Legislature(2005 - 2006)BELTZ 211
05/06/2005 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB293 | |
| HB133 | |
| HB217 | |
| Adjourn | |
| HB133 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 133 | TELECONFERENCED | |
| += | HB 217 | TELECONFERENCED | |
| + | HB 293 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
May 6, 2005
1:37 p.m.
MEMBERS PRESENT
Senator Gary Stevens, Chair
Senator Bert Stedman
Senator Thomas Wagoner
MEMBERS ABSENT
Senator Johnny Ellis
Senator Albert Kookesh
COMMITTEE CALENDAR
HOUSE BILL NO. 293
"An Act relating to a borough sales tax exemption for a source
that is taxed by a city in that borough."
MOVED HB 293 OUT OF COMMITTEE
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 133(JUD) am
"An Act relating to incorporation of boroughs, to annexation by
local action, and to regulations of the Local Boundary
Commission to provide standards and procedures for municipal
incorporation, reclassification, dissolution, and certain
municipal boundary changes; and providing for an effective
date."
HEARD AND HELD
HOUSE BILL NO. 217(title am)
"An Act relating to the determination of full and true value of
taxable municipal property for purposes of providing planning
assistance to the Department of Education and Early Development
and the legislature, calculating funding for education,
calculating school district participating shares for school
construction grants, and calculating tax resource equalization
payments and excluding from that determination the value of
property in certain areas detached from a municipality and the
value of certain property involved with oil and gas that is not
taxed by a municipality."
MOVED HB 217 (title am) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 293
SHORT TITLE: BOROUGH SALES TAX EXEMPTIONS
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS
04/29/05 (H) READ THE FIRST TIME - REFERRALS
04/29/05 (H) CRA, FIN
05/03/05 (H) CRA RPT 3DP 2NR
05/03/05 (H) DP: KOTT, LEDOUX, OLSON;
05/03/05 (H) NR: NEUMAN, SALMON
05/03/05 (H) FIN REFERRAL REMOVED
05/03/05 (H) CRA AT 8:00 AM CAPITOL 124
05/03/05 (H) Moved Out of Committee
05/03/05 (H) MINUTE(CRA)
05/04/05 (H) TRANSMITTED TO (S)
05/04/05 (H) VERSION: HB 293
05/05/05 (S) READ THE FIRST TIME - REFERRALS
05/05/05 (S) CRA
05/06/05 (S) CRA AT 1:30 PM BELTZ 211
BILL: HB 133
SHORT TITLE: MUNICIPAL BOUNDARY CHANGES/ COMMISSION
SPONSOR(s): REPRESENTATIVE(s) COGHILL
02/09/05 (H) READ THE FIRST TIME - REFERRALS
02/09/05 (H) CRA, STA
02/16/05 (H) SPONSOR SUBSTITUTE INTRODUCED
02/16/05 (H) READ THE FIRST TIME - REFERRALS
02/16/05 (H) CRA, STA
02/24/05 (H) CRA AT 8:00 AM CAPITOL 124
02/24/05 (H) Heard & Held
02/24/05 (H) MINUTE(CRA)
03/03/05 (H) CRA AT 8:00 AM CAPITOL 124
03/03/05 (H) Moved CSSSHB 133(CRA) Out of Committee
03/03/05 (H) MINUTE(CRA)
03/04/05 (H) CRA RPT CS(CRA) 5DP 2NR
03/04/05 (H) DP: SALMON, NEUMAN, KOTT, THOMAS,
OLSON;
03/04/05 (H) NR: LEDOUX, CISSNA
04/02/05 (H) STA AT 10:00 AM CAPITOL 106
04/02/05 (H) Moved CSSSHB 133(STA) Out of Committee
04/02/05 (H) MINUTE(STA)
04/04/05 (H) STA RPT CS(STA) NT 3DP 2NR
04/04/05 (H) DP: LYNN, ELKINS, SEATON;
04/04/05 (H) NR: GARDNER, GRUENBERG
04/04/05 (H) JUD REFERRAL ADDED AFTER STA
04/04/05 (H) JUD RPT CS(JUD) NT 2DP 3NR
04/13/05 (H) JUD AT 1:00 PM CAPITOL 120
04/13/05 (H) <Bill Hearing Postponed to 4/18>
04/18/05 (H) JUD AT 1:00 PM CAPITOL 120
04/18/05 (H) Moved CSSSHB 133(JUD) Out of Committee
04/18/05 (H) MINUTE(JUD)
04/19/05 (H) DP: COGHILL, MCGUIRE;
04/19/05 (H) NR: GRUENBERG, DAHLSTROM, GARA
04/25/05 (H) TRANSMITTED TO (S)
04/25/05 (H) VERSION: CSSSHB 133(JUD) AM
04/26/05 (S) READ THE FIRST TIME - REFERRALS
04/26/05 (S) CRA, STA
05/02/05 (S) CRA AT 1:30 PM BELTZ 211
05/02/05 (S) Heard & Held
05/02/05 (S) MINUTE(CRA)
05/06/05 (S) CRA AT 1:30 PM BELTZ 211
BILL: HB 217
SHORT TITLE: FULL & TRUE VALUE OF TAXABLE MUNI PROP.
SPONSOR(s): REPRESENTATIVE(s) HARRIS
03/14/05 (H) READ THE FIRST TIME - REFERRALS
03/14/05 (H) CRA, FIN
04/14/05 (H) CRA AT 8:00 AM CAPITOL 124
04/14/05 (H) -- Meeting Canceled --
04/26/05 (H) CRA RPT 1DP 6NR
04/26/05 (H) DP: THOMAS;
04/26/05 (H) NR: LEDOUX, SALMON, CISSNA, NEUMAN,
KOTT, OLSON
04/26/05 (H) CRA AT 8:00 AM CAPITOL 124
04/26/05 (H) Moved Out of Committee
04/26/05 (H) MINUTE(CRA)
04/28/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/28/05 (H) Scheduled But Not Heard
04/29/05 (H) FIN AT 8:30 AM HOUSE FINANCE 519
04/29/05 (H) Scheduled But Not Heard
04/29/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/29/05 (H) Moved Out of Committee
04/29/05 (H) MINUTE(FIN)
04/30/05 (H) FIN RPT 4DP 5NR
04/30/05 (H) DP: HAWKER, MOSES, FOSTER, CHENAULT;
04/30/05 (H) NR: HOLM, JOULE, WEYHRAUCH, KELLY,
MEYER
05/02/05 (H) TRANSMITTED TO (S)
05/02/05 (H) VERSION: HB 217(TITLE AM)
05/03/05 (S) READ THE FIRST TIME - REFERRALS
05/03/05 (S) CRA, FIN
05/04/05 (S) CRA AT 1:30 PM BELTZ 211
05/04/05 (S) -- Meeting Canceled --
05/06/05 (S) CRA AT 1:30 PM BELTZ 211
WITNESS REGISTER
Kaci Schroeder,
Aide to Representative Bill Thomas, Jr.
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 293
Rynnieva Moss
Aide to Representative Coghill
Alaska Capitol Building
Juneau, AK 99801
POSITION STATEMENT: Testified on HB 133
Steve Thompson, Mayor
800 Cushman Street
Fairbanks, AK 99701
Pete Roberts
Citizens Concerned About Annexation
Homer, AK
POSITION STATEMENT: Supported HB 133
Mike Black, Director
Division of Community Advocacy
Department of Commerce, Community & Economic Development
550 W. 7th Avenue Suite 1640
Anchorage, AK 99501
POSITION STATEMENT: Outlined DCCED interpretation of HB 133
Alan Lemaster
P.O. Box 222
Gakona,AK 99586
POSITION STATEMENT: Opposed HB 133
Tom Wright
Staff to Speaker John Harris
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Available for questions on HB 217
Pete Fellman
Staff to Speaker John Harris
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 217
Steve Van Sant, State Assessor
Department of Commerce, Community & Economic Development (DCCED)
550 W. 7th Street, Suite 1770
Anchorage, AK 99501-3510
POSITION STATEMENT: Testified on HB 217
ACTION NARRATIVE
CHAIR GARY STEVENS called the Senate Community and Regional
Affairs Standing Committee meeting to order at 1:37:28 PM.
Present were Senators Wagoner, Stedman, and Chair Gary Stevens.
HB 293-BOROUGH SALES TAX EXEMPTIONS
CHAIR GARY STEVENS announced the first order of business to come
before the committee to be HB 293.
1:37:53 PM
KACI SCHROEDER, Aide to Representative Bill Thomas, Jr., noted
that the committee heard the bill previously. She said that she
was available for questions.
CHAIR GARY STEVENS asked for the reasoning behind not stacking
taxes.
MS. SCHROEDER responded the bill clarifies statutory language
that allows a borough to avoid stacking taxes in areas that are
already taxing themselves.
CHAIR GARY STEVENS asked for a motion.
1:38:59 PM
SENATOR THOMAS WAGONER motioned to report HB 293 and attached
fiscal notes from committee with individual recommendations.
There being no objection, it was so ordered.
CSSSHB 133(JUD) AM - MUNICIPAL BOUNDARY CHANGES/ COMMISSION
CHAIR GARY STEVENS announced the next order of business to be HB
133.
1:39:34 PM
RYNNIEVA MOSS, Aide to Representative Coghill, stated that she
had an amendment, which would accommodate the petition that the
City of Petersburg has been working on for some time. She
explained that the Petersburg petition is by aggregate vote and
without the proposed amendment this legislation would stop that
particular petition process.
CHAIR GARY STEVENS called a brief at ease at 1:40:58 PM.
[Due to technical difficulties no recording occurred for HB 133
between 1:40:58 PM and 2:02:00 PM. The full, uninterrupted audio
for HB 133 may be found at the end of the recording between
5:56:40 PM and 6:21:37 PM.]
SENATOR STEDMAN motioned to adopt amendment 1.
24-LS0512\IA.2
Cook
10/31/05
A M E N D M E N T 1
OFFERED IN THE SENATE
TO: CSSSHB 133(JUD) am
Page 3, lines 15 - 20:
Delete all material.
Insert "the effective date of this Act and that has been
initiated before the effective date of this Act remains valid
and subject to AS 29.05.100(a), AS 29.06.040(c),
AS 44.33.812(a), and regulations adopted under those provisions,
as those provisions and regulations read on the day before the
effective date of this Act."
There being no objection, Amendment 1 was adopted.
MS. MOSS explained that the amendment deals with a pending but
not completed petition. If a petition is pending on the
effective date the old rules would apply.
CHAIR GARY STEVENS called on Fairbanks Mayor Thompson.
STEVE THOMPSON, Fairbanks Mayor, said he had three concerns with
the bill and he had stated them during the previous hearing.
1. History: Some of the earliest lawsuits in Fairbanks were
over annexations and the same probably holds true in
Anchorage. Nonetheless, local adjacent annexations do in
fact work out to be the best for the communities.
2. Fairbanks has run out of property and is looking at
adjacent areas amounting to between 500 and 1,000 acres for
community expansion. The borough would like to improve the
area to the point that it could be developed as an
industrial area or a housing subdivision. Under the
proposed legislation, if just one person lived in an area
and he or she voted no that would effectively put an end to
the expansion.
3. Services: In Fairbanks 30,000 people live inside the city
limits, but 80,000 people live in the immediate area. Jobs
are inside the city limits so about 50,000 people travel
into the community where they work every day. They expect
to have police, fire and ambulance protection and they want
the roads plowed and maintained. However, those 50,000
people provide none of the funding that it takes to provide
the services. Many people coming into town to work in the
community work for employers in buildings that are tax-
exempt. The Fairbanks Memorial Hospital, the federal
building, state court house, borough buildings, school
district headquarters, and schools are all big employers of
people that live outside the city and the city is left with
no way to recover any costs. Annexing the immediate areas
around the town that really are part of the community would
help solve the problem.
MAYOR THOMPSON referenced testimony from the previous hearing in
which Ms. Moss said that people living outside the city limits
contribute by buying drivers licenses and such things. He
asserted that the city sees none of that money. People living
outside the city pay nothing toward general city operation or
for police, fire or public safety officials. Those things must
be considered when trying to restrict sensible annexation and
growth.
In conclusion he said that annexation can take place in about
five different ways and border annexation simply makes sense.
CHAIR GARY STEVENS called on Mr. Roberts from Homer.
PETE ROBERTS, President, Citizens Concerned About Annexation,
said Mayor Thompson has some good points but he misses major
points in the American system. In particular, he's missing the
importance of the citizen, he said.
He related what happened in Homer when politicians decided to
triple the size of the original city. Neither the citizens of
Homer nor the people in the area to be annexed were adequately
informed or included in the process, which resulted in a major
and costly fight. He opined that the people living in the area
to be annexed need to be a part of the process and the city
needs to offer those people something other than just a tax
bill.
In Homer sales taxes account for two-thirds of the general
revenue budget so anybody who says the "out-of-towners" don't
shoulder a burden and provide for the cost of running services
in the area is sorely mistaken, he said.
MR. ROBERTS urged passage of SB 133.
CHAIR GARY STEVENS asked Mike Black if he had testimony.
MIKE BLACK, Director, Division of Community Advocacy, Department
of Commerce, Community & Economic Development (DCCED), said he
would summarize the May 6, 2005 letter he sent to Chair Stevens.
[Copy in file.]
MR. BLACK advised that DCCED has a somewhat different
interpretation of the bill than the sponsor. DCCED characterizes
HB 133 as providing the Local Boundary Commission (LBC) with
another option for conducting local action elections in relation
to municipal annexations.
The provisions described in Section 3 of AS 29.06.040(c) provide
a list of methods for conducting local action elections and HB
133 adds the provision that a majority of the votes cast by
voters residing in the annexing municipality may be required for
approval. The department views all the provisions set forth in
AS 29.06.040(c) as being independent of one another and it is
confident of the interpretation based upon the historical record
of the use of Section 3 provisions related to LBC actions.
Referencing Section 5 he said there was an issue with the
Petersburg petition, but it was addressed with the amendment.
[24-LS0512\IA.2] However, under the DCCED interpretation it
wouldn't have affected Petersburg because the proposal only
provides another option.
Based upon DCCED's interpretation of the bill, the department
has no objection, he said.
CHAIR GARY STEVENS asked for his response to Mayor Thompson's
concern that one person could stop economic development in an
annexation.
MR. BLACK replied he would have some of those same concerns if
the department had interpreted the bill to mean that a
municipality could not annex an area based on the vote of the
people in the area to be annexed. "Certainly that would put a
severe restriction upon the ability of the municipality to
provide services to areas and still get some reimbursement for
the use of those services. However, I don't believe that this
bill will present that problem," he concluded.
CHAIR GARY STEVENS called on Mr. Lemaster.
ALAN LEMASTER, Gakona resident, explained that Copper Valley is
surrounded by Valdez, Delta, and Mat-Su all of which are either
a borough or looking at becoming a borough. He stated concern
with the bill for reasons that are different than the previous
testimony. The local REAA is large and if the bill were to pass
it's conceivable that the area could be "cherry-picked to death
up here." It would be extremely problematic if the pipeline and
pump station were picked up by another borough and the rest of
the area were left to become something on its own.
He said he has discussed the concern with the LBC and they have
said he's not too far off the mark.
MS. MOSS said she'd like to respond to several statements. She
suggested that the situation in the Copper Valley wouldn't
change with passage of HB 133. Under existing law Mr. Lemaster's
concerns could be realized.
Referencing the LBC interpretation of Section 3, she directed
attention to page 2, line 22. Following the third provision at
the end of line 22 is the word "and". The legislative drafting
manual says that "and" or "or" should be included only between
the last two items in a list and not between each item.
Therefore, each item should be read as though it is a comma and
the word "and" that is just before the last item is inclusive.
Most of the roads in Fairbanks are maintained by DOT and the
people who live 40 to 50 miles from Fairbanks have, for the most
part, built their own homes over a period of time. A good many
of those people also live on fixed incomes. If the borough were
allowed to annex property all the way to the Yukon River and
begin charging property tax, many of those people would lose
their homes.
She concluded, " Mayor Thompson - I understand his concerns, but
what this bill is dealing with is an aggregate vote regulation
that is not covered statutorily. In fact it is contrary to
statute."
CHAIR GARY STEVENS called a brief at ease.
MS. MOSS asked that the bill be moved to the Senate State
Affairs Committee. Senator Therriault had similar legislation
moving through the process and she wanted him to have the
opportunity to review the legislation.
CHAIR GARY STEVENS said he appreciated her comments and he was
sure that the State Affairs Committee would have legitimate
concerns. However, the Community and Regional Affairs Committee
also has responsibility in what happens to communities.
CHAIR GARY STEVENS held CSSSHB 133(JUD) AM in committee.
HB 217-FULL & TRUE VALUE OF TAXABLE MUNI PROP (TITLE AM)
2:05:27 PM
CHAIR GARY STEVENS announced HB 217 to be up for consideration
and asked Mr. Wright to come forward.
TOM WRIGHT, Staff to Speaker John Harris, advised that he would
defer testimony to Mr. Fellman who works out of Speaker Harris'
Delta office.
2:06:56 PM
PETE FELLMAN, Staff to Speaker John Harris, spoke via
teleconference to explain that communities that are forming
boroughs with oil and gas properties within the proposed
boundaries might not want to tax property as a means of raising
revenue. Under HB 217, such communities could exclude the value
of oil and gas properties from the total value of the borough
property. This would allow those communities to explore other
forms of taxation to raise revenue needed to operate the borough
and to pay the required 4 -mills to fund schools.
HB 217 would provide opportunity and choice to communities that
want to form local government. The opportunity is to form and
fund affordable boroughs and the choice is to raise revenue in
new and creative ways, he said.
2:08:32 PM
CHAIR GARY STEVENS called on Mr. Van Sant.
STEVE VAN SANT, State Assessor, Department of Commerce,
Community & Economic Development (DCCED), testified via
teleconference to concur with the previous statement. If HB 217
were to pass, the value of oil and gas properties would be
excluded from a municipality's full value if the municipality
elected not to levy a property tax.
In the proposed Deltana Borough there is approximately $200
million in oil and gas properties for which the state receives
20-mills or about $4 million. If that property were included in
the borough's full valuation, 4-mills or $800,000 would have to
be raised for the required education contribution. It wouldn't
be easy to raise that amount of money with just sales tax so the
borough would almost be forced into levying a property tax.
He pointed out that it's more than likely that the property tax
levy would be more than just 4-mills. If the levy were 10-mills,
then the borough would take almost $2 million in revenue that
the state is already receiving.
In the instance of a detachment from a borough, the bill directs
DCCED to place the valuation at the level it was two years prior
to the detachment. The reason for this is that the education
formula uses the prior two years for funding.
2:10:45 PM
CHAIR GARY STEVENS asked if he sees this bill as being a
detriment to borough formation.
MR. VAN SANT replied not at all. In fact DCCED believes it would
assist in borough formation. Most people in the Deltana area are
very clear that they don't want a property tax. HB 217 would
allow a borough to form without forcing a property tax on the
residents. "To me it's an incentive," he said.
2:11:31 PM
CHAIR GARY STEVENS called on Mr. Hallgren.
PETE HALLGREN, City Administer, City of Delta Junction, reported
that the city has sponsored the Deltana Borough Charter
Commission and it is nearly ready to submit a borough formation
petition to the LBC for review and permission to circulate. The
hope is that this will lead to a public election in which all
citizens in the area participate.
As previously stated, the Trans Alaska Pipeline System (TAPS) is
valued at $200 million in the proposed borough. The statutory
tax level is 20-mills so the state receives about $4 million a
year from the pipeline. Upon borough formation, the City of
Delta Junction would like to dissolve and turn its assets over
to the new borough to avoid redundant local government.
Local governments craft services and a tax structure to meet
local conditions. Currently four boroughs have no property tax,
two boroughs have a raw fish tax, the Denali Borough has a
mineral severance tax and a bed tax, and the Northwest Arctic
Borough has a goldmine PILT agreement, which pays over 95% of
the borough's tax income.
State statute requires a 4-mill education contribution based on
the value of all taxable property in a borough. He reiterated
Mr. Van Sant's testimony saying that the proposed borough would
be forced to levy a property tax if it is required to contribute
4-mills or $800,000 on the value of TAPS.
Instead of a property tax, the Deltana Borough Charter
Commission would like to propose to the local voters a mix of
funding sources. That would include a fuel and energy tax and a
goldmine PILT agreement with the POGO Mine.
We view this bill as an enhancement to potential new borough
formation throughout the unorganized borough, he said. Local
areas would be free to craft measures that would fit the people
and businesses that are being taxed better than a straight
property tax. "In the proposed Deltana Borough, non-passage of
this bill would cost the state at least $800,000 a year in lost
revenue when we were forced to enact a property tax," he
concluded.
CHAIR GARY STEVENS noted there was no further testimony.
2:16:13 PM
SENATOR WAGONER motioned to report HB 217 (title am) 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 2:16:24 PM.
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