03/24/2004 02:03 PM Senate CRA
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ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
March 24, 2004
2:03 p.m.
TAPE (S) (S) 04-8
MEMBERS PRESENT
Senator Bert Stedman, Chair
Senator Thomas Wagoner, Vice Chair
Senator Gary Stevens
Senator Kim Elton
Senator Georgianna Lincoln
MEMBERS ABSENT
COMMITTEE CALENDAR
SENATE BILL NO. 267
"An Act relating to the exemption from taxation of real property
used as the primary residence of the widow or widower of a
resident 65 years of age or older, and to tax equivalency
payments for the widow or widower of a resident 65 years of age
or older."
MOVED CSSB 267(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 267
SHORT TITLE: SENIOR WIDOW(ER) PROPERTY TAX EXEMPTION
SPONSOR(s): SENATOR(s) WILKEN
01/16/04 (S) READ THE FIRST TIME - REFERRALS
01/16/04 (S) CRA, FIN
03/24/04 (S) CRA AT 2:00 PM FAHRENKAMP 203
WITNESS REGISTER
Senator Gary Wilken
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor SB 267
Wynola Possenti
No address provided
POSITION STATEMENT: Testified on SB 267
Randy Hoffbeck
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Commented on SB 267
ACTION NARRATIVE
TAPE 04-8, SIDE A
CHAIR BERT STEDMAN called the Senate Community and Regional
Affairs Standing Committee meeting to order at 2:03 p.m. Present
were Senators Wagoner, Gary Stevens, Elton and Chair Stedman.
Senator Lincoln arrived several minutes later.
SB 267-SENIOR WIDOW(ER) PROPERTY TAX EXEMPTION
CHAIR BERT STEDMAN announced SB 267 to be up for consideration
and invited Senator Wilken to come forward.
SENATOR GARY WILKEN, sponsor, read the sponsor statement into
the record:
Senate Bill 267 extends the senior or disabled veteran
property tax exemption to a widow or widower of an
eligible resident. Under current law, a resident 65
years of age or older is exempt from property taxation
on the first $150,000 of the assessed value of the
person's primary residence. Unfortunately if the
eligible resident dies, the remaining spouse is denied
the benefit of the previous exemption unless the
spouse is at least 60 years old.
Coping with the loss of a love one as well as the
accompanying loss of financial security is difficult
enough without the added burden of increase property
taxes. Senator Bill 267 permits a widow or widower of
a qualified applicant to remain eligible for the
senior or disabled veteran property tax exemption
regardless of age until the individual remarries. This
legislation helps make a difficult situation a little
bit easier.
As the residence in question is already exempted from
taxation, Senate Bill 267 will have negligible impact
on a municipality. However, this legislation will have
a huge impact on those individuals affected. Please
join me in endorsing the supporting this legislation.
SENATOR WILKEN noted that Wynola Possenti was available to offer
testimony and it was her circumstance that caused him to
introduce the bill.
SENATOR KIM ELTON asked how many people might be affected by
this legislation.
SENATOR WILKEN replied, "One so far," and noted that all
communities recognize the senior property tax exemption and he
was certain that other cases would surface.
SENATOR THOMAS WAGONER chimed in that he didn't think it was a
matter of recognition. This was a state mandate and is therefore
a statewide requirement.
SENATOR GARY STEVENS said he appreciated the intent, but from
the borough's point this would be a loss of revenue. He asked
the sponsor if he would consider asking the state to pick up
that cost for the borough.
SENATOR WILKEN said, "The cost of what Senator?"
SENATOR GARY STEVENS replied he was referring to the property
tax that the various boroughs would lose.
SENATOR WILKEN maintained there would be no loss or no
additional burden because the exemption already exists.
SENATOR GARY STEVENS held that the borough would receive the
property tax if this did not pass.
SENATOR WILKEN agreed with that point.
SENATOR KIM ELTON stated that the potential cost to a
municipality could be sizeable if the widow or widower was quite
young. He thought that issue was probably discussed when the 60-
year requirement was established. Suggesting that the 60-year
floor might be too high, he questioned whether a 50-year floor
should be considered.
SENATOR WILKEN responded that he didn't know and maintained that
the borough is already carrying the exemption so continuing to
exempt the widow or widower represents no additional cost.
"Going back to Senator Stevens, I'm not sure where the added
cost is." He said that Mrs. Possenti is now responsible for
property taxes since it was her deceased husband who qualified
for the exemption. "So that's the added revenue," he reasoned.
"Would I consider picking up some way to recognize that added
revenue," he asked.
SENATOR GARY STEVENS replied he has always thought that it was
unconscionable for the state to pass a law that burdens a
borough. Certainly the exemption already exists, but without
this bill the borough would be able to collect property tax on
that property. When the surviving spouse qualifies for the
exemption, they could apply for their own exemption. "Many
people have done that in the past."
SENATOR WILKEN countered that that's the purpose of the bill.
It's to relieve the surviving spouse from the added tax burden.
CHAIR STEDMAN opened public testimony.
WYNOLA POSSENTI testified via teleconference in support of SB
267. She thanked Senator Wilken for introducing the legislation
and stated her belief that very few people would be affected by
the change, but it would have a tremendous and positive impact
on those few. She proceeded to tell members about her personal
situation and further suggested that it might be appropriate to
increase the $150,000 amount to more accurately reflect the
current property values.
SENATOR WAGONER asked Mrs. Possenti to restate her last
suggestion, which she did. Her comments caused him to say, "I
don't believe we want to go there today."
CHAIR STEDMAN told Mrs. Possenti her suggestion would have a
substantial impact on municipalities and cities statewide.
MRS. POSSENTI said, "I wanted to throw it out as a thought,"
then restated her support of the bill.
SENATOR WAGONER gave Mrs. Possenti some background information
explaining that when the state originally set the program in
place for seniors, it was a funded mandate to forgive the first
$150,000 per resident. Since then the state withdrew the
funding, but left the statute in place granting the exemption.
Because of that, "There's a lot of resistance at most of the
government levels to do anything with this bill other than to
have the state get rid of it."
MRS. POSSENTI thanked him for the explanation.
SENATOR GARY STEVENS surmised there might be a dozen people in
his community that might benefit from this bill, but maintained
that this money wasn't coming out of a state coffer. Rather, the
money comes out of the boroughs' pockets. "It's less money that
the boroughs would be getting."
Since the boroughs are paying the price, they should be the ones
that make the decision, he said. This should be an option that
is available to them; the state shouldn't decide, he emphasized.
CHAIR STEDMAN asked if he would like to offer an amendment.
SENATOR GARY STEVENS said he would, but he wasn't sure where to
insert it or how to frame the language. Nonetheless he stated
that, "Conceptually I would move that this be an option for the
boroughs."
CHAIR STEDMAN asked whether there was opposition to the
amendment.
SENATOR WAGONER spoke up and said that he and Senator Gary
Stevens have been in municipal government and he understands
what this does to municipal government. "It's not so much the
level of funds as it is the unfunded mandate and the borough's
ability not to control their own their own tax relief measures
that are offered."
Although he wasn't sure he would vote against the bill, he did
intend to contact the borough if the bill passed from committee
to find out how many might people take advantage of this option.
This is a commendable idea but "I think it's kind of a 'Is the
glass half full or half empty?' kind of deal." Certainly it
would be a considerable burden on some surviving spouses to have
to pay the tax, but at the same time it would also be a burden
on the taxpayers in the incorporated area if the tax exemption
were to continue.
CHAIR STEDMAN asked if there was a state representative
available to offer information and there was no response.
SENATOR ELTON wondered whether the sponsor had contacted the
Alaska Municipal League then remarked that it's difficult to
debate a conceptual amendment that might take a number of
different forms. Also, he wasn't clear whether or not the
$150,000 exemption could transfer to a new property if that
became the primary residence.
SENATOR WILKEN said, "This legislation doesn't contemplate that.
It's silent on that."
CHAIR STEDMAN asked Mr. Hoffbeck if he had any enlightening
information regarding potential costs that boroughs and cities
might have to assume were this to pass.
RANDY HOFFBECK, Department of Revenue, advised that the cost to
the state would be negligible and the impact on boroughs and
municipalities would depend on how many residents qualify. He
opined that the number would be in the dozens, but they have no
data on that.
SENATOR GEORGIANNA LINCOLN said the state assessor indicated
that 12 or 13 underage widow or widowers statewide might be
affected by this legislation. She wasn't sure where he got that
information, but if there is a record the sponsor might want to
have that information for the next committee of referral.
SENATOR WILKEN said, "I don't know how to get that information."
SENATOR LINCOLN told him her information came from the state
assessor.
SENATOR WILKEN replied, "I don't know how to get it."
CHAIR STEDMAN looked around and asked if there was any more
discussion on the amendment.
SENATOR ELTON asked for someone to restate the amendment.
SENATOR GARY STEVENS explained that when one group of people is
given an exemption, everyone else in the community has to make
up for that difference. "In fact, what you are doing in
communities is taxing others higher in order to give people this
benefit.... I just question whether it's our right to force the
boroughs to accept this reduced revenue or to pass the taxes on
to your neighbors when we are not the ones that are paying the
bill."
The conceptual amendment is "that this be passed with the option
for the boroughs to accept it or not."
SENATOR ELTON asked the Chair to consider this at a later
meeting saying:
It seems to me that right now a borough can opt in.
They can take a proactive approach and say, 'We're
going to extend a property tax exemption to this class
of people.' It would seem to me that what Senator
[Gary] Stevens may want to consider is that this bill
have an opt-out, that this provision or this tax
exemption is extended to this class of people unless a
borough opts out because right now a borough can opt
in. They can exempt any class of taxpayer they want -
or most classes of taxpayers if they want.
I don't know if that's a friendly amendment to an
amendment that I'm not sure how I feel about in the
first place, but it's a point that I'd like to make.
CHAIR STEDMAN asked Senator Gary Stevens to respond.
SENATOR GARY STEVENS jested that he just made a bad amendment
worse. Becoming serious, he agreed that boroughs can certainly
opt-in at any time and increase the exemption, but he thought
they were unlikely to do so. What he intended is to allow
boroughs to opt-out of the additional exemption proposed in SB
267.
SENATOR ELTON said he would restate what he believes he heard,
which was:
So the amendment is that this class of citizens is
exempted from municipal property taxes unless the
borough brings them back as taxpayers. The borough
would have to adopt by ordinance a provision that says
we're not going to participate in this tax break.
SENATOR GARY STEVENS declared legal help was needed.
CHAIR STEDMAN asked if he wanted time to work on the amendment.
SENATOR GARY STEVENS questioned whether the committee was at
odds.
SENATOR WAGONER suggested moving the bill to the Finance
Committee.
SENATOR GARY STEVENS emphatically stated, amid peals of
laughter, that that was a bad idea.
SENATOR WAGONER judged that the committee was spending a lot of
time on the bill when that wasn't the real problem. The real
problem is the unfunded mandate, he said. Furthermore:
The good Senator on my right [Senator Lincoln] has
already stated that her staff discussed this with the
state assessor and there is probably a dozen, 12 or
13, people in the state that this may affect and I,
for one, would be willing to take it on my back to
extend this. I plan to call the borough mayor in my
borough and tell him what is going on and explain it
to him. I don't think they would have that much
problem with it.
CHAIR STEDMAN announced there was an amendment before the
committee and asked Senator Gary Stevens whether he wanted to
withdraw his amendment or have the committee vote on it.
SENATOR GARY STEVENS asserted he did not want to withdraw his
amendment. He was willing to negotiate with the members, but he
maintained that there should be an option for the boroughs to
decide whether or not they want to pick up this cost. "And the
place to argue it then is at the borough assembly."
CHAIR STEDMAN asked for further discussion and there was none.
He then called for a roll call vote on conceptual amendment 1.
Conceptual amendment 1 passed with Senators Gary Stevens,
Wagoner, Lincoln, and Elton voting yea and Chair Stedman voting
nay. Conceptual amendment 1 would allow boroughs and cities the
option of extending the senior citizen property tax exemption to
widows and widowers.
SENATOR WAGONER made a motion to move CSSB 267(CRA) from
committee with individual recommendations and attached fiscal
note.
SENATOR ELTON asked to see the conceptual amendment when it was
prepared. "I think it needs to be written in a way that it
allows them to opt-out rather than opt-in because right now they
can opt-in and extend that benefit to any class of citizen that
they want. So I just need to see it to understand it."
SENATOR GARY STEVENS contended the amendment wouldn't be
difficult to insert.
CHAIR STEDMAN announced that CSSB 267(CRA) moved from committee.
There being nothing further to come before the committee, Chair
Stedman adjourned the meeting at 2:35 pm.
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