Legislature(1995 - 1996)
04/30/1996 08:10 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
April 30, 1996
8:10 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Scott Ogan, Vice Chair
Representative Joe Green
Representative Brian Porter
Representative Caren Robinson
Representative Ed Willis
Representative Ivan Ivan
MEMBERS ABSENT
None
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 304(RLS) am
"An Act relating to the permanent disqualification of certain
individuals who have been absent from the state for payments under
the longevity bonus program; relating to unpaid sabbaticals under
the longevity bonus program; and providing for an effective date."
- PASSED CSSB 304(RLS) am OUT OF COMMITTEE
CS FOR SENATE BILL NO. 280(FIN) am
"An Act relating to municipalities; the incorporation of certain
boroughs in the unorganized borough; the formation of separate
unorganized boroughs; and to taxation in the unorganized boroughs."
- HEARD AND HELD
PREVIOUS ACTION
BILL: SB 304
SHORT TITLE: ELIGIBILITY FOR LONGEVITY BONUS
SPONSOR(S): STATE AFFAIRS
JRN-DATE JRN-PG ACTION
03/08/96 2658 (S) READ THE FIRST TIME - REFERRAL(S)
03/08/96 2658 (S) STA, FINANCE
03/19/96 (S) STA AT 3:30 PM BELTZ ROOM 211
03/19/96 (S) MINUTE(STA)
03/20/96 2805 (S) STA RPT 3DP 2NR
03/20/96 2805 (S) FISCAL NOTE (ADM)
04/19/96 3385 (S) FIN REFERRAL WAIVED
04/24/96 (S) RLS AT 10:30 AM FAHRENKAMP RM 203
04/24/96 (S) MINUTE(RLS)
04/24/96 3492 (S) RLS RPT CS AND CALENDAR 4/24
NEW TITLE
04/24/96 3527 (S) PREVIOUS FN (ADM)
04/24/96 3528 (S) READ THE SECOND TIME
04/24/96 3528 (S) RLS CS ADOPTED UNAN CONSENT
04/24/96 3528 (S) ADVANCED TO THIRD READING UNAN
CONSENT
04/24/96 3528 (S) READ THE THIRD TIME CSSB 304(RLS)
04/24/96 3528 (S) PASSED Y20 N-
04/24/96 3528 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
04/24/96 3528 (S) Kelly NOTICE OF RECONSIDERATION
04/25/96 3572 (S) RECON TAKEN UP - IN THIRD READING
04/25/96 3572 (S) RETURN TO SECOND FOR AM 1 UNAN
CONSENT
04/25/96 3573 (S) AM NO 1 MOVED BY KELLY
04/25/96 3573 (S) AM NO 1 ADOPTED UNAN CONSENT
04/25/96 3574 (S) AUTOMATICALLY IN THIRD READING
04/25/96 3574 (S) PASSED ON RECONSIDERATION Y20 N-
04/25/96 3574 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
04/25/96 3582 (S) TRANSMITTED TO (H)
04/26/96 4035 (H) READ THE FIRST TIME - REFERRAL(S)
04/26/96 4035 (H) STATE AFFAIRS, FINANCE
04/30/96 (H) STA AT 8:00 AM CAPITOL 102
BILL: SB 280
SHORT TITLE: MANDATORY INCORP OF CERTAIN BOROUGHS
SPONSOR(S): SENATOR(S) TORGERSON,Green,R.Phillips,Donley,Halford
JRN-DATE JRN-PG ACTION
02/09/96 2352 (S) READ THE FIRST TIME - REFERRAL(S)
02/09/96 2353 (S) CRA, STA
02/28/96 (S) CRA AT 1:30 PM BUTROVICH ROOM 205
02/28/96 (S) MINUTE(CRA)
02/28/96 2578 (S) COSPONSOR(S): DONLEY
03/13/96 (S) CRA AT 1:30 PM BUTROVICH ROOM 205
03/13/96 (S) MINUTE(CRA)
03/14/96 2736 (S) CRA RPT CS 3DP 1DNP SAME TITLE
03/14/96 2737 (S) FISCAL NOTES TO SB & CS (GOV,
03/14/96 2737 (S) DCRA-3, DOE, LAW, DNR)
03/14/96 2737 (S) ZERO FNS TO SB & CS (ADM, DPS, DOT)
03/14/96 2737 (S) FIN REFERRAL ADDED
03/14/96 2746 (S) COSPONSOR: HALFORD
03/27/96 2928 (S) STA REFERRAL WAIVED Y12 N8
04/03/96 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/03/96 (S) MINUTE(FIN)
04/03/96 (S) MINUTE(FIN)
04/04/96 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/09/96 3099 (S) FIN RPT CS 5DP 1DNP NEW TITLE
04/09/96 3099 (S) PREVIOUS FNS(GOV, DCRA-3, DOE, LAW,
DNR)
04/09/96 3100 (S) PREVIOUS ZERO FNS (ADM, DPS, DOT)
04/10/96 (S) RLS AT 10:50 AM FAHRENKAMP RM 203
04/10/96 (S) MINUTE(RLS)
04/11/96 3155 (S) RULES TO CALENDAR 4/11/96
04/11/96 3163 (S) READ THE SECOND TIME
04/11/96 3164 (S) FIN CS ADOPTED UNAN CONSENT
04/11/96 3164 (S) AM NO 1 ADOPTED Y14 N6
04/11/96 3165 (S) AM NO 2 WITHDRAWN
04/11/96 3165 (S) AM NO 3 FAILED Y6 N14
04/11/96 3166 (S) ADVANCE TO THIRD READING FLD
Y12 N8
04/11/96 3166 (S) THIRD READING 4/12 CALENDAR
04/12/96 3202 (S) READ THE THIRD TIME
CSSB 280(FIN) AM
04/12/96 3203 (S) RETURN TO SECOND FOR AM 2 UNAN
CONSENT
04/12/96 3203 (S) AM NO 2 ADOPTED UNAN CONSENT
04/12/96 3203 (S) AUTOMATICALLY IN THIRD READING
04/12/96 3203 (S) PASSED Y13 N6 E1
04/12/96 3203 (S) TAYLOR NOTICE OF RECONSIDERATION
04/15/96 3246 (S) RECON TAKEN UP - IN THIRD READING
04/15/96 3247 (S) PASSED ON RECONSIDERATION Y13 N7
04/15/96 3251 (S) TRANSMITTED TO (H)
04/16/96 3794 (H) READ THE FIRST TIME - REFERRAL(S)
04/16/96 3794 (H) STATE AFFAIRS, FINANCE
04/23/96 (H) STA AT 8:00 AM CAPITOL 102
04/23/96 (H) MINUTE(STA)
04/25/96 (H) STA AT 8:00 AM CAPITOL 102
04/25/96 (H) MINUTE(STA)
04/27/96 (H) STA AT 10:00 AM CAPITOL 102
04/27/96 (H) MINUTE(STA)
04/30/96 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
SENATOR BERT SHARP
Alaska State Legislature
Capitol Building, Room 514
Juneau, Alaska 99801-1182
Telephone: (907) 465-3004
POSITION STATEMENT: Sponsor of SB 304
KAREN PHILLIPS, Supervisor
Longevity Bonus Program
Department of Administration
P.O. Box 110211
Juneau, Alaska 99811-0211
Telephone: (907) 465-4416
POSITION STATEMENT: Answered questions on CSSB 304(RLS) am
SENATOR JOHN TORGERSON
Alaska State Legislature
Capitol Building, Room 427
Juneau, Alaska 99801-1182
Telephone: (907) 465-2828
POSITION STATEMENT: Prime sponsor of SB 280
ACTION NARRATIVE
TAPE 96-64, SIDE A
Number 015
The House State Affairs Committee was called to order by Chair
Jeannette James at 8:10 a.m. Members present at the call to order
were Representatives James, Porter, Green, Ivan and Ogan. Members
absent were Representatives Robinson and Willis. A quorum was
present to conduct business.
CSSB 304(RLS) am - ELIGIBILITY FOR LONGEVITY BONUS
Number 091
The first order of business to come before the House State Affairs
Committee was CSSB 304(RLS) am. CHAIR JAMES asked Senator Sharp to
present CSSB 304(RLS) am.
SENATOR BERT SHARP, Sponsor, said he couldn't claim originality for
SB 304 because it had been plagiarized from a section of a bill
submitted by the Governor that would have established a means test
for longevity bonus. The testimony of about 60 people in the
Senate State Affairs Committee was all negative except for this one
section which they all agreed with. The decision was made to take
that section, add some additional wording and craft a bill that
could be supported by the Senate State Affairs Committee.
Basically, SB 304 would disqualify individuals from receiving a
longevity bonus if they were out of state for over 180 cumulative
days in any 12 month period. The testimony in the Senate State
Affairs Committee was that anyone who was out of state for over 180
days really didn't need the longevity bonus and they weren't
relying on it as a means of support in their later years. The bill
contains the standard allowable absences from the state which are
very similar, if not exactly, to the permanent fund dividend
program. Senator Kelly added an amendment on the Senate floor to
include an allowance for a sabbatical once every five years for an
individual to be out of state for more than 180 days. He noted the
"permanent disqualification" language assumes the phase out stays
in effect. Therefore, if a person was disqualified under the 180-
day rule, no new applicants would be entertained including a
disqualification after December of this year; it ties in with the
existing law. He invited questions from committee members.
REPRESENTATIVE CAREN ROBINSON arrived at 8:13 a.m.
CHAIR JAMES asked if there were any questions of the sponsor.
Number 403
REPRESENTATIVE SCOTT OGAN felt it was a rational approach that
people would not be considered residents or eligible if they were
gone from the state for longer than six months. He supported
moving the bill out of committee.
Number 433
REPRESENTATIVE ROBINSON believed this was a fair way to deal with
the issue. She referred to the language on page 1, line 13,
"beyond the control" and asked if any definition currently existed
for that terminology.
SENATOR SHARP recalled that existing regulations cover allowable
absences as well as the authority to develop further regulations
deemed necessary by the Commissioner of the Department of
Administration. He deferred the question to the representative
from the department.
CHAIR JAMES thought the balance of the sentence set out how that
would be defined.
SENATOR SHARP commented the original bill had a $90,000 to $100,000
positive fiscal note; in other words a savings. There would be
some additional savings with the addition of Section 2, but the
department wasn't able to quantify it when that section was added.
Number 593
KAREN PHILLIPS, Supervisor, Longevity Bonus Program, Department of
Administration, said "beyond the control" is actually set up for
each individual case. For example, if an individual goes out for
chemotherapy treatments and is accompanied by their spouse,
potentially the family member not receiving the chemotherapy
treatments could be disqualified because it would not be beyond
their control to come back to the state, but it would be beyond the
control of the patient.
CHAIR JAMES asked if there were other questions for Ms. Phillips?
MS. PHILLIPS referred to the language on page 2, line 6, "a
recipient may take an unpaid sabbatical for a period of up to 12
consecutive months" and asked if the recipient was free to
designate how long the sabbatical would be?
CHAIR JAMES thought so. She said it was clear to her that up to a
period of 12 consecutive months does not necessarily mean January
through December, but a person could be absent from the state up to
12 months one time during a five year period.
REPRESENTATIVE BRIAN PORTER made a motion to move CSSB 304(RLS) am
with individual recommendations and attached fiscal note. Hearing
no objection, CSSB 304(RLS) am moved from the House State Affairs
Committee.
CSSB 280(FIN) am - MANDATORY INCORP OF CERTAIN BOROUGHS
Number 795
CHAIR JAMES announced the next item on the agenda was CSSB 280(FIN)
amended. She noted she had no intention of moving the bill out of
committee today, but hoped to have discussion and some sort of
determination as to the direction the committee would like to go.
The committee had made an amendment at the last hearing, mostly to
give a message to the people who are in organized cities that they
would not be doubly taxed if this bill were to go forward. She
would like to get some ideas as to whether or not committee members
wanted to move the bill out of committee in its existing form at
another hearing, amend the bill in some way, or not do anything at
all. She thought those were the three options available to the
committee.
Number 940
CHAIR JAMES directed committee members attention to the second
spreadsheet which showed the basic need for all the school
districts in the state, the required local contribution, the
eligible PL81-874 funds that would be applicable to the various
school districts, the percentage used in the foundation formula to
see what percentage of the PL-874 funds are offset against the
formula, the calculation of that percentage times the actual
deductible amount of PL81-874, the FY 96 foundation state aid and
the full value determination in the last column. She said the
total amount of money allocated for FY 96 was $762,733,630 which is
the foundation formula for schools and the total amount given out
of the basic need to the various school districts was $609,150,856.
CHAIR JAMES pointed out the third spreadsheet has fewer school
districts based on the implementation of these boroughs or
unorganized boroughs which encompasses some of the Rural Education
Attendance Areas (REAAs) into a larger district. She noted the
total basic need is $762,733,020; the total required local has gone
up by $14 million; the numbers in the full value determination
column are estimated but are currently being used for revenue
sharing and municipal assistance. While the total required local
has gone up by $14 million, the PL81-874 funds have gone down $14
million, so the net result is the same amount of money - the
$609,065,596 under the existing program is the same amount that
would be allocated to the schools. The reason for that is the
PL81-874 funds actually are considered the same in theory as local
contributions because it is federal money and considered to be
payment in lieu of taxes. She explained there would not be a
change in the net amount of money that would be sent out to the
school districts.
CHAIR JAMES called the committee's attention to the first
spreadsheet. To her, these figures were even more interesting in
that she thought one of the problems with the bill was the
perception of unfairness because those people who live in areas
where they pay property taxes are paying for their schools and the
people in the rural areas are not. She said that's not only a
perception, it's really true; people in the rural areas are not
taking money out of their pocket and putting it into schools. She
said, "Let's look at what this does then if we take the required
local, the deductible 874 funds, so we get the required local plus
impact aid currently the way it is, and then use the fiscal year 96
ADM divided out to see what the required local plus impact aid is
per ADM, and these are in order by the highest to the lowest.
You'll find North Slope is the highest, which is understandable
that they are putting in more local impact aid because they are a
very rich area. And even with a small millage rate, because they
have more property, they pay more and a lot of it is industrial
property that doesn't relate to population to students." She would
like the thoughts of committee members as to what they think is the
best way to strike a balance and solve the issue of some people
paying and others not paying. Her idea was that making all these
little "cells" around the state wasn't the fairest way because is
it Bethel's fault that the pipeline doesn't go through their area
or is it Nome's fault that Prudhoe Bay is in the North Slope
Borough?" As a state, she thought there were resource revenues and
that some how besides state's spending, ought to balance this issue
and that some kind of a tax on the unorganized borough might be the
fairest way to go. She asked Senator Torgerson to respond to some
of her concerns.
Number 1460
SENATOR JOHN TORGERSON, Sponsor, said he didn't mind Chair James'
idea of taxation for education in rural Alaska; that's what this
bill was about. He thought the question was a) Is it fair to have
people pay the same amount for education any where in Alaska or
just to continue the system the way it is, and b) if you believe
that everyone should pay for education, how do we go about putting
on that fee? He agreed with the taxation proposal but disagreed
with Chair James in not asking for the organization of local
governments or to divide the state into segments such as those
recommended by the Local Boundary Commission. He said the local
autonomy and the local vote is an important component of this bill.
It does enforce the payment, equalization or equivalency of
education dollars through some type of tax but the method is not
mandated. In the taxation effort, he thought they should come back
with the same formula used in taxed based communities and it should
tie back to full and true value. Recognizing this can't be done
overnight, he had asked for a phase in.
Number 1550
CHAIR JAMES said in response to Senator Torgerson's concern, that
basically is establishing a tax in the unorganized borough, which
she thought was a fair way to go. The problem, however, was
whether or not it needed to be tied in to the true value and still
be fair with the rest of the state. The question is does it make
any difference as to whether the tax is collected as a fish tax, a
resource tax, a sales tax or should the money come out of the
pockets of those specific people in the area that are paying the
tax, like it does with a property tax. She noted the Denali
Borough in her district does not have a property tax but the
borough collects the money and pays their local share by a bed tax
and a resource severance tax on the coal within their area. So,
technically they are not personally paying any tax, yet they are
meeting their local requirement. She said her other concern was
that the bare 4 mills issue didn't make any difference in the
bottom line of state spending and she felt there should be some
benefit if they were going through this exercise. It appeared to
her the way the system is set up right now would give the people in
their own communities a little more money to spend because they
would keep more of the PL-874 funds.
Number 1643
REPRESENTATIVE PORTER said for the record, "My phone has rung a
couple of times but apparently other office phones have rung a
couple of times concerning a problem that some people had in rural
Alaska about a couple of remarks that I made at the last hearing.
I would like to get that cleared up. If there is anyone who
interpreted what I said as an indication that I didn't think people
who had recently - comparatively recently - arrived in the state
should be treated somewhat differently as the rest of the
population of the state, I apologize because that is not what I
meant. What I meant was just the opposite. I would like, as we
have been discussing here, all of the citizens of the state to be
treated the same and all participate in the cost of education."
REPRESENTATIVE ED WILLIS arrived at 8:37 a.m.
Number 1708
CHAIR JAMES said she was not real comfortable with the existing
piece of legislation because it is not intended to be, according to
Senator Torgerson, a mandatory borough act and does not create
mandatory boroughs. She stated, "But in a sense it is and the
reason it is is because first of all they get an opportunity to
vote as to whether or not they want to be a borough and the lines
are already drawn by the Department of Community & Regional
Affairs. And then if they say yes, of course, then they are
forming a borough. When boroughs are formed, we give them money
and there's a fiscal note giving them money to create their own
governments. What we're doing is then if they decide to do that,
they've decided that yes, this is the best choice - it's not
necessarily the choice but it is the best choice of two choices
which is to do or not to do. Second of all, if they say no, then
we do create these little cells of named unorganized boroughs which
will each be treated in a different way and they will be forced to
make some decisions within those boundaries. Technically, that is
the same as creating a borough even though it's called an
unorganized borough. Further, this bill authorizes or deletes the
repeal of the third class borough and I heard extreme amount of
testimony in my office from the people from Haines who have the
only third class borough in the state and said `Oh please do not do
that; it is the worst form of government you can possibly have.'
The third class borough only allows them to make educational
decisions and to tax themselves -- that's all they have the ability
to do. And he said it just doesn't work. So he said, `Please
don't let them create more third class boroughs; those are really
devastating.' So essentially what we've done then is we really
have forced them into something that even if we don't say it's a
third class borough, what we're asking them to do is come together
and determine how they will tax themselves. That is the same as
coming together for government. I would prefer to just say,
sitting in the best interest of all those people in the unorganized
borough, to -- and maybe we could give them a choice even if they
wanted to vote on something, we could get them to all vote on do
you want a sales tax, do you want a resource tax or do you want an
income tax, or what do you want out there. And then we implement
that tax for the purpose of funding schools. The problem with that
then is that if we don't stick to the 4 mills and we don't do the
assessed valuation of all these areas, then we're treating them
differently than we are the rest of the people in the state who are
required either to do 4 mills or a percentage, whichever is the
least. So whatever we do, we have to treat them the same. If you
take a small bunch of people and treat them the same as a big bunch
of people, when you get to the comparison line of what costs more
per student, the small is always going to cost more per student
than the larger areas are going to. And if they're only required
to pay the same percentages, mill rates and so forth as these,
you're never going to establish that balance that I think everybody
would really like to have. But if the balance is that everybody
should pay something, we can deal with that with a tax in the
unorganized borough. And I think we can deal with that issue and
that might put part of this whole problem to rest. I agree that
everyone in the state, if anyone has to help pay for their
education, everyone should. I think we can all agree on that one
statement and the testimony we heard from most of the people is
they don't mind paying a tax. They don't understand how the tax
would work because we've never discussed it with them. They think
putting on an income tax statewide would solve the problem; that
would just continue to create the inequity. If we put a sales tax
on statewide, it would continue to create the inequity. The only
way that we can establish an equity is to have them pay a tax that
we're already paying in some way or them make a contribution that
we're already doing. And that's the only way we can level the
playing field. I agree with Senator Torgerson that we could make
a very simple bill that required this tax. The other problem is
that what is -- without looking at the fiscal note -- was it
$350,000 that they thought it would cost to assess all of the
property throughout the state?"
Number 1930
SENATOR TORGERSON said he had not seen that fiscal note yet; it was
a conversation that took place between he and the state assessor
and for whatever reason he had not gotten a fiscal note to Senator
Torgerson. The state assessor's first initial thought was $240,000
for a period of time and then it would go to $300,000 but Senator
Torgerson thought the assessor was under the assumption that some
areas would incorporate.
Number 1961
CHAIR JAMES asked if it wasn't true that if a tax was implemented
over all the unorganized boroughs, it might speed up the process of
those areas that are looking at organizing to organize?
SENATOR TORGERSON said he didn't know.
Number 1978
CHAIR JAMES said this was a real important issue and she would like
to work on the language with Senator Torgerson, hear the bill again
and pass it out.
Number 2012
REPRESENTATIVE IVAN IVAN said that Chair James had previously
mentioned taxes in the unorganized boroughs and asked if she was
targeting individuals similar to an income tax, or individuals and
property owners including businesses?
CHAIR JAMES said her preference was a resource tax and, "My reason
for that -- and Senator Torgerson, I think gave this example as one
of the reasons why he realized that we have an inequity in the
state. When there was a company for liquification who wanted to go
into Whittier and set up - and the prime reason they were thinking
about setting up there was because there was no taxes to pay. So,
when we are in a mode of wanting to invite businesses to come into
the state and do different things, they are going to be treated
differently if they are within a borough or not. And so that's why
I think that a resource based tax would be more reasonable.
Something that would address businesses coming into an area that is
not organized because they don't have to pay the same taxes they do
in an organized borough. An organized borough has an advantage
because they have the work force, they have the infrastructure and
so forth. So, I don't know that it is really that unfair or that
much of something that's going to determine where people locate.
But I think we ought to have some kind of fairness across the state
and a resource tax would do it - a sales tax in the unorganized
borough might. Some areas already have a sales tax but if it was
a small percentage - a 1 percent or even less - it wouldn't impact
everyone. You could exclude, like we have in this bill, the cities
that are already paying their portion of school - we could just
(indisc.-coughing). An income tax it seems wouldn't be - it would
be pretty hard to - I mean, the cost of implementing an income tax
is pretty great. For the amount of money that we would be wanting
to collect, I think that probably would be too administratively
heavy. But there is fish tax, which is also part of resources, I
think probably of all those resources would be the most fair."
Number 2109
REPRESENTATIVE ROBINSON said it seemed to her that this was an
extremely important decision and she didn't really know which way
to go. However, she believed that if major changes were going to
be made additional input was necessary and preferred that it be
assigned to an interim committee. She wasn't sure she was ready to
be part of a legislative body that imposed a tax on rural
communities when she had heard that many of those people don't mind
paying their own way, but they just don't know how they want to pay
their own way.
Number 2194
REPRESENTATIVE PORTER said the bill has had quite a few hearings
and a lot of input from the department and communities. He, too,
was hearing there are a lot of people who do not want to be
organized into a borough and of course, this bill doesn't do that.
It requires that they consider it, but it does not require they do
it. The thing he liked about the bill was that it provides for
some opportunity to have the Local Boundary Commission look at it
in individual segments and develop strategies for participation in
the education payment that fit the needs and desires of people in
those localized areas instead of having one sweeping decision for
the entire unorganized borough.
Number 2247
REPRESENTATIVE IVAN said he was in a dilemma in that the regional
corporation he represents goes through several election districts
and the mining project that's being looked at goes way out of their
proposed boundary area. He would like to have some input from the
mining companies that are doing some serious exploration.
Number 2282
REPRESENTATIVE GREEN asked if something like a resource tax would
potentially be looked at as a negative? He said, "We've got a lot
of outlying areas where this thing would really take place and
we're striving to try and develop some sort of a resource,
primarily energy but also gold mining and that sort of thing and
this could be a deterrent if it's going to be a tax on resources
that are yet to even be developed. A let's not get involved kind
of an attitude could prevail among people who might otherwise want
to go out there. The other thing I'm wondering about is would it
be based on a vote -- if you had several communities within one of
these areas - community areas - let's just assume that we're all
communities now and three of us like some sort of a resource tax
and the others would prefer just to stay with a per capita tax, do
you envision any kind of squabbles or are they fairly uniform in
the potential borough areas?"
Number 2332
SENATOR TORGERSON said he didn't know how to answer that but he
assumed there would be a lot of discussion. The bill was silent on
that issue; it just says the department will go out and through
their public hearing process, come forward with a decision. It
wasn't really spelled out how they would go about that. He stated,
"I suppose we could go in there and say we'd like everybody to vote
on the kind of tax or the kind of proposal they would like to do -
it could happen that way. I just assumed that since it has not in
the past - since we have mandated incorporation of boroughs and
annexations and a lot of other things, we've never put that
particular question to the vote. Basically, it is confined within
the powers that the borough forms under. In this case, it's third
class powers -- third class boroughs -- they (indisc.) education
and taxation powers. Or if you have a home rule or some other
kind, then that rests with the body that governs it if they form.
The whole thing is put together on having a proposal put together
by individualized incorporated or unincorporated boroughs and then
come back to this body for approval over a period of time." In
response to Representative Robinson's concerns, he said this
doesn't happen tomorrow; it's 10 or 15 years out without even
amending this bill.
Number 2400
CHAIR JAMES said in response to Representative Green's comment
about this discouraging resource development, in going back to the
local match that's indicated and based on estimated value, it's $14
million out of the total unorganized borough. She asked if
Representative Green thought that would stop resource development.
She said, "Once we go out and do an assessment valuation of the
property in all of this, it may be larger because this is an
estimated amount of money. It may be considerably larger. Let's
say it's twice as much as what we've guess is out there - now we're
talking about $28 million in the total unorganized borough. Is
that going to be changing the way people are going to be doing
resource development? I don't think so. One more thing is that a
lot of the existing boroughs get their tax base not from their
people's pockets but from actual business and other issues that's
going on in their district. If we do resource development, we're
asking those other people to pay from those same sources instead of
their own pocket. And so we can't say, just because we have a
property tax in Fairbanks and you have one in Anchorage, they don't
have one in Denali, so I should make them pay property tax, too?
Because then that means they're paying -- but they're meeting their
local match. I think this is the argument that we have to do if
we're going to try to level the playing field and I'm willing if
this committee wants to move this bill out just like it is without
fixing it, I would take that motion. I don't know how I would vote
on it because I have grave concerns about it. I think if this bill
would have come to us and been on the plate since last year that we
would have had more time to be able....
TAPE 96-64, SIDE B
Number 001
CHAIR JAMES continued..."and we've heard a lot from the people who
would be affected. We haven't heard a lot from the people who are
out there besides legislators who really think this is a good idea.
We really should hear from those too -- people in Anchorage and
Fairbanks and so forth."
Number 026
REPRESENTATIVE GREEN responded, "Mine wasn't so much of what we're
looking at now as a perception because we haven't got the
development yet, anyway. It's kind of the camel under the - the
nose under the tent syndrome that if this is good for schools it
may go on and on. Generally, and certainly the history of this
state is that our major source of revenue comes from some sort of
resource and whether it's schools and this issue or something else
in these unincorporated boroughs, it's just a perception among
energy producing companies that when you open the door to that
being the source of revenue, it's a scary situation. And I didn't
mean just for schools."
Number 055
CHAIR JAMES commented that's what this bill does. If all the local
people in the unorganized boroughs can make the choice of who to
tax, who do you think they're going to tax?
Number 066
REPRESENTATIVE OGAN said based on a property tax, the biggest
problem he has with some sort of organized borough is that the
person who is the most capitalistic and works the hardest, gets
penalized (indisc.). He favored the resource tax and thought it
was more fair. He thought that eventually there would be taxes
even though some people were adamant there would be no new taxes
until there was appropriate budget reductions. However, at the
appropriate time, he thought there would be a tax. He suggested
that perhaps the best thing to do was to just hold off on this
legislation until there is a tax in place. He thought the most
fair tax was a sales tax where everyone pays according to what they
spend, not what they save or invest. He noted he would not hold
the bill up; he would vote to move it on especially if there was a
resource based tax.
Number 148
REPRESENTATIVE WILLIS agreed with Representative Robinson's
remarks. He felt the bill needed additional work and whatever the
committee agree upon should have another round of public hearings.
Number 179
SENATOR TORGERSON said the committee was scaring him with some of
their conversation on the resource tax. The state already gets
paid royalties which is in lieu of resource taxes in a lot of cases
and if the committee was thinking of an in-place tax, that would
kill the legislation. He commented that a mining venture or
another big company that locates any place in the state is only
liable for the amount of tax that is its personal property or real
property times the mill rate or the equivalent of that. He didn't
think it should be assumed there was going to be a big gold mine or
coal mine that would pay the taxes for the entire borough. It
could happen, but they would not be required to do that. He
thought the committee was trying to fix all the problems that exist
with assessed valuation and other concerns across the state of
Alaska with one bill that's trying to equalize the part that aren't
paying. He stated whether it's a sales tax or income tax, we're
still starting from a point where there are people who are paying
and people who aren't paying and that's not going to be equalized
unless you determine to double tax people to bring them up to speed
with the rest of the state, which can't be done.
CHAIR JAMES said this bill would be held over in committee and she
would notify Senator Torgerson when it would be heard again.
ADJOURNMENT
Number 249
There being no further business to come before the House State
Affairs Committee, CHAIR JAMES adjourned the meeting at 9:03 a.m.
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