Legislature(1993 - 1994)
03/25/1993 08:37 AM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 25, 1993
8:37 a.m.
TAPE HFC 93-60, Side 1, #000 - end.
TAPE HFC 93-60, Side 2, #000 - end.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee to order
at 8:37 a.m.
PRESENT
Co-Chair Larson Representative Hoffman
Co-Chair MacLean Representative Martin
Vice-Chair Hanley Representative Navarre
Representative Brown Representative Parnell
Representative Foster Representative Therriault
Representative Grussendorf
ALSO PRESENT
Representative Brice; Representative Nordland;
Representative MacKie; Mike Greany, Director, Legislative
Finance Division; Arthur H. Snowden, II, Administrative
Director, Alaska Court System; Tam Cook, Director,
Legislative Services Division; Gerald J. Dorsher, Veterans
of Foreign Wars; Drew Scalzi, Kenai Peninsula Borough
Assembly; Vicky Borrego Catholic Community Service; Sherrie
Goll, Alaska Women's Lobby; Kent Swisher, Alaska Municipal
League; Ruth Gubyas, Older Alaskans Commission.
SUMMARY INFORMATION
HB 66 "An Act relating to municipal property tax
exemptions for certain residences and to property
tax equivalency payments for certain residents;
and providing for an effective date."
CSHB 66 (FIN) was reported out of Committee
with"no recommendation" and with two zero fiscal
notes by the Department of Community and Regional
Affairs and with a zero fiscal note by the
Department of Administration and with a fiscal
impact note by Department of Education.
HB 67 "An Act relating to eligibility for and payments
of public assistance; and providing for an
effective date."
HB 67 was HELD in Committee.
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HB 151 "An Act relating to payment by indigent persons
for legal services and related costs; and
providing for an effective date."
CSHB 151 was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note
by the Alaska Court System, dated 2/24/93 and with
two zero fiscal notes by the Department of
Administration and with a fiscal impact note by
the Department of Law.
HOUSE BILL NO. 66
"An Act relating to municipal property tax exemptions
for certain residences and to property tax equivalency
payments for certain residents; and providing for an
effective date."
Members adopted Work Draft 8-GH1032\R, 3/15/93 during the
March 18, 1992 House Finance Committee meeting (Attachment
1).
Co-Chair MacLean noted that members had received two
amendments from Representative Brown. Amendment 1 adds a
new section to create a mandatory low income deferral
program for seniors, disabled veterans, and widows on the
first $150.0 thousand dollars of the assessed value of real
property (Attachment 2). Amendment 2 gives municipalities
the option to add hardship language to either the exemption
program or the deferral program (Attachment 3). She noted
that members also received a memorandum from Tam Cook,
Director, Legislative Services Division (Attachment 4). Co-
Chair MacLean also referenced a letter from Marjorie Odlund,
Assistant Attorney General (Attachment 5).
Co-Chair MacLean indicated that she supported Amendment 2.
She felt municipalities should be given the option to offer
hardship deferments. She explained that Amendment 2 would
allow the municipalities to develope local ordinances to
defer or exempt senior citizen or veterans from property
tax. She relayed that the Legal Services Division advised
that the two amendments are incompatible.
GERALD DORSHER, VETERANS OF FOREIGN WARS spoke against HB
66. He asked that the Senior Citizen and Veterans Property
Tax Exemption Program be kept intact. He emphasized that
veterans may lose their state death gratuity. He noted that
federal taxes on heating will also hurt veterans and other
fixed income persons.
Co-Chair Larson noted that Amendment 2 would allow
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municipalities to continue the tax exemption or institute a
deferment. Co-Chair MacLean observed that municipalities
would define "hardship" through ordinances.
Co-Chair Larson reviewed the Senior Citizen and Veterans
Property Tax Exemption Programs. He noted that the programs
were begun around 1973. The State fully funded the programs
until 1985. Since then the municipalities have had to fund
the portion not funded by the State of Alaska.
Municipalities have requested that the State fully fund the
programs or give them the option to fund the programs. The
program cost approximately $9 million dollars in FY 93.
Two-thirds of the FY 93 program cost was carried by the
municipalities.
DREW SCALZI, KENAI PENINSULA BOROUGH ASSEMBLY spoke in
support of HB 66. He noted that state funding of the
mandatory exemption has been steadily declining each year.
He observed that municipalities only received 20 percent of
the total amount exempted in 1992. He emphasized that
municipalities should be given the opportunity to draft an
exemption ordinance. He added that voter approval should be
included. Mr. Scalzi supported a January 1, 1994 effective
date and exclusion for full value determination.
Co-Chair MacLean observed that under CSHB 66 (FIN)
municipalities have the option to exclude full value
determination. She added that the effective date of CSHB 66
(FIN) is January 1, 1994.
KATE SWISHER, ALASKA MUNICIPAL LEAGUE expressed support for
HB 66. He spoke in support of Amendment 2. He emphasized
that the Alaska Municipal League will assist local
governments in creating programs. He reiterated that
municipalities are paying 80 percent of the program. He
stated that the Alaska Municipal League would prefer that
the program be fully funded by the State of Alaska.
Representative Brown asked if the Alaska Municipal League
could live with the mandatory deferral. Mr Swisher felt
that the majority of municipalities would be able to
institute the mandatory deferral.
Representative Martin asked if the assess value should be a
formula to allow for area differentials and inflation.
Mr. Swisher stated that the Alaska Municipal League would
prefer that no specific level be established. He noted that
municipalities could exempt more than the first $150.0
thousand dollars.
Representative Martin MOVED to ADOPT, Amendment 2.
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Co-Chair MacLean reiterated that Amendment 1 and Amendment 2
are not compatible. Representative Brown questioned the
amendments incompatibility.
PAM COOK, DIRECTOR, LEGISLATIVE SERVICES DIVISION clarified
that Amendment 1 would provide a mandatory deferral with an
income cap in lieu of an optional deferral. Municipalities
would have an obligation to provide a deferral for low
income seniors and veterans. In addition, municipalities
would have the option of exempting property for categories
of individuals without the income test. The optional
deferral portion of CSHB 66 (FIN) is deleted by Amendment 1.
She noted it would be possible to layer an optional deferral
on Amendment 1.
Representative Martin asked if Amendment 1 should be split.
Ms. Cook explained that she could reconcile Amendments 1 and
2 if both are adopted.
Representative Brown asked if the deletion of "Page 3, lines
9 - 31: Delete all material" would allow an optional
deferral, a mandatory deferral and an optional exemption.
Ms. Cook agreed that such an amendment to Amendment 1 would
allow an optional deferral, a mandatory deferral and an
optional exemption.
Representative Hanley noted that Amendment 1 would determine
the income level for deferrals. He asked if municipalities
could deferral assessed property at a higher value than
$150.0. Ms. Cook explained that under Amendment 1,
municipalities would not be able to change the level of
deferral or the classification of qualified individuals. If
an optional deferral is added, municipalities could defer
seniors and veterans whose income is above the mandatory
level. Under Amendment 2 municipalities would have
flexibility to defer at any level they wished seniors and
disabled veterans.
Representative Brown stated that a mandatory exemption must
be accompanied by a dollar amount. Ms. Cook agreed that
municipalities must be told specifically what they are
mandated to defer.
Representative Martin asked if a formula could be used. Ms.
Cook agreed that a formula could be devised. Representative
Martin expressed his concern that rural areas could feel
they were being discriminated against. Ms. Cook emphasized
that tax codes use the same specific dollar amounts across
the board, statewide.
Representative Martin WITHDREW HIS MOTION. There being NO
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OBJECTION, the motion was withdrawn.
Representative Brown MOVED to AMEND, Amendment 1, to delete
"Page 3, lines 9 - 31: Delete all material." She explained
that Amendment 1, as amended, would provide a mandatory
floor for defer of low income seniors and veterans and an
optional exemption or deferral of others. There being NO
OBJECTION, it was so ordered.
Representative Hanley expressed support for Amendment 2.
Representative Grussendorf felt that municipalities would
have difficulty instituting programs unless guidelines are
provided.
Representative Brown emphasized that the over-riding
consideration is to provide a safety net to the poorest
people. She urged the Committee to not force individuals
out of their homes. She stressed that a new property tax
will be a problem to many individuals on a fixed income.
She acknowledged that many municipalities are moving in the
direction of providing deferrals.
Mr. Swisher, in response to a question from Co-Chair Larson,
stated that the Alaska Municipal League preference is for a
minimum of mandates and maximized flexibility. He
acknowledged that Amendment 1 is less onerous than other
options.
Representative Grussendorf noted that he has been a member
of the Alaska Municipal League. He observed that if there
is legislation that is "too wide open, then there is a
tendency for nothing to happen." He felt that it would be
easy to ignore the need without specific guidelines. Mr.
Swisher felt that seniors and veterans groups would pressure
local governments to address the issue.
(Tape Change, HFC 93-60, Side 2)
Representative Brown MOVED to ADOPT Amendment 1. A roll
call vote was taken on the motion.
IN FAVOR: Brown, Foster, Grussendorf, Hoffman, Navarre
OPPOSED: Hanley, Martin, Parnell, Therriault, MacLean,
Larson
The MOTION FAILED (5-5).
Representative Brown MOVED to ADOPT Amendment 2. There
being NO OBJECTION, it was so ordered.
Representative Brown referred to the effective date. She
asked how the effective date relates to the fiscal notes.
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She noted that the State would be responsible for half a
year of support to the exemption. Representative Martin
noted that taxes are collected on the calendar year.
Representative Brown asked what is the intention for the
first half of FY 94 in regards to reimbursing
municipalities. Co-Chair Larson emphasized that the
legislature must decide if they are going to appropriate for
a half a year. Representative Brown asked for an
explanation of the zero fiscal notes. Co-Chair Larson noted
that fiscal notes reflect the Governor's proposed zero
funding.
Representative Navarre asked if the tax exemption is
prospective or retrospective.
Representative Martin MOVED to report CSHB 66 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. Representative Brown OBJECTED.
She emphasized that the bill should stay in Committee until
an option is developed which will protect poor persons. She
stressed that programs aiding low income people are
receiving reductions in other areas of the budget. She
asserted that the State will incur other costs as a result
of the legislation. She maintained that individuals will
"fall threw the cracks" as a result of the legislation.
A roll call vote was taken on the motion.
IN FAVOR: Grussendorf, Hanley, Martin, Parnell, Therriault,
MacLean, Larson
OPPOSED: Navarre, Brown
The MOTION PASSED (7-9).
Representatives Foster and Hoffman were absent from the
vote.
CSHB 66 (FIN) was reported out of Committee with"no
recommendation" and with two zero fiscal notes by the
Department of Community and Regional Affairs and with a zero
fiscal note by the Department of Administration and with a
fiscal impact note by Department of Education.
HOUSE BILL NO. 151
"An Act relating to payment by indigent persons for
legal services and related costs; and providing for an
effective date."
House Bill 151 was in a subcommittee consisting of Chair
Representative Hanley with members Representatives Parnell,
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MacLean and Hoffman.
Representative Hanley explained changes made by the
subcommittee. Changes were made to ensure that indigent
people would not be charged for facilities not paid for by
non-indigent.
Co-Chair Larson MOVED to ADOPT, Work Draft 8-LS061\J, dated
33/17/93. Members discussed the meaning of "facilities".
There being NO OBJECTION, Work Draft 8-LS061\J, dated
33/17/93 was adopted.
ARTHUR H. SNOWDEN, II, ADMINISTRATIVE DIRECTOR, ALASKA COURT
SYSTEM explained the Supreme Court asked that legislation be
introduced to recover costs incurred by indigent. He
asserted that indigent are protected by language in the
legislation allowing deferment for "manifest hardship." The
Court maintains that "upon the person's conviction" should
be deleted.
Representative Hanley pointed out that enforcement of
judgments can be stayed. He emphasized that extra
protection has been added for indigent people.
Representative Brown stressed that the provision which would
delay repayment for three years after incarceration has been
deleted. She asked if persons should have more time to
reestablish themselves after release. She emphasized the
difficulty of individuals to transition back into society.
Mr. Snowden noted that some individuals will only serve 30
to 90 days. He stressed that the collection delay would
cause difficulties in the Department of Law. He maintained
that some individuals may have money at the time of trail
that is hidden from the court.
Representative Therriault stressed that due to civil
exclusion a judge could not go after an individuals "last
penny". He felt that there is no reason the State should
wait three years to recoup the costs of some one who spent
30 days in jail for a DWI.
Representative Grussendorf spoke in support of maintaining
"upon the person's conviction".
Mr. Snowden clarified, in response to a question from
Representative Parnell, that a "no contest" plea would be
considered a conviction in regards to cost recover.
Representative Navarre MOVED to TABLE CSHB 151 (FIN).
Representative Martin OBJECTED. Representative Navarre
WITHDREW HIS MOTION. Representative Brown MOVED to TABLE
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CSHB 151 (FIN). A roll call vote was taken on the motion.
IN FAVOR: Grussendorf, Navarre, Foster, Hanley, Martin,
Parnell, Therriault MacLean, Larson
OPPOSED: Brown
Representative Hoffman was absent from the vote.
The MOTION FAILED (9-1).
Representative Martin MOVED to report CSHB 151 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. Representative Brown OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Grussendorf, Navarre, Foster, Hanley, Martin,
Parnell, Therriault MacLean, Larson
OPPOSED: Brown
Representative Hoffman was absent from the vote.
The MOTION FAILED (9-1).
CSHB 151 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note by the
Alaska Court System, dated 2/24/93 and with two zero fiscal
notes by the Department of Administration and with a fiscal
impact note by the Department of Law.
HOUSE BILL NO. 67
"An Act relating to eligibility for and payments of
public assistance; and providing for an effective
date."
VICKY BORREGO, LEGISLATIVE LIAISON, CATHOLIC COMMUNITY
SERVICE spoke in opposition to HB 67. She stressed that HB
67 would:
* Reduce the amount of public assistance grants
Alaskan families may receive.
* Take out any cost of living allowances available
through the law beginning January 1, 1994.
* Rollback public assistance benefit levels to what
was in effect on January 1, 1990.
Ms. Borrego noted that the most needy senior citizens and
disabled adults will be affected. Seniors will lose as much
as $36 dollars a month. An estimated 23,000 dependent
children will be affected. She maintained that HB 67 does
not promote greater self-sufficiency, independence or
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empowerment but reduces an already spartan monthly benefit.
She felt that other options should be sought before taking
away basic benefits.
RUTH GULYAS, OLDER ALASKANS COMMISSION spoke against HB 67.
She stressed that poor seniors and disabled adults will
loose $36.00 dollars a month. The Older Alaskans Commission
(OAC) is concerned about the bill's effects on poor
Alaskans, Children and disabled adults. She stressed that
nearly 14 percent of Alaskans over the age of 65 are
recipients of old age assistance. she observed that many
seniors and all disabled adults under age 65 are not covered
by Medicare. She noted that Alaska has a high percentage of
persons who are not eligible for social security benefits.
The Commission feels that seniors are not likely to be able
to reverse their current economic situations.
SHERRIE GOLL, ALASKA WOMEN'S LOBBY spoke in opposition to HB
67. She asserted that HB 67 contains the "most sweeping set
of cuts to public assistance that has ever been considered
by the Alaska Legislature." She maintained that HB 67
contains everything that can be done to reduce benefits to
poor people.
She noted that testimony in previous hearings have been
overwhelmingly against HB 67. She asserted that HB 67 will
be particularly devastating to rural Alaskans.
Ms. Goll reiterated statistics noted by the previous two
speakers. She noted that there are 5,438 disabled and 89
blind adults that will be affected. She denied that people
move to Alaska to receive higher AFDC benefits. She
maintained that the growth in caseload for public assistance
programs has remained constant in comparison to population
growth. She noted that an additional growth in caseload
resulted from federally mandated changes in program
eligibility. She stressed that the standard of need is the
standard of basic decency and health. She maintained that
the basic standard of decency and health will no longer be
met if HB 67 is passage.
Ms. Goll noted that AFDC is designed to help parents of
children to get back into the job market. She asserted that
adult public assistance clients have little chance of
improving their financial picture. She stressed that the
alternative to assistance is institutionalization. She
noted that one in five children are dependent on AFDC.
Eighteen percent of Alaskan children are involved in the
program. She emphasized that other assistance programs are
also being reduced. There is a three year waiting list for
assisted housing in Juneau. The poor spend 70 percent of
their income on housing. They will pay 78 percent if HB 67
passes. She asserted that Permanent Fund Dividend checks
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are not spent on luxuries.
Ms. Goll stated that unemployed parents should be targeted
by jobs programs. She urged the Committee to consider the
Adult Public Assistance Program separate from AFDC. She
stressed that CSHB 67 (HESS) goes further than the
Administration planned. She maintained that the
Administration did not intend to delete the COLA.
ADJOURNMENT
The meeting adjourned at 10:12 p.m.
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