Legislature(2013 - 2014)SENATE FINANCE 532
04/17/2014 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB379 | |
| HB234 | |
| HB308 | |
| HB361 | |
| HB121 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 379 | TELECONFERENCED | |
| += | HB 234 | TELECONFERENCED | |
| += | HB 308 | TELECONFERENCED | |
| += | HB 361 | TELECONFERENCED | |
| += | HB 160 | TELECONFERENCED | |
| + | HB 328 | TELECONFERENCED | |
| += | HB 121 | TELECONFERENCED | |
| += | HB 204 | TELECONFERENCED | |
| + | HB 143 | TELECONFERENCED | |
| + | HB 282 | TELECONFERENCED | |
| += | HB 193 | TELECONFERENCED | |
| += | HB 231 | TELECONFERENCED | |
| += | HB 305 | TELECONFERENCED | |
| += | HB 19 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 17, 2014
9:15 a.m.
9:15:07 AM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 9:15 a.m.
MEMBERS PRESENT
Senator Pete Kelly, Co-Chair
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Benjamin Nageak; Representative Mike Hawker;
Robert Ervine, Staff, Representative Lindsey Holmes;
Representative Dan Saddler; Michael Paschall, Staff,
Representative Eric Feige.
PRESENT VIA TELECONFERENCE
Steve Vansant, State Assessor, Anchorage; Rob Elkins,
Deputy Director, Administration and Finance, North Slope
Borough, Anchorage; Matt Fonder, Director, Tax Division,
Department of Revenue, Anchorage; Margaret Brody, Director,
Health Care Services, Department of Health and Social
Services, Anchorage.
SUMMARY
CSHB 19(RLS)(efd am)
PERM. MOT. VEH. REGISTRATION/TRAILERS
CSHB 19(RLS)(efd am) was SCHEDULED but not HEARD.
CSHB 121(FIN)
COMMERCIAL FISHING & AGRICULTURE BANK
CSHB 121(FIN) was HEARD and HELD in committee for
further consideration.
CSHB 143(FIN)
COMMERCIAL FISHING CREWMEMBER LICENSES
CSHB 143(FIN) was SCHEDULED but not HEARD.
CSHB 160(FIN)
LICENSING OF ATHLETIC TRAINERS
CSHB 160(FIN) was SCHEDULED but not HEARD.
CSHB 193(FIN)
MUNICIPAL TAXATION OF TOBACCO PRODUCTS
CSHB 193(FIN) was SCHEDULED but not HEARD.
CSSSHB 204(FIN)
SALMON & HERRING PRODUCT DEV'T TAX CREDIT
CSSSHB 204(FIN) was SCHEDULED but not HEARD.
HB 231 CATTLE BRAND REGISTRATION
HB 231 was SCHEDULED but not HEARD.
HB 234 EXTEND REGULATORY COMMISSION OF ALASKA
HB 234 was REPORTED out of committee with a "do
pass" recommendation and with previously
published fiscal impact note: FN1(CED).
CSHB 282(JUD)
LANDLORD AND TENANT ACT
CSHB 282(JUD) was SCHEDULED but not HEARD.
CSHB 305(FIN)
JUNK DEALER & METAL SCRAPPER LICENSING
CSHB 305(FIN) was SCHEDULED but not HEARD.
HB 308 ALASKA SECURITIES ACT EXEMPTIONS
HB 308 was REPORTED out of committee with a "do
pass" recommendation and with previously
published fiscal impact note: FN1(CED).
CSHB 328(L&C)
BOARD/LICENSING OF MASSAGE THERAPISTS
CSHB 328(L&C) was SCHEDULED but not HEARD.
HB 361 LICENSING OF BEHAVIOR ANALYSTS
HB 361 was REPORTED out of committee with a "do
pass" recommendation and with previously
published indeterminate fiscal note: FN1(DHS);
and previously published fiscal impact note:
FN2(CED).
CSHB 379(FIN)
OIL & GAS PROPERTY TAX
CSHB 379(FIN) as REPORTED out of committee with a
"do pass" recommendation and with previously
published indeterminate fiscal note: FN2(REV).
CS FOR HOUSE BILL NO. 379(FIN)
"An Act relating to the limitation on the value of
property taxable by a municipality; and providing for
an effective date."
9:16:44 AM
REPRESENTATIVE BENJAMIN NAGEAK, SPONSOR, introduced
himself.
Co-Chair Meyer asked if Representative Nageak had any
additional comments. Representative Nageak thanked the
committee for considering the legislation. He stated that
the legislation had been in the works for forty years.
Vice-Chair Fairclough wondered if the bill would affect the
assessment of property value for the state.
STEVE VANSANT, STATE ASSESSOR, ANCHORAGE (via
teleconference), responded that the legislation changed the
way the limitation was calculated for oil and gas property
based on the initial mil-rate that was calculated for two
municipalities: the North Slope Borough and the City of
Valdez. He stated that there were some calculations that
moved the percentage around 300 percent and 375 percent for
the North Slope Borough. The legislation would allow the
borough to have more funds in their operating revenue, as
opposed to their bond debt, so they could maintain the
facilities that had been bonded over the years. Currently,
there was no limitation on bonding, so if the borough
needed more money for certain items they could bond and
take as much revenue as was needed. The borough had
consistently been at 18.5 mil rate, so there was no
anticipation for a change. He also stated that the Valdez
mil-rate was 20 percent, which was very high for the tax
payer. He shared that the conversations with the North
Slope Borough showed that the bond debt reduce, and the
revenue would be put in the operating revenue, so the
maintenance program could function as desired. He felt that
the bill would not cost the state money, but it could cost
the state money.
Vice-Chair Fairclough queried the instance on how the
legislation might cost the state money. Mr. Vansant
responded that the North Slope could charge a 21.3 mil-
rate, and generate an extra $58 million. This would require
payment from everyone in the borough, including the oil
companies and the local tax payer. He stressed that the
borough intended to lower their bonded debt, so they would
not need to raise more than an 18.5 mil-rate in the
operating revenue in order to generate more revenue for the
maintenance program.
Vice-Chair Fairclough queried the effect of the state. Mr.
Vansant replied that the borough could raise their mil-rate
to 21.3 it would cost the state the extra revenue. If the
borough did not lower the bonded debt, they could still
raise $58 million, which would cost the state $58 million.
He stressed that the borough intended to lower their mil-
rate by paying off some of the bond debt, so keeping their
mil-rate at 18.5 would give them more operating revenues
and not need the bonded revenues.
9:22:44 AM
Vice-Chair Fairclough wondered why the state paid the
property taxes dollar for dollar to the borough. Mr.
Vansant responded that the state collected a mil-rate of 20
on all of the oil and gas property in the state. Of that,
the state gave back to the local municipalities at the
locally charged mil-rate.
Vice-Chair Fairclough surmised that there was a statewide
mil-rate, and if a local community taxed, the state would
forgo revenue at the state level and allow the local
community control of the funds. Mr. Vansant agreed with
that summation.
Senator Olson pointed out that the borough could reduce
their mil-rate, which would bring more revenue to the
state.
Co-Chair Kelly asked for an explanation of the bonded
indebtedness versus the operating costs. Mr. Vansant
explained that currently, municipalities had a mil-rate
limit of 30 for operating revenues. There was no limitation
of what a municipality may charge to repay bond debt. He
stated that there were two sets of funds that a
municipality could accumulate: revenue and bond debt. The
tax limitation would change the current statute from 225
percent to a variation of 225, 300, or 375 percent. That
would change the total amount of dollars that a
municipality may collect under operating revenues. The bond
debt still had no limitation, so a municipality could bond
as long as there was a vote to pay for the bonds. He stated
that the bill would change the calculation, so the
municipality could collect more operating funds. He
remarked that the borough wanted to lower their bond debt,
but was facing a limitation on the operating revenue, which
inhibited maintenance.
9:27:21 AM
Senator Bishop wondered if the legislation only affected
two boroughs. Mr. Vansant replied in the affirmative. The
only two boroughs that were reaching the limit: the North
Slope Borough and the City of Valdez.
Co-Chair Meyer queried the number of boroughs that would be
impacted by the legislation. Mr. Vansant replied that there
were only two municipalities that would be impacted. He
said that there was potential for Valdez, Kenai, Anchorage,
and Mat-Su to get more oil and gas properties.
Co-Chair Meyer remarked that there was oil production in
the Cook Inlet, but wondered if it was not enough to
matter. Mr. Vansant replied that the production did not
bring enough dollars to be impacted by the formula.
Senator Olson queried Mr. Elkins position on the
legislation, how he planned to lower the debt service and
its obligations in order to keep the taxes at a manageable
level.
ROB ELKINS, DEPUTY DIRECTOR, ADMINISTRATION AND FINANCE,
NORTH SLOPE BOROUGH, ANCHORAGE (via teleconference),
replied that under the adopted budget for FY 15 there was
$146 million available for debt service. The borough had
been working for ten years to pay down its debt. He
stressed that there were several years when the borough had
over $1 billion of debt. He stressed that the effort to pay
down the debt was done with assumption that the legislation
would pass. On an average year, there would be an
additional 14 to 16 percent owed on top of the principle
payment. Therefore, by bonding for light duty vehicles and
other operating items, it costs an additional 14 to 16
percent over the life of the bond. By altering the
calculation, the North Slope Borough could move the
purchases into the operating budget to save tax dollars.
He felt that the bill would provide the borough with
flexibility, and the borough had worked hard to
systematically reduce its bond debt.
Senator Olson pointed out that the North Slope Borough
would lower its debt service in order to keep the tax at an
affordable rate.
9:32:46 AM
Senator Dunleavy wondered if there was opposition from the
sponsor's district to the legislation. Representative
Nageak replied that he was not aware of any opposition to
the bill.
Senator Hoffman wondered if the City of Valdez was
supportive of the legislation. Representative Nageak
replied that he was not aware of any opposition to the bill
from anyone, including the state.
Co-Chair Meyer wondered if there was any opposition to the
bill from the City of Valdez. Senator Bishop replied that
he was not aware of any opposition to the legislation.
Vice-Chair Fairclough wondered if there was a cap on the
mil-rate for anyone under the state's jurisdiction.
Representative Nageak responded that the North Slope was
under a cap for the previous 40 years. He stressed that
there was some strain when there was a substantial
restriction. He thought that the North Slope Borough was
the only municipality with a cap.
Vice-Chair Fairclough remarked that, in her experience,
when there was a property tax issue the tax payers demanded
to be taxed less. She noted that there was only
representation from the community, not the tax payer on
this legislation. She asked if there was a cap in the
legislation.
Vice-Chair Fairclough wondered if there were exemptions
from the state in local communities that established local
exemptions. Mr. Vansant wondered if she meant residential
exemptions.
Vice-Chair Fairclough clarified that she was concerned over
the question of raising a mil-rate. She noted that the
people would be taxed, if the mil-rate was increased. She
wondered if local communities established exemptions that
transferred responsibility of the property tax payments to
another entity. Mr. Vansant replied that Anchorage had a
$20,000 residential exemption, and six municipalities offer
exemptions some up to $100,000. He stated that the North
Slope Borough offered a residential exemption up to
$50,000, and offered a residential optional exemption for
senior citizens up to and additional $150,000.
9:39:51 AM
Vice-Chair Fairclough wondered if Valdez offered similar
exemptions for their property tax payers. Mr. Vansant
responded that Valdez only offered a $20,000 exemption for
residential property, and did not offer any exemption above
the state-mandated $150,000.
Vice-Chair Fairclough wondered if the state had state
authority over Valdez for the mil-rate setting. Mr. Vansant
responded that all municipalities were required to exempt
certain properties such as churches, schools, charitable
properties, etc., whether it was the city of Valdez or any
other municipality. The City of Valdez had also opted out
of all personal property exemptions.
Vice-Chair Fairclough wondered if there were contributions
to schools. Mr. Vansant replied in the affirmative. He
stated that the North Slope Borough was required to
participate at a 45 percent need.
Vice-Chair Fairclough understood that a community might
believe that there was a disadvantage with a mil-rate cap,
and wondered if there should be a consideration for a cap.
Mr. Vansant responded that the bill had a cap, and would
only raise it from the 225 percent formula cap to a 300
percent formula cap. He stated that there was a cap under
AS 29.45.090 to all municipalities of a 30 mil-rate, which
was 3 percent for operating revenues.
Vice-Chair Fairclough wondered if the reference was in
Section 6 regarding "not more than 19 mil." Mr. Vansant
replied that the percentage was outlined, and were set caps
for assessments, which would set caps for the collected
revenues. The other cap was for a 30 mil rate, which
applied to all municipalities.
Senator Hoffman announced that the bill did not change the
taxable mil rates, but rather asked for flexibility about
how the municipality was limited to move money between the
operating and capital budgets.
9:46:17 AM
Senator Olson stressed that this legislation was the top
priority for the North Slope Borough.
Vice-Chair Fairclough wondered if the mil-rate cap was
voted on by the people. Representative Nageak replied that
there was an ordinance that was passed each year.
Vice-Chair Fairclough stressed that she was not in
opposition to the bill, but was attempting to understand
the consequences to the state. She announced that the state
could receive extra money or could lose up to $30 million.
MATT FONDER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE,
ANCHORAGE (via teleconference), replied that the bill could
cause either increased or decreased revenue to the state,
because it depended on the municipalities' responses to the
bill.
9:50:21 AM
Co-Chair Meyer wondered how the North Slope Borough's
response to the bill would impact the state's revenue. Mr.
Fonder replied that, if the borough reduced their debt
service payments and kept their mil-rate to the state,
there would be no impact to the state's revenue. If their
debt service remained the same, and they needed more funds
for operating costs, they would need to increase their mil-
rate.
Co-Chair Meyer asked if DOR had a position on the bill. Mr.
Fonder replied that DOR did not have a position on the
legislation, but was available for questions.
Senator Hoffman surmised that the legislation would not
impact the current work of the North Slope Borough; it only
gave the borough flexibility to meet their operational
needs.
Co-Chair Meyer felt that the discussion was more
complicated than necessary.
Senator Olson stressed that there was no incentive to
increasing the amount.
Vice-Chair Fairclough stated that it was impressive that
the North Slope had decreased $1 billion of debt and
reduced it to $300 million.
Senator Bishop felt that the bill would allow the borough
to pay down the debt even faster.
Vice-Chair Fairclough MOVED to REPORT CSHB 379(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 379(FIN) was REPORTED out of committee with a "do
pass" recommendation and with previously published
indeterminate fiscal note: FN2(REV).
9:54:25 AM
AT EASE
9:56:50 AM
RECONVENED
HOUSE BILL NO. 234
"An Act extending the termination date of the
Regulatory Commission of Alaska; and providing for an
effective date."
9:57:53 AM
REPRESENTATIVE MIKE HAWKER, introduced himself.
Co-Chair Meyer noted that Representative Hawker had
presented the legislation on April 14. Representative
Hawker agreed, and noted that there was a request for
documentation of one item in the Regulatory Commission of
Alaska's financial statements (copy on file).
9:58:25 AM
AT EASE
10:01:42 AM
RECONVENED
10:03:09 AM
Co-Chair Meyer wondered if Senator Hoffman was satisfied.
Senator Hoffman replied in the affirmative.
Vice-Chair Fairclough MOVED to REPORT HB 234 out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HB 234 was REPORTED out of committee with a "do pass"
recommendation and with previously published fiscal impact
note: FN1(CED).
HOUSE BILL NO. 308
"An Act relating to the exemptions under the Alaska
Securities Act and to securities issued by Native
corporations; and providing for an effective date."
10:04:01 AM
ROBERT ERVINE, STAFF, REPRESENTATIVE LINDSEY HOLMES,
introduced himself.
Vice-Chair Fairclough MOVED to REPORT HB 308 out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HB 308 was REPORTED out of committee with a "do pass"
recommendation and with previously published fiscal impact
note: FN1(CED).
10:05:13 AM
AT EASE
10:09:03 AM
RECONVENED
HOUSE BILL NO. 361
"An Act relating to licensing of behavior analysts."
10:09:28 AM
REPRESENTATIVE DAN SADDLER, SPONSOR, introduced himself,
and was willing to respond to questions.
Co-Chair Meyer stated that there were also some testifiers
available for to respond to questions.
Vice-Chair Fairclough would like a revised fiscal note on
the indeterminate costs regarding the next phase of the
legislation. She felt that the ramifications to the state's
budget should be evaluated in pursuing additional care for
the people of Alaska.
MARGARET BRODY, DIRECTOR, HEALTH CARE SERVICES, DEPARTMENT
OF HEALTH AND SOCIAL SERVICES, ANCHORAGE (via
teleconference), announced that the service was not
currently covered under Medicaid rules, which was why the
fiscal note was indeterminate. There would be 1838 children
who had a diagnosis of Autism that were currently enrolled
in Medicaid. There would need to be individual assessments,
at $175 per evaluation. That cost would be covered, if the
service became covered under Medicaid.
Vice-Chair Fairclough stressed that the next step would be
legislation that would allow Medicaid to cover the cost.
She stressed that there should be an acknowledgement of a
cost of approximately $26 million with 50 percent covered
by the federal government. She felt that the cost was high,
but necessary to meet the needs of the diagnosed children.
She felt that the numbers delivered by the department were
too low.
Co-Chair Meyer queried the cost of obtaining a license.
Representative Saddler responded that the cost would be
approximately $1300 per person for the initial biennium,
and would decrease to $450 for subsequent bienniums.
10:15:19 AM
Senator Bishop surmised that it would be a $1300 initial
license, and a $400 for a renewal. Representative Saddler
agreed, and stated that the initial cost would be a portion
to the BCBA.
Representative Saddler noted a there was information that
indicated that with three years of an early intensive
behavioral intervention, there were upfront costs. After
three years, approximately half of the children accomplish
near normal functioning. He stated that approximately one-
third of the children had substantial gains, and 15 percent
saw no benefits. The implications indicated some upfront
higher costs, but the early intervention avoided the need
for additional special education services.
Vice-Chair Fairclough MOVED to REPORT HB 361 out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HB 361 was REPORTED out of committee with a "do pass"
recommendation and with previously published indeterminate
fiscal note: FN1(DHS); and previously published fiscal
impact note: FN2(CED).
10:17:20 AM
AT EASE
10:23:40 AM
RECONVENED
CS FOR HOUSE BILL NO. 121(FIN)
"An Act relating to the examinations, board, loans,
and records of the Alaska Commercial Fishing and
Agriculture Bank; and providing for an effective
date."
10:24:11 AM
MICHAEL PASCHALL, STAFF, REPRESENTATIVE ERIC FEIGE,
introduced himself, and stated that he was willing to
respond to questions.
Co-Chair Meyer queried the relationship of the bank with
the state. Mr. Paschall responded that the establishment
was formed to help the fishing and agriculture industry. It
was given a privileged tool to use limited entry permits as
collateral. Therefore, there was a specific statute that
granted the authority, even though they were created as a
private bank. The only relationship they had with the state
was as an agent of the state with the ability to use
limited entry permits as collateral. The governor appointed
two board members from within the members of the bank to
assure the interest was followed.
Co-Chair Meyer wondered if two board members were appointed
by the governor. Mr. Paschall responded in the affirmative.
Co-Chair Meyer queried the total number of board members.
Mr. Paschall replied that the board member numbers could be
changed by the corporation. He assumed there were between 5
and 9 members of the board.
Senator Hoffman stressed that two board members were
appointed by the governor. Mr. Paschall agreed.
Senator Olson queried the reasoning of the incorporation of
the recent amendment related to lobbyists. Mr. Paschall
replied that the bank had requested the ability to hire a
lobbyist. The state had an ownership interest in the bank
when it was initially created, so the bank could not have a
lobbyist at that time. The state no longer had an ownership
interest in the bank, so the bank was facing a logistical
issue of maintaining involvement with the legislative
process.
Co-Chair Meyer surmised that the bank had a very specific
interest, because they were statutory obligated to the
state. He felt that they still had a strong tie to
government, so there was question as to the appropriateness
to have a lobbyist to influence law making. He wondered if
the amendment was made in the other body. Mr. Paschall
replied that the amendment was made in the other body.
10:29:32 AM
Co-Chair Meyer wondered if the bank had a government
affairs employee. Mr. Paschall replied in the negative,
because they only had ten employees.
Co-Chair Meyer asked if the bank was reviewed every three
years. Mr. Paschall responded that the bank was not
currently reviewed by the Banking Commission, because it
was excluded from all banking laws that apply to other
banks. The statutes regulating the bank were the only
regulating statutes for the bank, which was why they were
asking to be reviewed. It helped their ability to obtain
credit from other lenders.
Senator Dunleavy remarked that the bank may be the only
outfit that did not employ a lobbyist.
Co-Chair Meyer was not concerned with whether or not the
bank had a lobbyist.
Vice-Chair Fairclough queried the definition of "resident."
Mr. Paschall replied that the resident status referred to
the general statute, which was a resident for one year with
the intention of staying in the state.
CSHB 121(FIN) was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 160(FIN)
"An Act relating to the licensing and regulation of
athletic trainers."
CSHB 160(FIN) was SCHEDULED but not HEARD.
CS FOR HOUSE BILL NO. 328(L&C)
"An Act establishing the Board of Massage Therapists;
relating to the licensing of massage therapists; and
providing for an effective date."
CSHB 328(L&C) was SCHEDULED but not HEARD.
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 204(FIN)
"An Act relating to a product development tax credit
for certain salmon and herring products; and providing
for an effective date."
CSSSHB 204(FIN) was SCHEDULED but not HEARD.
CS FOR HOUSE BILL NO. 143(FIN)
"An Act relating to crewmember fishing licenses; and
providing for an effective date."
CSHB 143(FIN) was SCHEDULED but not HEARD.
CS FOR HOUSE BILL NO. 282(JUD)
"An Act relating to the rights and obligations of
residential landlords and tenants; and relating to the
taking of a permanent fund dividend for rent and
damages owed to a residential landlord."
CSHB 282(JUD) was SCHEDULED but not HEARD.
CS FOR HOUSE BILL NO. 193(FIN)
"An Act relating to the joint administration of
tobacco taxes by the state and a municipality."
CSHB 193(FIN) was SCHEDULED but not HEARD.
HOUSE BILL NO. 231
"An Act eliminating the Department of Revenue's duty
to register cattle brands."
HB 231 was SCHEDULED but not HEARD.
CS FOR HOUSE BILL NO. 305(FIN)
"An Act relating to the records of metal scrappers;
repealing the requirement that a junk dealer or metal
scrapper obtain a license; and providing for an
effective date."
CSHB 305(FIN) was SCHEDULED but not HEARD.
CS FOR HOUSE BILL NO. 19(RLS)(efd am)
"An Act relating to permanent motor vehicle
registration in the unorganized borough and in a
municipality that has elected to allow permanent
registration; relating to the registration fee for
noncommercial trailers and to the motor vehicle tax
for trailers; and providing for an effective date."
CSHB 19(RLS)(efd am) was SCHEDULED but not HEARD.
ADJOURNMENT
10:33:45 AM
The meeting was adjourned at 10:33 a.m.