Legislature(2001 - 2002)
04/18/2002 10:39 AM Senate RLS
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ALASKA STATE LEGISLATURE
SENATE RULES COMMITTEE
April 18, 2002
10:38 a.m.
MEMBERS PRESENT
Senator Randy Phillips, Chair
Senator John Cowdery, Vice Chair
Senator Rick Halford
Senator Gene Therriault
Senator Johnny Ellis
MEMBERS ABSENT
None
COMMITTEE CALENDAR
SENATE BILL NO. 4
"An Act relating to a mandatory exemption from municipal property
taxes for certain residences and to an optional exemption from
municipal taxes for residential property; and providing for an
effective date."
APPROVED CSSB 4(RLS) FOR CALENDARING
SENATE BILL NO. 185
"An Act relating to the basis for determining eligibility for and
the amount of power cost equalization payments; and providing for
an effective date."
APPROVED FOR CALENDARING
PREVIOUS COMMITTEE ACTION
SB 4 - See Community & Regional Affairs minutes dated 2/7/01 and
2/28/01, Finance Report dated 4/5/02 and Rules minutes dated
4/20/01 and 4/16/02.
SB 185 - See Finance minutes dated 4/9/02.
WITNESS REGISTER
Ms. Wilda Rodman
Staff to Senator Therriault
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Answered questions about SB 4
Ms. Deb Davidson
Staff to Senator Donley
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Answered questions about SB 185
ACTION NARRATIVE
TAPE 02-8, SIDE A
Number 001
CHAIRMAN RANDY PHILLIPS called the Senate Rules Committee meeting
to order at 10:34 a.m. Present were Senators Halford, Therriault
and Phillips.
SB 4-MUNICIPAL PROPERTY TAX EXEMPTION
SENATOR THERRIAULT moved to adopt Version K of SB 4 as the
working document of the committee. There being no objection,
Version K was adopted.
SENATOR THERRIAULT then explained the change made in Version K.
He said that Senator Donley suggested language in the Senate
Finance Committee that would limit the availability of the
additional property tax exemption in those municipalities with
excessive per capita bonded indebtedness. When the provision that
allows additional property tax exemption for EMS and fire
volunteers was added to the bill, Senator Donley expressed
concern that the provision could be a mechanism used by
municipalities to do an end run so he wanted the same limiting
language placed in that section, which appears on page 2, lines
14-16.
CHAIRMAN PHILLIPS announced that Senator Ellis was present.
SENATOR ELLIS asked for a synopsis of the legislation and whether
it is good for senior citizens and bad for municipalities.
SENATOR THERRIAULT said it will have no impact at all on senior
citizens. Right now anyone with residential property can take a
$10,000 property tax exemption. Section 1 would allow, after
approval by the local voters, increasing that exemption to
$15,000. Section 2 would allow the assembly to grant an
additional $5,000 property tax exemption for a person who is a
volunteer fire fighter or EMS provider. He noted multiplying the
$5,000 by the standard millage rate amounts to $100 to $200.
SENATOR ELLIS asked if the bill will have any impact on
commercial property.
SENATOR THERRIAULT said it could if a local government decided to
grant a property tax exemption and then increase the overall
millage rate to recoup any loss. However, the potential loss of
revenue from the exemption for EMS providers is relatively small.
The North Star Borough estimated the cost at about $25,000. The
reason he wanted the overall exemption increase to go to a vote
was so that business owners could make their case as to why it
should or shouldn't be done.
SENATOR ELLIS asked if the Municipality of Anchorage (MOA) has
taken a position on the bill.
SENATOR THERRIAULT replied that right now the MOA does not take
advantage of the current $10,000 exemption.
CHAIRMAN PHILLIPS recognized the presence of Senator Cowdery.
SENATOR HALFORD asked how the exemptions can stack on top of each
other.
SENATOR THERRIAULT explained that a municipality can grant up to
a $15,000 exemption per resident.
SENATOR HALFORD remarked:
Okay, so that's the $15,000 or 20 percent of the
assessed value, whichever is less. Then you add the
emergency medical service - fire fighting service - and
this shows that you can have two individuals compounded
so if you have a couple, both of whom are part of the
volunteer fire fighting department, which is in many
cases the case, you go from $15,000 to $25,000 so the
size of the exemption is really $25,000 at the top end
- from 10 to 25 thousand. The second question I have is
how this affects the formulas where the combined total
property assessed valuation triggers a requirement in
education - the 4 percent - or any other segment of a
state-funding component. Does this take those
properties off the calculation or do those values still
remain part of the calculation, which requires the
local effort?
SENATOR THERRIAULT answered that those mechanisms operate
independent of anything in the bill. The bill applies to the
amount of property tax that can be assessed on the property and
those formulas operate on the total assessment of the property
value.
SENATOR HALFORD asked if the total assessed property value is
changed by what you exempt from the taxation on that assessment.
SENATOR THERRIAULT said it is not.
SENATOR HALFORD asked who this will apply to.
SENATOR THERRIAULT said it will apply all across the state. Some
municipalities do not take advantage of the current $10,000
exemption and whether they will take advantage of this bill is
unknown. However, it will not be available to the North Slope
Borough because of its overall bonded indebtedness.
SENATOR HALFORD asked about Valdez.
SENATOR THERRIAULT said it would be available to Valdez.
SENATOR HALFORD asked if the Mat-Su and Kenai Boroughs apply the
$10,000 exemption.
MS. WILDA RODMAN, staff to Senator Therriault, said that
currently the North Slope Borough has a total per capita bonded
indebtedness of $15,000 so it is the only borough that will be
affected by that clause. Regarding the Kenai and Mat-Su Boroughs,
she said that Bristol Bay, Valdez, Kenai, the North Slope and
North Star Boroughs use the existing $10,000 exemption.
SENATOR THERRIAULT added that some of the municipalities that
have chosen not to grant the general residential exemption may
take advantage of Section 2, which applies to volunteers, if they
are having difficulty attracting volunteers.
There being no further questions, SENATOR THERRIAULT moved to
calendar CSSB 4(RLS) at the Chairman's discretion with its
accompanying fiscal note that shows a potential loss of $200,000.
He explained the fiscal note assumes that all municipalities will
grant the exemptions and increase the overall millage rate on oil
and gas properties, lowering the state's take.
SENATOR HALFORD asked if the Finance Committee version estimated
a loss of $714,000.
SENATOR THERRIAULT said that fiscal note applied when the bill
allowed the residential property tax exemption to go up to
$30,000. It has been decreased to $5,000 so the fiscal note
decreased substantially.
CHAIRMAN PHILLIPS asked how much it would cost if all communities
opted into this program.
MS. RODMAN said she did not know.
SENATOR THERRIAULT said he does not know the cost of the current
program to the state treasury.
CHAIRMAN PHILLIPS said he would like to get an answer to that
question.
CHAIRMAN PHILLIPS announced that hearing no objections, CSSB 4
(RLS) would be calendared.
SB 185-PCE BASED ON HIGHEST COST
SENATOR COWDERY moved to calendar SB 185 with its accompanying
fiscal note at the Chairman's discretion.
SENATOR ELLIS objected.
SENATOR HALFORD said his question pertains to the sponsor
statement, and read, "The revisions contained in SB 185 result in
slightly higher payments being made to 12 percent of the
communities receiving PCE."
MS. DEB DAVIDSON, staff to Senator Donley, sponsor, explained
that it has to do with the way PCE payments are calculated. The
Regulatory Commission of Alaska (RCA) and the Alaska Industrial
Development and Export Authority (AIDEA) have a complicated
method of calculating payments. She assumes that the increases
are based on the historical usage of the community facilities and
residences. She noted that committee members' packets contain a
table of information provided by AIDEA that shows the difference
of what communities would receive as a whole under the existing
program and what they will receive if the bill passes. Some
would, in fact, get an increase.
SENATOR THERRIAULT asked if some communities are not PCE-eligible
under the current program and pay higher rates than the PCE
communities.
MS. DAVIDSON said that is correct.
SENATOR HALFORD asked if that remains the case.
MS. DAVIDSON said she believes that is correct in a couple of
instances. She believes some areas within the Copper Valley
Electric Association pay close to 20 cents per kilowatt hour and
that Kodiak Electric Association pays 16 to 17 cents per kilowatt
hour. Even with the revisions, a couple of areas will not be
eligible for PCE that would be paying a higher rate. However,
this bill will bring the rate closer to the statewide average.
There being no further discussion, the motion to calendar SB 185
carried with Senators Therriault, Cowdery, and Phillips in favor
and Senators Ellis and Halford opposed.
There being no further business to come before the committee,
CHAIRMAN PHILLIPS adjourned the meeting at 10:54 a.m.
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