HOUSE BILL NO. 217 "An Act relating to the determination of full and true value of taxable municipal property for purposes of calculating funding for education and certain other programs." TOM WRIGHT, STAFF, SPEAKER JOHN HARRIS, introduced Mr. Fellman. 2:20:25 PM PETE FELLMAN, STAFF, SPEAKER JOHN HARRIS, (via teleconference) explained that under HB 217 communities forming boroughs that have gas and oil properties in their borough boundaries could exclude the value of that property as a means to raise new revenue. 2:22:09 PM Representative Holm asked Mr. Van Sant why a borough would choose not to tax a large piece of property at 20 mills, so that it could then tax people at 4 mills. 2:23:16 PM STEVE VAN SANT, STATE ASSESSOR, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, (via teleconference) explained that under current law requirements, the borough would have to come up with additional money for school funding and would need to levy a property tax. He related that the proposed legislation would lower the property tax by $200 million. The bill would provide boroughs with the option to levy a property tax or not. Representative Holm asked why that option is not given to any other large municipalities such as Fairbanks. Mr. Van Sant replied that under this scenario the borough would have that option. The property mentioned in the bill is singled out because it is "centrally accessed property" and crosses jurisdictional lines. HB 217 would apply to all such municipalities. Representative Holm asked if there is currently a property tax. Mr. Van Sant replied that there is no local tax being levied, but there is a state tax leveled against the pipeline. 2:27:28 PM Co-Chair Chenault inquired where the cost to the state of $1.9 million would come from. He asked about mill rates. Mr. Van Sant clarified that he was giving an example: at 4 mills, the proposed borough would receive a little less than $800,000, and at 10 mills, they would receive about $1.9 million. 2:28:26 PM PETE HALLGREN, CITY ADMINISTRATOR, DELTA JUNCTION, (via teleconference) related that his city is currently looking at developing a borough proposal. There are currently four boroughs in the state, which have no property tax. The charter commission of Delta Junction has been looking at a petition, which would allow for funding for a proposed borough, with a variety of taxes. He explained the differences in taxes and how the property tax would work. There would be no fiscal impact from this bill, but in the future there would be issues. He said that Fairbanks could also choose to do this. The bill would make the formation of new boroughs along the pipeline more feasible. 2:33:13 PM Co-Chair Chenault inquired about the advantages of accepting this bill in order to assess a smaller tax. Mr. Van Sant said that it offers alternatives in taxation. He clarified what the bill would allow. 2:35:35 PM Representative Hawker MOVED to report HB 217 out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 217 was REPORTED out of Committee with a "no recommendation" recommendation and with zero fiscal impact note #1 by the Department of Commerce, Community and Economic Development. 2:36:40 PM