because taxes were higher on houses than
on raw land.
3:20:48 PM
Vice-chair Fairclough asked which financial institutions
had been communicated with. Mr. Hanna replied that the
institutions included Alaska Pacific Bank, True North
Federal Credit Union, and First Bank in Ketchikan.
Co-Chair Stoltze remarked there had been a large housing
development planned in one of his precincts until the
economy had taken a downturn. He observed that the bill had
far reaching impacts.
Vice-chair Fairclough was supportive of the concept before
the committee, but she reiterated her concern about
homeowners in her district that were dealing with the
ramifications of a bankruptcy. She believed the proposal
was an excellent idea and that the sponsor had created
flexibility in the way the state would pass the law;
however, she wanted a more detailed understanding of the
bankruptcy process in order for municipalities to factor it
into their implementation of the law.
Mr. Hanna relayed that based on conversations with the
state and local assessor's offices he understood that
municipalities could take a second position if desired. He
elaborated that the tax liability by law could stay with
the owner of record, but the municipality could also choose
to defer the liability to prevent it from transferring to
another person in the event of a bankruptcy.
Vice-chair Fairclough understood that the flexibility
existed, but she guessed that in her municipality the
government would take its cut first. She shared that when
the government took its cut on a foreclosure or bankruptcy
it meant that the Anchorage property tax payers would be
accepting the burden and risk. She believed the state
framework in the bill worked fine, but the devil was in the
details related to who the responsible party was if the
developer went bankrupt.
3:24:30 PM
Co-Chair Stoltze CLOSED public testimony.
Representative Munoz read from a letter she had received
from Juneau commercial banker Jerry Kromer:
From a lending perspective the increased cash outflow
needed to carry the property taxes on the full final
value of the lots without being matched to the timing
of the cash inflow when the lots are sold creates
greater risk to the lender. Risk is compensated in two
ways: higher rates for borrowing and/or lower loan
amounts, each of which adds to the costs to the end
purchaser of the lot and higher housing or commercial
prices without real increased benefit to the developer
or to the lender. Through the higher costs and
reductions in the amount of development that could
have been done, the taxing authority is in my opinion
getting less revenue through less eventual
development.
Representative Wilson asked whether the tax deferral
stopped at the beginning of a housing project or upon
completion. Representative Munoz answered that the tax
liability would be due when the lot sold within the initial
five year period or it would require the building to be
completed if there was not a building permitting process.
Representative Wilson noted that there was not a permitting
process in Fairbanks and asked for verification that the
developer would not pay the deferred tax until the house
was completed.
Representative Munoz replied that either the sale of the
lot or the construction of the building would occur before
the tax deferral ended.
Co-Chair Stoltze referred to the zero fiscal note.
Co-Chair Thomas MOVED to report CSHB 264(CRA) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 264(CRA) was REPORTED out of committee with a "do
pass" recommendation and with one new zero fiscal note from
the Department of Commerce, Community and Economic
Development.
HOUSE BILL NO. 302
"An Act repealing certain audit requirements for
entities receiving contributions from permanent fund
dividends."
HB 302 was SCHEDULED but not HEARD.
HOUSE BILL NO. 253
"An Act classifying certain substances as schedule IIA
controlled substances; and providing for an effective
date."
HB 253 was SCHEDULED but not HEARD.
ADJOURNMENT
3:28:23 PM
The meeting was adjourned at 3:28 PM.