Legislature(2001 - 2002)
04/08/2002 01:40 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 & REGIONAL AFFAIRS COMMITTEE
April 8, 2002
1:40 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Alan Austerman
Senator Randy Phillips
MEMBERS ABSENT
Senator Georgianna Lincoln
Senator Pete Kelly
COMMITTEE CALENDAR
SENATE BILL NO. 351
"An Act relating to conveyance of tide and submerged land to
municipalities."
HEARD AND HELD
SENATE BILL NO. 352
"An Act relating to the assessment of farm or agricultural land
for purposes of municipal taxation; and providing for an
effective date."
HEARD AND HELD
CS FOR HOUSE BILL NO. 355(CRA)
"An Act relating to the taxation of mobile telecommunications
services by municipalities; and providing for an effective date."
MOVED CSHB 355(CRA) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 358(CRA)
"An Act relating to an optional exemption from municipal property
taxes for certain land from which timber is harvested and for
certain improvements used in or necessary to the harvest of
timber; and providing for an effective date."
MOVED CSHB 358(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
SB 351 - No previous action to record.
SB 352 - No previous action to record.
HB 355 - No previous action to record.
HB 358 - No previous action to record.
WITNESS REGISTER
Wilda Rodman
Aide to Senate Therriault
Alaska State Capitol, Room 427
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SB 352
Steve Van Sant
State Assessor
Department of Community & Economic Development
th
550 W. 7 Ave Suite 1770
Anchorage, AK 99501-3510
POSITION STATEMENT: Testified on SB 352 and HB 358
Rob Wells
Director, Division of Agriculture
1800 Glen Highway Suite 12
Palmer, AK 99615
POSITION STATEMENT: Testified on SB 352
John Tobin
3390 Duncan Road
North Pole, AK 99705
POSITION STATEMENT: Testified on SB 352
Stewart Davies
1606 Roosevelt Drive
Fairbanks, AK 99708
POSITION STATEMENT: Testified on SB 352
Ed Arobio
Division of Agriculture
P.O. Box 81482
Fairbanks, AK 00708
POSITION STATEMENT: Testified on SB 352
Amy Erickson
Aide to Representative Lisa Murkowski
Alaska State Capitol, Room 408
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 355
Darrell Bell
No address provided
POSITION STATEMENT: Answered questions on HB 355
Chuck Harlamert
Juneau Section Chief
Department of Revenue
P.O. Box 110420
Juneau, AK 99811-0420
POSITION STATEMENT: Testified on HB 355
Carol Carroll
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801-1724
POSITION STATEMENT: Testified on SB 351
Ron Schonenback
Department of Natural Resources
400 Willoughby Suite 400
Juneau, AK 99801
POSITION STATEMENT: Testified on SB 351
Representative Mike Chenault
Alaska State Capitol, Room 432
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 358
Jeff Jahnke
Department of Natural Resources
th
550 W. 7 Ave Suite 1770
Anchorage 99501
POSITION STATEMENT: Testified on HB 358
Marvin Ross
Kenai Mapping Director
POSITION STATEMENT: Testified on HB 358
Tim Navarre
Kenai Peninsula Borough Assembly
144 North Binkley St
Soldotna, AK 99669
POSITION STATEMENT: Testified on HB 358
ACTION NARRATIVE
TAPE 02-7, SIDE A
CHAIRMAN JOHN TORGERSON called the Senate Community & Regional
Affairs Committee meeting to order at 1:40 p.m. Present were
Senators Austerman, Phillips and Chairman Torgerson.
SB 352-MUNICIPAL TAXATION OF AGRICULTURAL LAND
WILDA RODMAN, aide to Senator Gene Therriault, read the following
sponsor statement into the record:
The State of Alaska has been careful to recognize that
there is a public purpose served when land used for
farming and other agricultural activities is classified
and restricted for agricultural use. One key element of
restricting land for agricultural use is that, so long
as it is so classified and restricted, the land should
be assessed and taxed at a rate that is based on farm
value, rather than on land sales that are often higher
than farm value.
The state recognized the need for assessing fee simple
land, used for agriculture, on its farm value and
provided a farm exemption under AS 29.45.060. The
statute did not specifically include state restricted
agricultural use lands, since these lands, by
definition, could only be used for agriculture.
Unfortunately, the assessment of state restricted
agricultural lands is subject to rising taxes as local
assessors increasingly use comparable sales to assess
these lands while ignoring the agricultural value of
these restricted use lands.
Often state restricted agricultural use land cannot
meet the requirements of AS 29.45.060. Yet, land sold
by the state and restricted to agricultural use can
only be used for agricultural purposes, therefore
precluding other uses of the land. Thus, assessments
should be based on the value of the crops that can be
produced, not on other perceived values or land sales.
SB 352 re-affirms the public purposes of the state's
designation of certain lands for agricultural purposes
only. It removes the requirement that owners of
agricultural land apply for and receive a determination
of agricultural use before receiving the farm exemption
assessment provided by AS 29.45.060.
MS. RODMAN said SB 352 is a companion bill to HB 455, which was
amended in a House committee. She provided members with copies of
the amendment.
SENATOR TORGERSON called for teleconferenced testimony.
STEVE VAN SANT, state assessor, said he was available to answer
questions.
CHAIRMAN TORGERSON asked him if he supported the bill as amended
in the House.
STEVE VAN SANT replied they didn't oppose it.
SENATOR PHILLIPS asked for the definition of "certain."
MR. VAN SANT replied the amendment applied to page 2, line 5
where "for farm use in accordance with this section" is deleted
and "based upon that restricted use" is inserted. The intent was
that land restricted to agricultural use would be assessed based
on that use. That doesn't mean that it would be based on farm us
because the land isn't required to be farmed. Some land is
required to be cleared but not farmed so the intent was that
those lands would be assessed based on what those lands are
selling for.
SENATOR PHILLIPS said he was referring to the title change in the
proposed amendment \A.1 in which "certain" replaces "farm or" on
page 1 line 1. He asked if this was defined by page 2, line 5.
MR. VAN SANT said the legal department changed the title, but it
was referring to the agricultural restricted lands.
CHAIRMAN TORGERSON asked for the status of HB 455.
MS. RODMAN replied it came over to the Senate that day and
received referrals to the Community and Regional Affairs and
Resources Committees.
CHAIRMAN TORGERSON announced they would take action on HB 455 at
a later meeting. They would take testimony on SB 352, but take no
action.
SENATOR AUSTERMAN said he didn't find reference to the last
sentence of the sponsor statement in the bill.
MS. RODMAN replied, "They receive that determination… where it
says, 'This subsection does not apply to a person with an
interest in land that is classified…."
SENATOR AUSTERMAN said he wasn't familiar with agricultural land
and was having difficulty reading that out of the bill itself. He
then asked whether it referred to the new language at the bottom
of page 1 and top of page 2 and that is what removes the
requirement.
MS. RODMAN said that is her understanding, but Ed Arobio was on
line and could address the question more specifically.
CHAIRMAN TORGERSON replied they would hear from him later.
ROB WELLS, Director of the Division of Agriculture testified in
support of the bill and said they have been working with the
assessor's office on this version of the bill. Their support is
based on interest from farmers who feel they should not be
required to fill out the application for farm use land since they
are restricted to agricultural use as conveyed by the state at
purchase.
JOHN TOBIN testified via teleconference from Fairbanks in support
of SB 352. He testified on HB 455 previously. His land assessment
has increased almost 500 percent in the last two years and the
added tax burden makes it difficult to make ends meet.
STEWART DAVIES testified via testified teleconference from
Fairbanks in support of SB 352. He purchased his land in 2000
knowing it had a restrictive agricultural covenant. His current
assessment is at $400.00 per acre and is based on comparable
sales in the borough. They don't acknowledge inherent differences
between fee simple title property and agricultural restricted
land. Filing yearly for the farm use exemption to get a reduced
assessment is redundant since the land already has an
agricultural restriction placed on it by the State of Alaska.
SENATOR AUSTERMAN asked why subsection (b) from page 1 couldn't
be deleted altogether.
ED AROBIO from the Division of Agriculture explained the statute
was originally set up for completely fee simple land that was
being used for farming so that is the reason for the other
sections of the bill.
SENATOR AUSTERMAN asked again whether subsection (b) couldn't be
eliminated.
MR. AROBIO didn't believe they would support that and the borough
probably wouldn't either because it applies to other land that is
being used for farming as well as the restricted land discussed
here.
CHAIRMAN TORGERSON asked Mr. Van Sant for his thoughts on
eliminating subsection (b).
MR. VAN SANT said, "First I nearly had a heart attack." The
subsection was included to take the pressure off farmers to sell
their fee simple farmland to developers by lowering the property
taxes. It is quite important.
CHAIRMAN TORGERSON asked him what the assessed value would be on
state agricultural land if the bill passed.
MR. VAN SANT replied it would be helpful to give a theoretical
explanation. A piece of fee simple land might be assessed at
$300.00 per acre based on farm use, but have a full value of
$1,000.00 to $3,000.00 per acre. Then there are state
agricultural restricted lands that are selling for $400 to $600
per acre that the assessor is assessing at that rate. Some people
are under the impression that the assessor is assessing that land
at values other than agricultural restricted land. You aren't
going to find land that you can buy in large chunks for $400.00
per acre in this state. That is the assessed value of
agricultural restricted land. This is a reiteration that the
assessor will assess this land based on the agricultural
restricted value of $400-$600 per acre or whatever it may be.
CHAIRMAN TORGERSON said his reading is that Section 1 exempts
them from subsection (b) then Section 2 subsection (f) is the
mechanism for assessing.
MR. VAN SANT agreed, based on the restricted use.
CHAIRMAN TORGERSON said the bill would be held and the committee
would act on the companion bill the following week.
HB 355-MOBILE TELECOMMUNICATIONS TAX
AMY ERICKSON, staff to Representative Murkowski and the House
Labor and Commerce Committee, read the following into the record:
HB 355 is the mobile telecommunications tax. State and
local governments tax mobile telecommunication services
in a variety of ways. Because of the mobility of
wireless equipment determining which state and local
taxes apply to a wireless call is complicated. The
process of determining wire transaction is commonly
referred to as sourcing. In order to create a more
uniform system for taxing wireless calls, Congress
passed the Mobile Communication Sourcing Act in 2000.
States have until August 1, 2002 to conform to the
federal act and those failing to conform will be
preempted from imposing taxes on most calls made
outside of where the customer's primary use occurs, so-
called roaming calls.
This bill conforms state law to federal law to clarify
that mobile telecommunications services are subject to
taxation in the users place of primary use. That is the
residential or business address where the customer's
use of the mobile service primarily occurs. Passage of
this bill prevents multiply taxation of services,
allows the state to appropriately tax wireless calls
and eliminates confusion as to where to tax the
wireless calls. The bill does not impact the rate of
taxes or fees that state's or localities impose on
wireless calls or the types of calls subject to taxes.
Each jurisdiction with taxing authority will continue
to determine whether to tax a call and at what rate.
The Mobile Telecommunication Sourcing Act was crafted
by industry, state, local and tax officials and is
endorsed by such entities as the National Governors
Association, League of Cities, and the Federal Tax
Administration.
SENATOR PHILLIPS asked Ms. Erickson if she knew why the Governor
from Montana vetoed the legislation.
MS. ERICKSON replied she didn't know the reason but either
Darrell Bell or Dan Youmans from AT&T Wireless probably would.
DARRELL BELL responded via teleconference and said the Montana
Governor ran for election on a strict no new taxes campaign and
she believed some might view her as supporting additional taxes
if she signed the bill.
SENATOR PHILLIPS asked how the law is currently being enforced in
Alaska or any other state.
MR. BELL explained that the service carrier that is handling the
roaming activity is applying the taxes where they have roamed to
and remitting them to the local governments. Those charges are
then passed on to the home carrier who collects them from the
customer. States applying the federal law will forgo revenue from
taxes on calls made within their state by visitors, but will gain
authority to tax calls made by residents while out-of-state. This
makes administration of the taxes much simpler and on a state-by-
state basis should be revenue neutral.
He added about 30 states have passes conforming language bills
and Montana is the only state that has had a problem.
CHAIRMAN TORGERSON asked where his charges would be taxed if he
traveled to Washington and made roaming calls.
MR. BELL explained if he went to Seattle, Washington and placed a
call today, the State of Washington would impose a sales tax and
the city of Seattle would impose both a sales tax and a utility
tax. The serving carrier would remit the taxes locally and then
pass them on to the home carrier who would then apply the taxes
to his bill. The charges might be buried in the roaming charges
but they would likely be there. Under this bill, all the calls
would be taxed to the primary-use taxing jurisdiction. No longer
would they be taxing people that roam into the state.
CHAIRMAN TORGERSON asked how it could be revenue neutral.
MR. BELL said the same amount of revenue would be lost from
customers roaming into Alaska as would be gained by customers
from Alaska roaming outside the state. Another part of the bill
is that either the state provides a database or the carrier uses
a nine digit zip code identification to enter users into the
correct jurisdiction. Additionally, if a customer believes they
are being taxed to the incorrect jurisdiction the home carrier
must respond to the complaint within 60 days to correct the
error.
States that don't pass this type of legislation before August 1,
2002 will lose money because they will no longer be able to tax
individuals that roam into the state but have primary use outside
the state.
CHAIRMAN TORGERSON asked for confirmation that the bill would be
revenue neutral.
CHUCK HARLAMERT, Department of Revenue representative, said at
present only local governments impose taxes on the revenues and
the bill should be revenue neutral in Alaska. It's a good bill
and the state should take every opportunity allowed by the
federal government.
SENATOR PHILLIPS made a motion to move CSHB 355(CRA) and attached
fiscal note from committee with individual recommendations.
There being no objection, it was so ordered.
SB 351-CONVEYANCE OF TIDELANDS TO MUNICIPALITIES
SENATOR ROBIN TAYLOR read the following into the record:
For too long, coastal municipalities have been denied
control of the land within its own boundaries. SB 351
will correct problems in existing law, giving
communities more control over some of its more valuable
property.
SB 351 makes the transfer of tide and submerged lands
to municipalities much easier than is in current law.
It requires the commissioner to identify specific land
the state may reserve in the public interest or access
and transfer the balance to the municipality. From
there, local government and the local public can
determine how that land is of the most value. In some
cases, it will remain wild for its scenic value; in
others, it may be developed. In either case, the final
decision will be made at the local level. Residents who
actually have to live with the results will have easy
access and input in the decision making process.
SB 351 also allows the municipality to make selections
and receive an answer within an acceptable timeline.
For many communities, the selection process has been
brought to a "hurry up and wait" status because the
department has not made a determination. Often, that is
because of the department's workload. This bill
corrects that problem by providing for a 90-day
timeline for response. This time frame gives the
department 90 days to review the request. If there is
no objection based on the reasons stated in Section 1,
the land is conveyed to the municipality.
Making decisions for local communities on how they
conduct their business should not be up to state
government. Communities make the best decisions for
their community. The public process always works best
on a local level. SB 351 will give local governments
the ability to best determine how land within its
boundaries can and will be used for its residents.
SENATOR TAYLOR said he just received the fiscal note from the
Department of Natural Resources and they indicate they are unable
to calculate the fiscal impact for the bill. He was sure they
would comment further. He said that if a 90-day objection period
is not sufficient the department should suggest a timeframe.
There are many communities that have never received their land
transfers, particularly the tideland transfers. As a policy
matter, this situation should be resolved and this is one
suggestion.
CHAIRMAN TORGERSON said he wasn't sure 90 days would be workable
either, but for different reasons such as clouded titles.
Extending the 90-day timeframe to 180 days and giving reasons for
which the commissioner could extend might be workable.
SENATOR PHILLIPS asked Senator Taylor for a specific example from
Wrangell or Petersburg and how this could help them.
SENATOR TAYLOR replied one of the biggest problems in his area is
the cost of surveying. They were looking for a solution so an
industrial complex or processing plant that wanted to locate
along the beach would be able to do so. The property might have
been transferred in essence, but it has never been surveyed and
conveyed so it is still literally held within the state's
ownership. Additionally, the Legislature has required that recent
conveyances can only be made through a lease while in earlier
conveyances the communities could actually sell their tidelands.
If someone wants to develop tidelands now, the state requires the
proposed developer to survey much more land than they need so the
cost is so huge it stops the entire process from moving forward.
SENATOR PHILLIPS asked whether that is internal policy or state
law that is driving the state to require the block surveys.
SENATOR TAYLOR thought the reason was that the Legislature had
never appropriated enough money for the state to survey the
lands. The state put off surveying and is now telling communities
they must survey. The new text states that, "Any property
conveyed without prior survey must be surveyed and if necessary,
resubdivided before its lease, development, or sale." The cost of
any required survey and subdivision requirements would be borne
by the municipality. He included this language so parcels for a
particular project or development could be surveyed without
including large tracts that weren't relevant to the project. He
thought this would be a way of expediting the process but he too
was concerned about the 90 day limit.
CHAIRMAN TORGERSON asked whether this came under the municipal
entitlement section.
SENATOR TAYLOR didn't know whether this would be part of their
entitlement acre-for-acre.
CHAIRMAN TORGERSON noted that 230 million acres was more than was
transferred to local governments in total.
SENATOR AUSTERMAN said municipalities are specifically referred
to, but he couldn't tell whether boroughs would also be affected.
SENATOR TAYLOR replied they would be affected if they owned land.
He didn't think associations or villages would qualify if they
weren't incorporated.
SENATOR AUSTERMAN was concerned about scope because areas without
municipalities such as Prince of Wales Island with their
mariculture issues could be affected. He wondered whether
municipalities could take over the sub leases and deal with those
mariculture issues.
SENATOR TAYLOR said Wrangell received most of their tidelands
through a conveyance by the state and, at the same time, received
all the existing leases that were on those tidelands. There were
leases for storage facilities and log storage on tidelands that
never went dry. Although there's probably opportunity for the
community to modify those leases there hasn't been a pattern to
do that because it would affect business stability as much as
anything. Leases have been transferred and he's not aware of any
problems that have occurred at renewal. However, he agreed the
question was valid because it is possible that a municipality
could dramatically change a lease upon renewal.
SENATOR AUSTERMAN then questioned how "municipality" would be
defined because on Kodiak Island the uplands are refuge and the
lower lands are state waters that are leased from the state to
set netters.
CHAIRMAN TORGERSON said the city and borough limits are quite
well defined. Borough limits might not be completely surveyed but
they follow section lines fairly well and city governments follow
their own survey lines. He then read, "This section does not
enlarge or diminish the general grant land entitlement of a
municipality nor is the conveyance of the section counted against
the municipalities general land grant."
CAROL CARROLL, Department of Natural Resources representative,
read the following statement into the record:
Existing state law (AS 38.05.825) allows DNR to convey
state-owned tidelands and submerged lands to
municipalities if they are needed for a specific
development project or use. The existing law protects
the public's right to use and have access across these
tidelands for navigation, recreation and other uses
(referred to as the public trust doctrine) after
conveyance.
The existing law has enabled municipalities to acquire
tidelands and submerged lands that are needed for
development. Lands have been transferred to Wrangell,
Whittier, Anchorage, Lake and Peninsula Borough,
Dillingham, Cordova, Valdez, and many other communities
under this existing law. DNR is not aware of any
particular problem with the existing law and is unsure
why the changes are proposed.
This legislation modifies AS 38.05.825 by removing the
requirements for a demonstrated need and specifically
would allow municipalities to sell tidelands and
submerged lands. It also requires the commissioner to
either approve or disapprove an application within 90
days or it automatically would be approved without any
public notice or decision by DNR.
DNR strongly opposes this bill as it makes AS
38.05.825, the law allowing conveyances of tidelands to
municipalities, unconstitutional and unmanageable.
Section 1 of the bill deletes most of the criteria for
approval of conveyances in the existing law, including:
that the land must be suitable for occupation and
development, that the land be appropriately classified
by either a state or municipal land use plan, and that
there be a need for the transfer for an existing or
proposed project.
Section 1 also adds a provision that the commissioner
can only disapprove a municipal application when the
state can identify a specific state use or statutory
reservation of the land. The only lands with such
reservations would be legislatively established areas
such as Kachemak Bay State Park, State Game Refuges and
Critical Habitat Areas, state ferry terminals and state
boat harbors, and a few other sites. This provision
would likely result in the conveyance of virtually all
tideland and submerged lands within municipalities, an
area DNR estimates to be 20 to 30 MILLION acres.
The consequences of such conveyances are staggering.
For example, the North Slope Borough could receive
title to the surface of all offshore lands in Prudhoe
Bay, thereby controlling where and how development
occurs on state oil and gas leases that underlay the
offshore waters. Many log transfer facilities and
aquatic farm sites in Southeast would be under borough,
not state, control, with multiple different rules
depending on municipal, not state, laws. These are
only a few examples.
In addition, such massive conveyances to municipalities
in Southeast Alaska would jeopardize the existing Quiet
Title Action that the State has filed in the US Supreme
Court against the federal government that includes
tidelands and submerged land in the Tongass National
Forest.
Section 2 requires DNR to approve or disapprove a
conveyance within 90 days, or it is automatically
approved. Because this provision allows conveyances to
be approved automatically after 90 days without public
notice as required by the Constitution, DNR believes
this section of the bill is unconstitutional. This
section also specifically allows municipalities to sell
the tidelands. Under federal law and the Alaska
Constitution, tidelands and submerged lands are
considered Public Trust resources held by the state for
the use and enjoyment of all citizens, and Public Trust
resources generally cannot be sold. By specifically
allowing for the sale of tidelands and submerged lands,
this section of the law violates the public trust
doctrine.
Because the bill allows virtually all tidelands and
submerged lands within municipal boundaries to be
conveyed under this bill, shortly after the bill
passes, DNR will likely be flooded with applications
that it will be unable to process within the 90-day
timeframe.
In conclusion, DNR believes that existing law AS
38.05.825 allows the state to transfer tideland and
submerged lands to municipalities for a specific
development project or use. This authority works as
presently defined.
SENATOR AUSTERMAN asked whether the department would be willing
to negotiate on the 90 day limit if the bill were to become law.
MS. CARROLL replied she doesn't know what the timeframe would be
but it certainly would depend on how many applications were
received. She would ask the department what timeframe they could
give the committee.
CHAIRMAN TORGERSON suggested she talk with the sponsor since he
just received the fiscal note and realized there might be
problems.
SIDE B
2:45 pm
SENATOR PHILLIPS asked whether DNR would need additional staff if
the bill were to become law.
MS. CARROLL said she could provide him with information regarding
the current staff levels. The fiscal note is indeterminate
because they don't know what kind of response they would get from
municipalities. "Twenty to thirty million acres is a lot of
land."
SENATOR PHILLIPS asked how many conveyances are currently done in
a year.
RON SCHONENBACH with the Department of Natural Resources Division
of Mining Land and Water said in Southeast they have entertained
applications from eight municipalities since the current bill was
passed in 1995. All the municipalities have full management
authority for those tidelands. They have a pending application
from the Haines Borough and another from the Ketchikan Borough.
All others from Southeast have been processed.
SENATOR PHILLIPS asked him to provide the committee with
information regarding the rest of the state.
MR SCHONONBACH said he would get that information. The staff that
deals with the leases for the rest of the state is covered in the
resource allocation development section and are also the ones
doing the AS 29 conveyances to municipalities along with the
tideland conveyances to municipalities.
SENATOR PHILLIPS commented some community must have complained.
CHAIRMAN TORGERSON announced to bill would be set aside so Ms.
Carroll could provide the requested information.
HB 358-EXEMPTION FROM PROPERTY TAX: TIMBER
REPRESENTATIVE MIKE CHENAULT, bill sponsor, introduced the bill
via teleconference. This would give municipalities an additional
tool to lower the threat of fire on spruce bark beetle killed
forestland by allowing the option to waive property taxes on
roads or other property improvements that facilitate the removal
of the timber.
The Kenai Peninsula Borough has approximately 2.2 million acres
of spruce forest and 1.1 million of it is affected by the spruce
bark beetle infestation. In an effort to mitigate the fire
threat, the Kenai Peninsula Borough tried to enact a property tax
waiver program but the plan was blocked because state law doesn't
allow for such breaks. This bill makes the necessary changes in
state law to allow the Kenai Peninsula Borough or other
municipalities in a similar situation to help protect themselves
without having to take on additional tax liabilities. The tax
breaks aren't mandated rather they are an option.
Included in member's packets were copies of the supporting
resolution from the Kenai Peninsula Borough and photos of the
beetle infestation on the peninsula.
SENATOR PHILLIPS asked whether there was any opposition to the
bill.
REPRESENTATIVE CHENAULT replied he wasn't aware of any
opposition.
CHAIRMAN TORGERSON asked whether they anticipated that this would
affect smaller parcels of land and individual owners.
REPRESENTATIVE CHENAULT thought this would give the borough the
opportunity to look at each parcel then make a determination
about which lands would be included.
CHAIRMAN TORGERSON wanted it a matter of record what was being
exempted from taxation. He wanted examples of "improvements to
real property, including personal property affixed to the
improvements…."
REPRESENTATIVE CHENAULT replied the improvements would be any
roads that were built into parcels to make access to the timber
harvest.
CHAIRMAN TORGERSON asked whether they would have to apply for the
exemption every year.
REPRESENTATIVE CHENAULT thought that would be a borough decision.
CHAIRMAN TORGERSON asked the state assessor whether the exemption
would need to be renewed annually and whether he supported the
bill.
STEVE VAN SANT, State Assessor, said this was well deserved and
he did support the bill. An assembly grants the exemption and
they could set it up with any timeframe they wanted. There would
be no requirement from the state to set any particular timeframe.
CHAIRMAN TORGERSON replied it was written that way but he wanted
his opinion whether a timeframe was needed.
STEVE VAN SANT said this seems to be an issue where you never
know whether the issue will arise again. He rarely supports
exemptions, but feels this has merit. It gives municipalities the
ability to deal with a dangerous situation.
JEFF JAHNKE, Director of the Division of Forestry and State
Forester, testified in support of the bill. Although the value of
the affected spruce has declined substantially there are still
three important reasons why the harvest should continue.
1. It reduces the hazard caused by dead and dying trees
2. It encourages reforestation
3. It continues to recover the value that still remains
MARVIN RUSE, Mapping Director of the Spruce Bark Beetle Task
Force, testified in support of the bill. The tax incentives might
encourage some vacant landowners to become more active in moving
the hazard on their land. Two thirds of the Kenai Peninsula is in
federal or state ownership so the only opportunity is on private,
Native and borough land. They want to encourage the removal of
any and all of the hazard.
MR. VAN SANT questioned including "or at risk of being infested"
because a municipality that was oil rich could use that as an
excuse to exempt lands which could cost the state money from oil
and gas revenues. He wanted his concern a matter of record.
CHAIRMAN TORGERSON said he noticed that as well. The bill ought
to do what the testimony says it's supposed to, which is to spur
the removal of the infested trees or enhance the probability of
reforestation. Unfortunately, the bill is silent on that. He
encouraged local governments to take this a step further and
develop a plan for removal of the risk otherwise there would be
no exemption.
MR. VAN SANT said he understood that but unfortunately it doesn't
always work that way.
TIM NAVARRE from the Kenai Borough Assembly assured members they
would act quickly once the bill is passed and would probably work
with Mr. Van Sant. There is much work to be done before they pass
an ordinance that covers their intent.
CHAIRMAN TORGERSON said he appreciates that. He likes intent
placed in the bill, but this bill just gives authority for tax
relief and doesn't accomplish the goals as expressed in the
testimony. He didn't intend to amend the bill; local governments
would have to do that on their own. If the state assessor sees
it's being abused he expects him to bring the matter back before
the Legislature and they would repeal the law.
MR. NAVARRE said they would be working diligently to come up with
a good ordinance.
There was no further testimony.
CHAIRMAN TORGERSON asked for the will of the committee.
SENATOR PHILLIPS made a motion to move CSHB 358(CRA) and attached
fiscal note from committee with individual recommendations.
There being no objection, it was so ordered.
ADJOURNMENT
There being no further business before the committee, the Senate
Community and Regional Affairs Committee meeting was adjourned at
2:40 p.m.
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