Legislature(2003 - 2004)

03/24/2004 02:03 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    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                                                               
CHAIR  STEDMAN   asked  whether  there  was   opposition  to  the                                                               
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                                                               
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                                                               
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                                                               
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                                                               
SENATOR  WAGONER  suggested  moving   the  bill  to  the  Finance                                                               
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                                                               
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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