Legislature(2003 - 2004)
03/17/2003 01:37 PM Senate CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
March 17, 2003
1:37 p.m.
MEMBERS PRESENT
Senator Thomas Wagoner, Chair
Senator Robin Taylor, Vice Chair
Senator Gary Stevens
Senator Georgianna Lincoln
Senator Kim Elton
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 38
"An Act relating to construction, plumbing, mechanical,
electrical, fire safety, and other safety codes adopted by state
agencies and municipalities; and providing for an effective
date."
HEARD AND HELD
SENATE BILL NO. 118
"An Act relating to the power of boroughs to conduct inspections
and enforce standards for food and aquatic farm products; and
providing for an effective date."
HEARD AND HELD
SENATE BILL NO. 136
"An Act increasing an optional exclusion or exemption from
municipal taxation for residential property."
HEARD AND HELD
PREVIOUS ACTION
SB 38 - See Community and Regional Affairs minutes dated 2/26/03
and 3/5/03
SB 118 - No previous action to record.
SB 136 - No previous action to record.
WITNESS REGISTER
Senator Gene Therriault
Alaska State Capitol, Room 111
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor SB 38
Colin Maynard
Alaska Professional Design Council
PO Box 100515
Anchorage, AK 99501-0515
POSITION STATEMENT: Spoke in opposition to SB 38
Steve Shows
Construction Inspector
No address provided
POSITION STATEMENT: Testified on SB 38
Zach Warwick
Alaska State Capitol, Room 111
Juneau, AK 99801-1182
POSITION STATEMENT: Answered questions on SB 38
Ernesta Ballard
Commissioner, Department of Environmental Conservation
410 Willoughby Suite 303
Juneau, AK 99801-1795
POSITION STATEMENT: Testified on SB 118
Kristin Ryan
Acting Director, Division of Environmental Health
555 Cordova Street
Anchorage, AK 99501
POSITION STATEMENT: Testified on SB 118
Mary Jackson
Staff to Senator Tom Wagoner
Alaska State Capitol, Room 427
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SB 136
Gary Superman
Kenai Peninsula Borough Assemblyman
144 North Binkley Street
Soldotna, AK 99699
POSITION STATEMENT: Testified on SB 136
Steve Van Sant
State Assessor
Division of Community & Business Development
th
550 W. 7 Ave Suite 1770
Anchorage, AK 99501-3510
POSITION STATEMENT: Answered questions on SB 136
ACTION NARRATIVE
TAPE 03-7, SIDE A
CHAIR THOMAS WAGONER called the Senate Community and Regional
Affairs Standing Committee meeting to order at 1:37 p.m. Present
were Senators Taylor, Lincoln, Elton and Chair Wagoner. Senator
Gary Stevens arrived momentarily.
The first order of business was SB 38.
SB 38-ADOPTION OF SAFETY CODES
CHAIR THOMAS WAGONER asked for a motion to adopt the committee
substitute (CS).
SENATOR ROBIN TAYLOR made a motion to adopt Banister 3/17/03 \S
version CSSB 38 as the working document.
SENATOR GEORGIANNA LINCOLN asked if the sponsor would speak to
the CS.
CHAIR WAGONER confirmed the sponsor would speak to the CS and
that there was a question and answer draft in the packets as
well.
SENATOR GENE THERRIAULT explained the \S version CS addresses
several issues discussed at the previous hearing. For a
transition term, the delay period changed from three years to
two years. This delay would allow mechanical administrators time
to receive proper training when there is a switch from one code
to another. Language on page 3, line 29 clarifies that the delay
period applies only when there is a switch to a complete new
code. There would be no delay for normal code updates.
The larger issue of whether all the codes should be placed under
the oversight of one agency is not addressed. He came to no
conclusion himself and was aware that the Administration was
working with the agencies to come to a resolution.
He remarked the committee could either wait for a decision
regarding jurisdiction or they could move the CS out of
committee and allow the Labor and Commerce Committee to continue
work on the issue.
There were no questions asked of Senator Therriault.
SENATOR WAGONER announced there were several individuals waiting
to give testimony and advised all previous testimony was on
record.
MR. COLIN MAYNARD, Alaska Professional Design Council
representative, testified via teleconference. Although he hadn't
seen the second CS, he understands it is similar to the first so
the council would oppose adoption. They don't believe the
mechanical code belongs in the Department of Labor; rather it
belongs with the building and fire codes.
The name change from Uniform Code to International Code by the
International Conference of Building Officials (ICBO) has caused
much confusion, but they are the same people who have been
writing the mechanical code in Alaska for the last forty years
and the council sees no reason for a change. The question
regarding whether the Department of Public Safety has the legal
authority to adopt a mechanical code is curious because they
have been doing so for as long as he can remember. The council
agrees with the task force approach to address all the codes at
one time rather than in this piece meal process.
MR. STEVE SHOWS, a construction inspector, testified he is
certified by all uniform and international code writing
agencies. He made the following points:
· Both codes have a bias and they are slightly different, but
both are good codes
· He agreed with removing the discriminatory language that
would not allow the International Codes to be adopted in
Alaska.
· International Codes have a public safety, health and
welfare bias that is very evident
· National Fire Protection Association (NFPA) favors industry
and trade organizations
Because Alaska has a fragmented approach to construction
regulation, he advised looking to municipalities where codes are
seamless, integrated, work together and people communicate so
the building construction industry and the health and safety of
residents is at the forefront. Keep in mind; the purpose is fair
and impartial regulation and public safety.
For over 15 years, organizations convinced the Legislature to
keep the 1979 plumbing code as the State document regulating
that activity and trade. It cost the State 10s of millions of
dollars a year to administer the outdated code that financially
benefited those who sold and installed expensive materials.
There was no further testimony.
SENATOR LINCOLN asked what position Fairbanks held regarding SB
38.
MR. ZACH WARWICK, staff to Senator Therriault, advised the
building officials continue to oppose the legislation.
SENATOR LINCOLN asked for information regarding their main
opposition.
MR. WARWICK explained they opposed the time lag and because they
have gone through the process to update their codes to the
International Codes, SB 38 would require the municipality to do
additional work.
SENATOR LINCOLN asked how much time that additional work would
require.
MR. WARWICK said it depends on which code the Department of
Labor adopts. The links between the International Fire Code and
International Building Code would need to be updated to
synchronize with the Uniform Code if that code is adopted, but
no additional work would be required if the International Code
is adopted.
SENATOR LINCOLN asked if the two year delay wouldn't allow for
such updates.
MR. WARWICK explained there would be no delay when the
Department of Labor initially adopts a particular code. If there
were code switches in the future, there would be a delay.
SENATOR LINCOLN remarked NANA/Colt Engineering was also opposed
to bill because of the shift from one department to another. She
asked if the sponsor had spoken to the firm to address their
concerns.
MR. WARWICK reported he spoke with Mr. Moore several times. He
added there are opposing views on this issue and probably the
only agreement is that the codes could possibly be in one place.
SENATOR LINCOLN referred to the sponsor's statement that
jurisdiction hasn't been resolved. She asked the Chair's
intention.
CHAIR WAGONER replied he would like the Labor and Commerce
Committee to work on that aspect of the legislation. Since the
last hearing he has given some thought to putting the codes
together under the jurisdiction of the Division of Occupational
Licensing.
MR. WARWICK said it is his understanding that division doesn't
have the technical knowledge; they deal primarily with training
and licensing of the trades. They can authorize a class under a
code, but they don't deal with the exact codes. Administration
officials have advised him they are arranging for people from
the Fire Marshall's office, the Department of Labor and the
Governor's office to meet and discuss where the codes should
reside. It's difficult to find a third neutral department where
the codes could be placed.
SENATOR KIM ELTON asked for clarification that in addition to
the building officials the Fairbanks Mayor and City Council
continues to oppose the bill.
MR. WARWICK thought the Fairbanks officials that wrote letters
in opposition to the legislation were speaking on behalf of the
building officials.
SENATOR ELTON noted the committee didn't know what the
Administration's position was and there were still substantive
questions and issues associated with the legislation. The Alaska
Professional Design Council raised a number of questions and he
was uncomfortable moving the bill prior to receiving feedback
from the Administration and addressing those issues.
SENATOR TAYLOR agreed to the extent that the critical aspect of
the legislation is jurisdiction. The critical policy call for
the Legislature is to decide where the codes should be housed.
Continuity and one stop shopping that Mr. Shows spoke of are
critical to the building trades and design professionals. He too
expressed a desire to address the jurisdictional question prior
to moving the bill. The committee already spent considerable
time on the bill and moving it without addressing jurisdiction
would waste that time and effort.
CHAIR WAGONER announced he would hold SB 38 in committee until
they heard from the Governor's Office, the Department of Labor
and the Fire Marshall's Office.
SENATOR TAYLOR asked the Chair to call for objection or a vote
then declare whether the CS was adopted or not.
CHAIR WAGONER apologized and asked whether there was objection
to adopting Banister 3/17/03 \S version CSSB 38. There was no
objection and it was so ordered. The bill was held in committee.
SB 118-BOROUGH INSPECTION: FOOD/AQUATIC FARMS
CHAIR THOMAS WAGONER asked Commissioner Ernesta Ballard to
introduce SB 118.
ERNESTA BALLARD, Department of Environmental Conservation
Commissioner, gave the following opening remarks:
SB 118 is the Governor's legislation, which we hope
you will approve to allow first and second class
boroughs to enforce food safety standards.
The State of Alaska has been ensuring that food is
handled correctly since statehood. State law provides
the framework and the department's regulations provide
the standards that protect public health. We are
fortunate that in this area there has been a growing
knowledge of food safety handling practices and modern
food preparation technology in recent years. And in
fact in the last 20 years many food safety programs
have implemented new regulatory approaches to take
advantage of this new body of information.
Nationally, a mix of local, state, and federal
governments perform the needed tasks to ensure the
public food supply is protected. In Alaska, state
government has been the primary entity working with
food service establishments to protect public health.
The state has had statutory and regulatory ability to
delegate this program to local governments since 1999.
Anchorage takes advantage of this opportunity and
conducts food inspections as a home-rule municipality.
We believe it is important to encourage as much local
control as possible in the important area of local
food safety. State law allows home rule cities and
boroughs, and first and second class cities to
implement a food safety program that is consistent
with their charter and approved by their assembly.
This bill provides the same opportunity to first and
second class boroughs. Specifically, it allows those
boroughs to conduct a food safety program using
protective state standards.
The State of Alaska will continue to set protective
standards and implement them in areas that have not
asked for delegation to provide the service
themselves.
This legislation does not require any local government
to take on this responsibility. It gives them the
opportunity to exercise local control should they
choose.
SENATOR ROBIN TAYLOR asked if cities were in any position to
test aquatic farm products.
COMMISSIONER BALLARD said a local municipality could take on
those powers, but they would have to demonstrate they had a
sufficiently funded program and sufficiently skilled personnel.
She added, "This is a theoretical delegation, it sets up the
opportunity."
SENATOR TAYLOR stated this was a good idea and he would
encourage any municipalities that wanted to do this. He asked if
Anchorage or any city monitored air pollution.
COMMISSIONER BALLARD replied Anchorage has a fairly extensive
capability that is specifically delegated through the department
to handle aspects of their air pollution program.
SENATOR TAYLOR asked if the department would be able to delegate
or require a city to exercise the powers.
COMMISSIONER BALLARD advised this is not a mandatory program; it
is optional and the department will continue to implement a
program that is available statewide that will assure that any
place in the state without a locally delegated program has an
adequately protected food safety program.
SENATOR LINCOLN asked what the incentive would be for boroughs
to assume this responsibility and, in particular, the liability
associated with food inspection. She questioned whether the bill
was the result of boroughs asking to assume that role.
COMMISSIONER BALLARD advised the incentive comes from the basic
civic principle, "that government likes to do for its people, as
close to the people as possible." Food safety is one of the
oldest government programs in the country. She assured members
there would be local governments who would seek the local
opportunity to deal directly with their restaurants and people
who prepare food. The department would continue to provide a
food safety program for cities that don't exercise the option.
She described a double-pronged incentive to explain why the
Governor proposed the bill. In the last appropriations bill last
year, the Legislature specifically directed the Administration
to reorganize their inspection program for the boroughs that
were large enough to run their own cost effective program.
Nationally, the process of food safety management has moved
beyond Alaska's conventional inspection based program. The
department believes it's time to work toward offering incentives
and program components that work with operator certification and
operator management systems to get more responsibility and
accountability placed with the operator of the food
establishment.
SENATOR LINCOLN questioned how much the department would save if
municipalities assumed the authority of inspecting food and farm
products and whether the savings might be enough to save the
department a position.
COMMISSIONER BALLARD advised the Governor's budget proposes a
reduction of six positions and an attendant reduction of more
than $500,000 of program receipts. That anticipates the four
largest boroughs assuming program responsibility. The program
reduction is specifically a reduction of the inspection program
that the department currently provides in those boroughs. It is
fully supported by restaurant fees; the restaurants pay the fee
and the department provides the inspection service. Presumably,
those boroughs would charge a fee and run their own program.
The department has sufficient funds remaining in the Governor's
proposed budget to reorganize and implement a protective
statewide program without that component of the program. She
advised SB 118 is best viewed as a companion to the proposed
budget, which is a reorganization of the current program. It
eliminates the components of the program in the four boroughs,
but it doesn't eliminate the department's responsibility to set
standards that are protective statewide.
SENATOR GARY STEVENS said he had three questions. Although he
likes the option, it appears to be a wash. Would the fees that
are collected pay for the personnel hired to administer the
programs? Would this actually save money for the state? Also is
it possible that aquatic farming might include seafood
processing as well?
COMMISSIONER BALLARD replied:
· The restaurant fees cover much of the costs but not the
entire cost of the program. At the state level the program
must determine the framework and standards of the
regulatory program for food safety inspection.
· The proposed budget reduction is the actual cost of
implementing the inspection program in the four large
boroughs. The state budget includes all program receipts.
There would be a reduction in those program receipts and a
corresponding reduction in the positions and expenditures
at the department level.
SENATOR GARY STEVENS interjected he was focusing on the boroughs
because he couldn't understand why a borough would ever assume
the inspection authority if they didn't collect enough to cover
all costs.
COMMISSIONER BALLARD replied the boroughs should answer that
question, but she believes many local governments prefer to have
a regulatory relationship in public health protection. She
thought Anchorage was pleased with their stakeholder program
rather than having the state provide the program for them.
She continued:
· When the total state budget is reduced, whether through
program receipts or general fund, it is a reduction so
this is a reduction in state employment. In theory, when
you reduce state employment there is a net beneficial
affect in overall cost control.
SENATOR GARY STEVENS restated he was looking for an answer to
whether or not the fees a borough might charge restaurants would
cover their costs to administer the inspection program. Would a
borough that chose the delegation of authority assume no
financial burden?
COMMISSIONER BALLARD replied a borough choosing delegation would
have to decide how to structure their program, which would have
to be as protective as the department's program. There are many
ways to achieve protection and inspection is one choice. A
borough might choose an operator certification program, a food
worker safety card or some other tool to achieve a program. The
Division of Environmental Health would review the program
selected by the borough to determine whether or not it was
protective enough. The borough would select the type and amount
of fee to be collected. They could charge a per-visit fee, a
license or permit fee, an annual fee or some other scheduled
fee. While there are many ways to put a program together, the
department's job is to determine whether a borough had designed
an acceptably protective program. The borough's job would be to
decide how to put their program together so it would work best
for them.
SENATOR GARY STEVENS asked what an operator certification
program means.
COMMISSIONER BALLARD explained it means that the food service
operator might be required to have a personal certification that
could be arranged through the department or an independent
provider. Nationally, there is improved flexibility in
delivering protective programs. The incidence of food borne
illness is at least holding its own; it is not going up. There
are good ways to protect people by moving accountability closer
to the restaurant operator and away from the regulator. "We, and
the restaurant operators, and the boroughs and municipalities in
this state are ready to move forward into a more contemporary
regulatory regime."
In response to the third question, she said the department would
continue to maintain responsibility over the seafood processing
plants in the state.
SENATOR ELTON asked whether she was aware of any first or second
class boroughs that had asked for the delegation of authority.
COMMISSIONER BALLARD admitted she was aware of none.
SENATOR ELTON thought this was introducing cross-jurisdictional
issues. He pointed out that owners of food service franchises
would find different inspection regimes in different areas of
the state, which wouldn't be business friendly.
COMMISSIONER BALLARD declared that is the case in all other
states. Alaska is probably the only state that maintains a
statewide food safety program. Most states have local health
districts that are even smaller units of government than local
government. Local health districts are generally organized
within counties and the responsibilities under discussion
generally accrue to local health districts. For example, a
McDonalds might have 30 jurisdictions in the State of
Washington.
SENATOR ELTON said, "So it would be intuitive for us to assume
that they prefer our system where they only have one
jurisdiction."
COMMISSIONER BALLARD wasn't sure that would be a good intuitive
judgment. Large national chains probably have their own food
management safety system that they operate uniformly at every
restaurant in the chain and at a higher standard than any state
or health district could hope to achieve. Due to liability, they
are their own best protectors.
SENATOR ELTON asked how or whether the department deals with
cruise ship or ferry food service.
COMMISSIONER BALLARD advised the department does not deal with
cruise ships but they do have jurisdiction over the state
ferries.
SENATOR ELTON asked if she envisions each municipality having
the responsibility to inspect ferries.
MS. KRISTIN RYAN, Division of Environmental Health Director,
responded that the division intends to maintain oversights of
operations such as the railroad and ferry system that operate
across jurisdictions.
SENATOR ELTON asked whether the department would maintain
jurisdiction for school districts, particularly in
unincorporated areas, in which a licensed, inspected food
provider was required before they could qualify for federal
dollars.
MS. RYAN was aware of the restriction that requires a
government-licensed entity, which means that a local
jurisdiction would qualify.
SENATOR ELTON speculated that due to the permissive nature, some
local jurisdictions wouldn't take advantage of the option.
Chevak probably wouldn't assume food inspection powers and he
wondered whether the department would maintain jurisdiction.
MS. RYAN replied the department would maintain jurisdiction for
any area that chose not to assume the authority.
SIDE B
2:15 pm
CHAIR WAGONER remarked governments work in strange and
mysterious ways. He related a story regarding how zoning powers
shifted back and forth between the borough and City of Kenai and
wondered if this might not develop similarly.
COMMISSIONER BALLARD said she couldn't testify to the stability
of borough forms of government, but food safety regulation is
evolving and it's time for Alaska to evolve with it. The
department intends to develop a statewide program that will be
protective statewide regardless of borough activity. It is the
state's responsibility to assure that there is a standard of
safety available from Barrow to Craig and boroughs could then
choose to use the tool or not use the tool. "It's a matter for
them to decide what kind of a regulatory program they want in
their own communities."
CHAIR WAGONER requested an accounting of the receipts that the
department currently collects for inspection services from each
borough.
SENATOR TAYLOR remarked it is his understanding that second-
class boroughs have limited power for taxing for educational
purposes and that is all. Asking them to assume this
responsibility may be too much. Although he had no objection to
providing communities the opportunity to assume inspection
responsibility, he was unsure any would exercise the option.
Because of this, he questioned whether the department would
accomplish the six person reduction.
COMMISSIONER BALLARD advised Juneau, Kenai, Mat-Su, and
Fairbanks are large enough to cost effectively assume the
responsibility. They formed this judgment by counting the
establishments; it is the inspections for those boroughs that
generate $513,000 in annual fee income and require six
inspectors. They aren't anticipating other boroughs would become
involved in a locally run program, but the legislation would
allow participation.
SENATOR TAYLOR expressed hope that boroughs would assume that
option and concern in regard to the accounting for inspections
as they relate to business licenses.
COMMISSIONER BALLARD advised Kristin would explain the Anchorage
fee structure and the relationship between a business license
and the present program.
MS. RYAN explained the fee structures are separate. Anchorage
collects inspection fees from food service businesses and those
businesses apply for a business license from the state. That is
how she would anticipate it would happen with other boroughs as
well. The department would step away from charging and
collecting the fees because they would not be providing the
service. The borough would have to determine how to establish a
fee structure and collection process. As Commissioner Ballard
explained, the program could be inspection based or some other
form.
SENATOR TAYLOR noted the department would have to track business
locations to determine whether they were on the state's
inspection list or someone else's. Currently everyone is used to
sending their fee to DEC. With the change, fee collection would
be based on a geographic designation and some businesses could
fall through the crack.
COMMISSIONER BALLARD replied the challenge is real but the
department is well capable to handle it because they have
extensive and daily and intricate financial relationships with
almost every level of government and every community in the
state. "While it sounds like a complex challenge, it's part and
parcel of what our business is."
SENATOR ELTON asked what would happen if local government opted
not to provide inspections because it appears that the state has
the option of saying, "We're not going to do it for you." It
seems the ultimate goal is to pass the responsibility to local
government.
COMMISSIONER BALLARD responded, "There are many forces colliding
at one time on the food safety inspection program." In the last
appropriations bill the Legislature made it clear they wanted
the department to step away from inspections in those four
larger boroughs. Because of that directive, the department is
revamping the entire program to be sure that without inspections
in those four boroughs, the public is still assured of a
protective food safety program.
SENATOR ELTON observed the cheaper and easier to inspect
restaurants would be taken out thereby leaving the department
with the more expensive inspections. He cited a lodge owner in
Idaho Inlet who is unhappy because he has to apply for so many
permits. If the department has to inspect his food service, it
would lose money unless his fees are increased to pay for the
inspection.
COMMISSIONER BALLARD said they are not assuming that inspections
are the only or even the best way to accomplish food safety. The
lodge owner referred to may not have seen an inspector and yet
that lodge owner probably has a very remarkable food safety
record because he has a very high sense of responsibility to his
customers. The department is providing him the tools, through
the plan review permit, to help him assure that his kitchen is
constructed so he can easily wash and sanitize it, so that he
has adequate food preparation separation areas, and that he has
three sinks so that when he is using a sink for food
preparation, he isn't using it for dishwashing as well. The
department is providing him tools and resources and they believe
they can extend their relationship to him through the Internet,
through the telephone, and through passing on best practices so
they do not depend on an inspection to achieve compliance with
state standards. The majority of restaurants in the State of
Alaska have achieved a remarkable food safety record without an
inspection.
SENATOR ELTON remarked that lodge owner probably wasn't going to
want to talk to the department any more than he already had.
That being said, it seems as though that lodge owner would have
it better than Bullwinkles [Juneau restaurant] because
Bullwinkles would be inspected. This would be a two-tier system
in which the remote person would operate "best business
practices" while the restaurant in town would undergo
inspections.
COMMISSIONER BALLARD didn't agree she said that. If Juneau does
not assume responsibility for a food safety inspection program,
then Bullwinkles would get the same care and attention from the
department that the remote lodge owner receives. If Juneau
assumes the responsibility, there are many tools to choose from
to achieve food safety.
SENATOR ELTON said, "So inspections are not required."
COMMISSIONER BALLARD replied the department is reviewing its
food safety program to determine whether inspections should be
required and whether they are the best way to achieve food
safety protection. Department records indicate most restaurants
in the State of Alaska have achieved a good food safety program
without ever being inspected. The department has regularly
reported through their missions and measures that they have been
unable to fulfill departmental goals in realizing inspections.
In spite of this, the food safety record is good because of
their plan review and restaurant relationships. Most states have
moved beyond sole dependence on inspections.
SENATOR ELTON advised he would follow up on his questions later
since the bill would be held in committee.
SENATOR LINCOLN asked for the following at the next hearing:
· An accounting of both the income and costs of the
inspection program and a list of the first and second
class boroughs referred to
· How the department planned to find out which borough would
opt in or out and how many staff would be needed to make
that determination before the effective date that is less
than four months away
· How the fiscal note is zero
· Whether there are fees for the aquatic farm products
· What the liability would be
SENATOR TAYLOR recalled a time when people that lived in the
various communities did public health inspections. Once the duty
was moved into DEC, small communities were no longer given that
service unless someone flew out of Juneau. The fees went up
while the service went down. He asked why the state shouldn't
return to a similar system.
COMMISSIONER BALLARD admitted the level might not be the same as
it was before the transfer of responsibility to DEC, but about
15 of their 35 staff members are located in 20 remote offices to
provide inspection and consultation services. Since the transfer
to DEC the number of restaurants has increased, more people eat
out, and the state's administrative budget has consistently been
reduced. The level of service state agencies used to offer is no
longer available because the budget won't allow it.
Years ago the department implemented a risk based prioritization
of inspection planning so those establishments that handled the
broadest spectrum of food and the most complex preparation were
the targets for the most regular inspections. It is responsible
of the Executive Branch to reorganize the program. In the
meantime, restaurant owners, the Food and Drug Administration,
and state governments have figured out better ways to
communicate the principles. Mandatory hand washing signs in
bathrooms are a good example. This is something that a once
yearly inspection would not improve; it must be operator
accountability.
2:50 pm
SENATOR TAYLOR asked if DEC staff is cross-trained and would
losing the positions impact the overall DEC mission.
COMMISSIONER BALLARD said there has been extensive training in
the environmental health department. There used to be a separate
food processing and food management groups and they are all
cross-trained now.
SENATOR ELTON referred to statutes 17.20.005 through 17.20.075
and announced they include labeling and advertisement of
halibut, salmon, and sablefish products, misbranding of halibut,
sale and labeling of frozen meat and fish.
MS. RYAN referred to the end of the chapter, 17.20.075, and said
it gives the Commissioner the authority to delegate sections or
not. She added, "That's an exact copy of the ability we'd
already given to first and second class cities... And we also
only have the authority in our food code to delegate. We don't
have the authority to delegate our seafood processing code at
this time. Although if at some point, someone wants to do that
we can look at doing that."
SENATOR ELTON asked why they are authorizing it to be done if
they don't plan on doing so.
No response was forthcoming and there were no further questions.
CHAIR WAGONER announced the bill would be held in committee.
SB 136-RESIDENTIAL PROPERTY TAX EXEMPTION
CHAIR THOMAS WAGONER announced this was a preliminary hearing
and more information regarding SB 136 would be available at the
next hearing. He asked Ms. Jackson to introduce the legislation.
MS. MARY JACKSON, staff to Senator Thomas Wagoner, explained the
bill increases the existing property tax exemption from $10,000
to $50,000. The $10,000 exemption has been on the books since
1974. She noted the bill has two fiscal notes. The first one
from the Department of Commerce and Economic Development is
zero. The second is from the Tax Division and is incorrect.
The Tax Division presumes that if up to $50,000 exemption were
provided, the Bristol Bay Borough, the Kenai Peninsula Borough,
the Fairbanks North Star Borough, the North Slope Borough, and
the City of Valdez would take advantage of the provision, which
would reduce revenues to the State of Alaska. The Kenai Borough
is the only one that collects a sales tax and they offset their
property taxes, in part, because of the $14 million they collect
in sales tax. Kenai residents are actually helping the State of
Alaska by paying a sales tax because they aren't reducing the
revenues to the state.
SENATOR LINCOLN allowed that she supported property exemptions,
but she had two concerns. First, whom would this exemption
actually help? Both rich and poor pay sales tax, but just those
with enough money to become property owners qualify for the
property tax exemption. Renters would not have the opportunity
to take advantage of the exemption even though they pay rent and
thereby help the property owner pay for property taxes. "The
poor are the ones that end up suffering for something like
this." Second, she thought increasing the exemption to $50,000
would force the hand of the other four municipalities.
MS. JACKSON agreed everyone pays sales tax, but in this state
there is a rebate program, which provides some offset. With
regard to the second concern, she thought the other boroughs
would utilize the program, but the Kenai Borough wouldn't object
to this being single purpose legislation.
SENATOR ROBIN TAYLOR asked if it was correct that the Kenai
Borough had a 6.5 millage rate.
MS. JACKSON told him that was correct.
SENATOR TAYLOR asked for the sales tax rate.
MS. JACKSON advised they pay a five percent sales tax.
CHAIR WAGONER added the borough charges two percent and some
areas charge five and one half and six percent tax.
SENATOR TAYLOR announced he is currently paying ten or eleven
mills and seven percent sales tax and Wrangell needs every bit
of that to operate. He assumed Kenai needs the $40 million they
generate from property taxes and $14 million from sales taxes to
cover their budget. He observed this would simply shift money
within the tax frame. The income has to stay at the same level
to keep everything running. He asked how the amount of property
tax revenue would be affected if all property owners were to
receive a $50,000 exemption.
MS. JACKSON said if property tax were reduced, there would be an
increase in sales tax or a decrease in a service that was
offered.
SENATOR TAYLOR replied sales tax wouldn't increase because it's
generated by the economy, but there would be a decrease in the
total taxable base. He advised Kenai Borough could accomplish
the same thing by making the local decision to increase the
sales tax rate and to drop the mill rate.
MS. JACKSON agreed and said the Kenai Borough has discussed
this.
SENATOR TAYLOR said he could guarantee the North Slope Borough
would take full advantage of the increased exemption and they
would probably exempt all residential properties and nothing on
an oilrig. He was unclear what impact this would have on the
educational formula that requires a minimum payment of 4 mills.
MS. JACKSON reported that Eddy Jeans from the Department of
Education and Early Development said it would have no affect
because it is optional.
SENATOR TAYLOR remarked that is because for the North Slope
Borough it's an either or situation. It's either 4 mills or 30
percent, whichever is less and for the rest of the state it's a
mandated 4 mills.
MS. JACKSON agreed; the corrected fiscal note will reflect that
if the exemption increased, Fairbanks would see a $625,000
revenue decline Kenai revenue would decline by $700,000, the
North Slope by $133,000 and Valdez by $475,000. The total
projected revenue decline is $1.9 million and this is the
dilemma, but the issue is that the Kenai Peninsula Borough would
like to have another option. They provide the sales tax in
addition to the property tax. She noted there are additions to
the 6.5 mill rate for the service areas.
SENATOR KIM ELTON asked if you could distinguish between
vacation property and primary residence.
CHAIR WAGONER informed him they differentiate now and this
legislation wouldn't change that.
SENATOR TAYLOR added this is currently done under the senior
exemption.
SENATOR ELTON noted the bill says exempt residential property so
a borough could make a distinction between owner occupied or
not.
MS. JACKSON informed him line 8 says, "for any one residence."
CHAIR WAGONER called for teleconferenced testimony.
TAPE 2
3:00 pm
MR. GARY SUPERMAN, Kenai Peninsula Borough Assemblyman, said the
rationale for pursuing the increase is to provide homeowners
some tax relief. The borough finance department projects that
the impact to the borough and the state on AS 43.56 [Oil and Gas
Property] revenues would be minimal. Property assessments have
climbed each year for the last five years and over a two year
period should mitigate the exemption. Also, voters defeated a
ballot proposition to exempt food from sales tax. Property
owners are looking for tax relief and voters want this option to
be available on the local level. Stable tax rates are attractive
to potential new residents.
SENATOR TAYLOR asked him to think about the earlier discussion.
This legislation would just cause a revenue shift because the
borough would need the same amount of money each year. The
borough would have to increase the mill levy after exempting
$50,000 or increase the sales tax rate if those are the two
primary sources of income. If the Legislature allows the
increased exemption it would decrease the amount of valuation
the State of Alaska has. This would be a $1.9 million revenue
impact to the state at a time when the Governor has a series of
revenue enhancers. He calls those taxes and fees.
He asked Mr. Superman to send a note and give his opinion on how
that adjustment would occur.
MR. SUPERMAN agreed he could do so then pointed out the borough
gives seniors a total exemption. They have a list of exemptions
but it doesn't include a property tax exemption for the working
class people. Voters elected to keep the sales tax the way it
is, but that doesn't mean they aren't looking for tax relief. If
the exemption for the sales tax had been approved, it would have
had a $2 million impact to the borough and the increase from
$10,000 to $50,000 is about the same. They see a projected loss
in taxable assessed valuation of $310 million and from FY02 to
FY03 they see an increase of $270 million in their tax
assessment roles.
There were no further questions for Mr. Superman.
SENATOR GARY STEVENS asked Mr. Van Sant a question regarding the
school contribution. He noted it is 4 mills on the valuation of
the property. If there is an exemption to property taxes he
wondered if that would reduce the valuation and change the
amount of money that would go into the foundation formula.
MR. Steve Van Sant, State Assessor, advised moving the exemption
from $10,000 to $50,000 would have no bearing on the school
foundation funding. It would still be 4 mills of full value. If
the Kenai Borough elected to increase the exemption, the State
Assessor would keep the same full value there is now. The
optional exemptions are added back.
There were no further questions.
The bill was held in committee.
CHAIR WAGONER adjourned the meeting at 3:15 pm.
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