Legislature(1995 - 1996)
04/30/1996 08:10 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.