Legislature(2005 - 2006)BELTZ 211

04/15/2005 01:30 PM COMMUNITY & REGIONAL AFFAIRS


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02:07:16 PM Start
02:07:49 PM SB161
02:28:52 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Bills Previously Heard/Scheduled
+= SB 161 BOROUGH SALES TAX EXEMPTIONS TELECONFERENCED
Moved SB 161 Out of Committee
Senate Bill:
TAXATION OF MINING PROPERTY; CONTRACTS
APPROVED BY MUNICIPALITIES FOR PAYMENT
IN LIEU OF TAXES
<Pending Introduction & Referral>
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         April 15, 2005                                                                                         
                           2:07 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Gary Stevens, Chair                                                                                                     
Senator Bert Stedman                                                                                                            
Senator Thomas Wagoner                                                                                                          
Senator Johnny Ellis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Albert Kookesh                                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 161                                                                                                             
"An Act relating to a borough sales tax exemption for a source                                                                  
that is taxed by a city in that borough."                                                                                       
                                                                                                                                
     MOVED SB 161 OUT OF COMMITTEE                                                                                              
                                                                                                                                
Taxation    of   Mining    Property;   Contracts    approved   by                                                               
municipalities for Payment in Lieu of Taxes                                                                                     
                                                                                                                                
     PENDING INTRODUCTION & REFERRAL                                                                                            
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 161                                                                                                                  
SHORT TITLE: BOROUGH SALES TAX EXEMPTIONS                                                                                       
SPONSOR(s): STATE AFFAIRS                                                                                                       
                                                                                                                                
04/04/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/04/05       (S)       CRA, FIN                                                                                               
04/13/05       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
04/13/05       (S)       Heard & Held                                                                                           
04/13/05       (S)       MINUTE(CRA)                                                                                            
04/15/05       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Senator Gene Therriault                                                                                                         
Alaska Capitol Building                                                                                                         
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  Sponsor SB 161                                                                                           
                                                                                                                                
Steve Van Sant, State Assessor                                                                                                  
Department of Commerce, Community & Economic Development                                                                        
PO Box 110800                                                                                                                   
Juneau, AK 99811-0800                                                                                                           
POSITION STATEMENT:  Posed a question regarding SB 161                                                                        
                                                                                                                                
Renee Broker, Attorney                                                                                                          
Fairbanks North Star Borough                                                                                                    
PO Box 71267                                                                                                                    
Fairbanks, Alaska 99707                                                                                                         
POSITION STATEMENT:  Available for questions on SB 161                                                                        
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR  GARY  STEVENS called  the  Senate  Community and  Regional                                                             
Affairs  Standing  Committee  meeting  to order  at  2:07:16  PM.                                                             
Present were  Senators Stedman, Wagoner  and Chair  Gary Stevens.                                                               
Senator Ellis arrived during the course of the meeting.                                                                         
                                                                                                                                
              SB 161-BOROUGH SALES TAX EXEMPTIONS                                                                           
                                                                                                                                
CHAIR GARY STEVENS  announced SB 161 to be  up for consideration.                                                               
He said the  committee heard the bill previously  and the concept                                                               
makes sense.                                                                                                                    
                                                                                                                                
2:07:49 PM                                                                                                                    
                                                                                                                                
SENATOR  GENE THERRIAULT,  sponsor, said  the policy  question is                                                               
whether  current  statute should  be  interpreted  to prohibit  a                                                               
borough government  from having an  offset for city  taxes within                                                               
the borough  boundary. If an  offset or exemption  is prohibited,                                                               
the two  taxes would  be stacked  and in  some instances  the tax                                                               
would be doubled.                                                                                                               
                                                                                                                                
That   isn't  a   correct   interpretation,   he  asserted.   The                                                               
Legislature did not intend to  restrict a borough government from                                                               
allowing the  offset. An interpretation  that is being  pushed is                                                               
of  concern  because   if  it  is  accepted,  it   could  have  a                                                               
detrimental  impact on  the revenues  generated across  the state                                                               
for bed taxes.                                                                                                                  
                                                                                                                                
The bill language is specific to  make it clear that if a borough                                                               
government  wants  to  allow  the offset,  it  can.  In  previous                                                               
decisions  on  taxing  powers  the Legislature  has  not  made  a                                                               
decision to force tax stacking.                                                                                                 
                                                                                                                                
2:09:44 PM                                                                                                                    
                                                                                                                                
CHAIR GARY STEVENS  said this would make it clear  that a borough                                                               
may choose to have or not to have stacked taxes.                                                                                
                                                                                                                                
2:10:22 PM                                                                                                                    
                                                                                                                                
SENATOR BERT  STEDMAN questioned why the  Legislature should step                                                               
in when litigation is underway.                                                                                                 
                                                                                                                                
CHAIR GARY STEVENS cautioned members  to discuss the issue rather                                                               
than the particular case.                                                                                                       
                                                                                                                                
SENATOR THERRIAULT said the real  issue in Mason's Manual is that                                                               
since  the Legislature  is a  separate branch  of government,  it                                                               
should  not  be concerned  with  a  potential action  of  another                                                               
branch  of  government.  However,   that  interpretation  is  not                                                               
binding on a member of the general public that might testify.                                                                   
                                                                                                                                
That  being said,  the  policy  call for  the  Legislature is  to                                                               
decide whether it  agrees with the interpretation  of statute and                                                               
whether the statute should be clarified.                                                                                        
                                                                                                                                
SENATOR STEDMAN noted  that a borough in  his district interprets                                                               
the statute in  the same way as the Fairbanks  North Star Borough                                                               
so more than just the one borough would be affected.                                                                            
                                                                                                                                
SENATOR THERRIAULT said  a borough would want to  have the option                                                               
to  exercise that  power so  it could  maintain equal  tax rates.                                                               
Consumers will  shop where the  tax is  lower when access  is the                                                               
same.                                                                                                                           
                                                                                                                                
CHAIR  GARY   STEVENS  asked  if   a  general  sales   tax  could                                                               
potentially be exempted.                                                                                                        
                                                                                                                                
SENATOR THERRIAULT  replied it could  be. The language  gives the                                                               
local government the  ability to decide whether it  wants to have                                                               
an offset for bed tax, alcohol  tax, general sales tax or whether                                                               
it wants to stack the taxes.                                                                                                    
                                                                                                                                
SENATOR THOMAS WAGONER  said he still hadn't  had the opportunity                                                               
to discuss this with people in  his district, but tax stacking is                                                               
common in the Kenai Peninsula Borough.                                                                                          
                                                                                                                                
2:18:18 PM                                                                                                                    
                                                                                                                                
SENATOR  THERRIAULT replied  in that  borough a  policy call  was                                                               
made to stack  taxes. In other boroughs the local  policy call is                                                               
to  offset  the  taxes.  That's  the  way  it  should  be;  local                                                               
government   should  be   able   to  make   that  decision.   The                                                               
interpretation  that  has  been  advanced is  that  there  is  no                                                               
option.                                                                                                                         
                                                                                                                                
SENATOR  WAGONER said  his district  has detractors  as well  and                                                               
that's why he wants to check  with the local attorney. He doesn't                                                               
want to ambush his community.                                                                                                   
                                                                                                                                
SENATOR  THERRIAULT said  he understands  the desire  to look  at                                                               
local impact,  but the wording on  page 1, line 8  indicates this                                                               
is up to the discretion of the local government.                                                                                
                                                                                                                                
CHAIR  GARY STEVENS  said it  is a  matter of  local control  and                                                               
although  he is  a bit  concerned about  sales tax  and how  that                                                               
works he is more comfortable now than at the first hearing.                                                                     
                                                                                                                                
He asked Senator Stedman if had any questions.                                                                                  
                                                                                                                                
SENATOR STEDMAN replied he was comfortable.                                                                                     
                                                                                                                                
SENATOR WAGONER agreed  that the Legislature has the  power to do                                                               
what the sponsor asks.                                                                                                          
                                                                                                                                
2:22:59 PM                                                                                                                    
                                                                                                                                
CHAIR GARY  STEVENS noted  Senator Ellis  had joined  the meeting                                                               
and gave him a synopsis of the discussion.                                                                                      
                                                                                                                                
2:23:29 PM                                                                                                                    
                                                                                                                                
SENATOR WAGONER  noted the bill  had a finance referral  and said                                                               
he had no problem moving the bill.                                                                                              
                                                                                                                                
CHAIR GARY STEVENS asked Senator Ellis if he had any questions.                                                                 
                                                                                                                                
SENATOR ELLIS  said he was  well versed on  the issue and  had no                                                               
questions.                                                                                                                      
                                                                                                                                
CHAIR  GARY  STEVENS  noted  Mr.  Van Sant  indicated  he  had  a                                                               
question.                                                                                                                       
                                                                                                                                
2:24:25 PM                                                                                                                    
                                                                                                                                
STEVE VAN SANT,  Assessor, said he assumes that  this would apply                                                               
to cities  as well as  boroughs and  he was curious  whether that                                                               
was the intent.                                                                                                                 
                                                                                                                                
CHAIR  GARY  STEVENS  said  a   city  couldn't  tax  outside  its                                                               
boundaries so he wasn't sure how a city could stack taxes.                                                                      
                                                                                                                                
MR. VAN  SANT said  he thought  about it  again and  withdrew his                                                               
question.                                                                                                                       
                                                                                                                                
SENATOR WAGONER said there wouldn't be a problem with this bill.                                                                
                                                                                                                                
MR. VAN SANT said he agrees.                                                                                                    
                                                                                                                                
CHAIR GARY STEVENS asked if the sponsor wanted to comment.                                                                      
                                                                                                                                
SENATOR THERRIAULT  said he  didn't think it  would be  a problem                                                               
for a city.                                                                                                                     
                                                                                                                                
RENEE  BROKER, Fairbanks  North Star  Borough Attorney,  said she                                                               
agrees  it was  appropriate  for  Mr. Van  Sant  to withdraw  his                                                               
question. It wouldn't be an issue for a city.                                                                                   
                                                                                                                                
CHAIR GARY  STEVENS asked if a  city is limited in  the amount of                                                               
sales tax it could charge.                                                                                                      
                                                                                                                                
MS. BROKER said she wasn't aware of a statutory limit.                                                                          
                                                                                                                                
MR.  VAN SANT  clarified his  question by  explaining that  there                                                               
used to  be a  6 percent limit,  but it was  removed a  few years                                                               
ago.                                                                                                                            
                                                                                                                                
CHAIR GARY STEVENS asked for a motion.                                                                                          
                                                                                                                                
SENATOR WAGONER  motioned to  report SB  161 and  attached fiscal                                                               
notes  from  committee  with  individual  recommendations.  There                                                               
being no objection, it was so ordered.                                                                                          
                                                                                                                                
There being  no further  business to  come before  the committee,                                                               
Chair Gary Stevens adjourned the meeting at 2:28:52 PM                                                                        
                                                                                                                                

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