Legislature(2007 - 2008)HOUSE FINANCE 519
04/11/2007 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB67 | |
| HB178 | |
| HB155 | |
| HB212 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 155 | TELECONFERENCED | |
| + | HB 158 | TELECONFERENCED | |
| + | HB 178 | TELECONFERENCED | |
| + | HB 212 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 67 | TELECONFERENCED | |
HOUSE BILL NO. 67
"An Act relating to an optional exemption from
municipal property taxes on certain residences of law
enforcement officers."
Vice Chair Stoltze MOVED to ADOPT the work draft for HB 67,
labeled 25-LS-0314\F, Cook, 4/10/07. There being NO
OBJECTION, it was so ordered.
1:48:44 PM
SUZANNE CUNNINGHAM, STAFF, REPRESENTATIVE MEYER, explained
the three major changes to HB 67 depicted in the new CS.
Section 1 provides that property of a private, nonprofit
four-year college is also exempt from taxation except for
cases when there is a private lessor of the property. This
treatment is consistent with the way the University of
Alaska is treated.
1:49:10 PM
Ms. Cunningham explained that Section 2 was added by request
and provides for an optional tax exemption for fraternal
society orders or associations. Section 3 was worked on by
Representative Gruenberg's office and addresses previous
concerns raised by Representative Gara.
NORMAN COHEN, STAFF, REPRESENTATIVE MAX GRUENBERG, explained
the changes to Section 3. He pointed to a change on page 4,
which limits a parcel owned by a law enforcement officer to
one exemption. If two or more individuals own the parcel,
the exemption depends on the percentage owned by the law
enforcement officer. The individuals can decide between
themselves how the exemption is distributed. Other changes
were made to give municipalities more discretion in how they
decide which area is to be tax exempt. Municipalities can
also decide which law enforcement officers are eligible for
the exemption.
Mr. Cohen referred to page 4, lines 13 and 14, which gives
the municipality the ability to place additional criteria
when determining which areas to include for the exemption
and how large to make them.
1:54:27 PM
Representative Hawker referred to Section 1 and asked which
property tax payers would benefit from the proposed change.
Ms. Cunningham listed Alaska Pacific University (APU) and
Sheldon Jackson College. Representative Hawker wondered how
much monetary relief they would be receiving. Ms.
Cunningham explained that under AS 29.45.030 there is a
property tax exemption for property used exclusively for
nonprofit, religious, charitable, cemetery, hospital, or
educational purposes. The new language clarifies that if
the property of four-year, private, nonprofit institutions
is leased, the lessor is liable for municipal property tax.
Representative Hawker inquired if the taxing authority would
have to make up for waived taxes. He wondered if the
liability would then fall upon other taxpayers of the
community. Ms. Cunningham referred to a section under the
mandatory property tax exemption that allows the
municipality to seek revenue from the state. Representative
Hawker expressed interest in knowing the amount of the
potential lost revenue by allowing Sheldon Jackson and APU
to be tax exempt.
Co-Chair Meyer asked if this is a local option.
REPRESENTATIVE MAX GRUENBERG, co-sponsor, reported that
Section 1 was not optional.
1:58:05 PM
Representative Crawford wondered about the impact on Wayland
Baptist University in his district. He asked about the
effect of this legislation on the property tax cap.
MIKE BLACK, DIRECTOR, COMMUNITY ADVOCACY, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, explained that
if a class of property tax is removed, the balance of
revenue needing to be generated would be passed on to other
taxpayers in Anchorage. He thought that there was no state
reimbursement to make up for the loss. He said there would
be no effect on the municipal tax cap.
Representative Hawker requested a dollar amount.
Mr. Black related that some university-owned vacant
properties would be removed from the tax roll. He could not
state a dollar amount.
Representative Hawker wondered about the relationship
between vacant property and Alaska Pacific University (APU).
Mr. Black reported that the properties are held in title by
APU, although they are not attached to the campus.
HARRY MCDONALD, BOARD OF TRUSTEES, ALASKA PACIFIC
UNIVERSITY, clarified that no tax has ever been paid on
those properties. Representative Hawker asked by what
authority APU has been exempt.
DOUG NORTH, PRESIDENT, ALASKA PACIFIC UNIVERSITY, explained
the university's 501(c)3 status as a non-profit educational
institution from 1959 until 2005.
2:03:08 PM
BOB MINZ, TRUSTEE, ALASKA PACIFIC UNIVERSITY, added that
there is a provision in state law whereby an entity that has
never paid tax, is excluded from having to pay.
Representative Hawker asked why this bill is needed. Bob
Minz replied that in 2006 the municipal assessor changed the
interpretation. Representative Hawker asked what the change
in interpretation was. Mr. Minz responded that in 2006 and
2007 the municipality decided that APU property was taxable.
Representative Hawker asked how much money was involved.
Mr. Minz replied that the 2006 taxes are in dispute. A
clarification of state law would solve the problem.
2:05:13 PM
Representative Gruenberg inquired if the Mat-Su property was
left in trust. Mr. Minz replied said he is not sure which
property is being referred to. Representative Gruenberg
clarified that he is referring to a homestead that was left
to the university. Mr. Minz related that APU only leases
that property. Representative Gruenberg concluded it would
not be covered by the bill. Mr. Minz said that is correct.
Representative Gruenberg questioned about a specific piece
of APU property that is being rented out. Mr. Minz replied
that in 2007 the tax exemption for the Spine Institute
building was withdrawn while the remaining exemptions were
continued.
2:07:03 PM
Co-Chair Chenault asked if University of Alaska (UA) land is
involved. Ms. Cunningham said the provisions pertaining to
UA lands are untouched by this legislation.
Co-Chair Chenault asked if it would be optional for
municipalities to allow exemptions. Ms. Cunningham said
that Section 2 of the bill is optional. Co-Chair Chenault
referred to a letter from Shane Horan (copy on file) voicing
concern about exemptions for UA leasehold interests and
fraternal orders.
Co-Chair Chenault declared a conflict of interest stating
that he is a member of Moose and Elks clubs.
Co-Chair Chenault voiced concern about pressure on
municipalities regarding exemptions. He questioned if the
time is right. He pointed out that it would cost the Kenai
Borough $25,000 for the exemptions. He stated concern about
exempting properties at a time of budget tightening. He
agreed with the police officer exemption.
2:11:23 PM
Co-Chair Meyer noted that the amendments regarding the
fraternal orders were proposed in another committee. Vice
Chair Stoltze addressed the appropriateness of those
exemptions. He pointed out that fraternal orders often
function as community centers. He expressed comfort with
the optional exemptions.
Representative Gara pointed out that there are hundreds of
good reasons for property tax exemptions. He noted on page
2, line 22, property used exclusively for nonprofit
religious, charitable, cemetery, hospital, and educational
purposes are already exempted. He spoke in favor of those
exemptions as well as college property exemptions. He
questioned the need for Section 2 and wondered why current
law is not adequate.
2:17:14 PM
Mr. North explained the curricular relationship between APU
and the Spine Institute, which leases their property. He
spoke to the current exemptions for AU and APU. The
question is how to level the playing field among the various
colleges and universities in the state.
Representative Gara spoke highly of APU, however, he
questioned the favoritism of one group of doctors over
another regarding taxes.
Mr. McDonald explained how APU operating costs are handled.
He clarified that the doctors are not getting the tax break,
the university is. Mr. North added that the amount is
$200,000 per year.
2:20:26 PM
Ms. Cunningham addressed Representative Gara's concern.
Page 1 outlines properties that are exempt from property
tax. Subparagraph (a) states that the properties are exempt
from taxation except that a privately sold contract or other
interest in the property is taxable to the extent of the
interest. That language was included at the request of the
municipal attorney's office so that a lessor would be liable
for tax purposes.
Representative Gruenberg added that the Spine Institute is
not tax free. He asked what the educational relationship is
between APU and the Spine Institute. Mr. North described
the internship relationship, curriculum, and adjunct
recruitment. He referred to an educational agreement
between the Spine Institute and APU (copy on file.)
Representative Gara clarified that the doctors pay municipal
business tax and state corporate tax. He concluded that
currently the building would be taxed unless the law is
changed.
Mr. Minz reported that currently there is a dispute with APU
as to whether that property should be taxed.
2:24:35 PM
Representative Hawker questioned exemptions for fraternal
orders and maintained that voters should have a chance to
voice an opinion. He stated concern about the assembly
changing taxes without the voice of the people. He
suggested language to allow voters to have a say. Vice
Chair Stoltze thought that was a reasonable request.
2:26:37 PM
Representative Gruenberg said he would accept a friendly
amendment to that effect. Co-Chair Chenault also agreed.
Representative Hawker clarified that his concern is only
with Section 2.
Representative Hawker MOVED to ADOPT Conceptual Amendment
#1:
ADD to Section 2.
Incorporate language similar to that found in Sec.
29.45.050(a) A municipality may exclude or exempt or
partially exempt residential property from taxation by
ordinance ratified by the voters at an election.
This would incorporate the concept into the exemption
taxation of the property of a fraternal society, order,
or association that is exempt from federal taxes.
Vice Chair Stoltze OBJECTED.
Representative Hawker clarified "an election" would allow
the municipality to decide which election.
2:29:36 PM
Representative Gara pointed out that charitable
organizations are exempt already. This amendment applies to
organizations that wish to exempt non-charitable-use
property. He maintained that the issue is not clear.
Vice Chair Stoltze WITHDREW his OBJECTION.
Conceptual Amendment #1 was ADOPTED.
Representative Gruenberg stated a conflict of interest in
that he is a member of the Lions' Club.
Co-Chair Meyer noted a zero fiscal note by the Department of
Commerce, Community and Economic Development.
2:32:58 PM
Representative Hawker reported reservations about imposing
unfunded mandates on municipalities. He agreed with
Representative Gara's concern regarding exemptions for
commercial enterprises. He said he would have to vote
against the bill because he is against additional property
tax in Anchorage.
2:34:35 PM
Representative Gara spoke to properties used by religious
groups. He objected to Section 2, which would expand that
exemption to properties used for profit by religious groups.
He stated no support for Section 2 of the bill.
Co-Chair Meyer summarized that that would be true only after
voter approval.
Representative Gruenberg thought Section 2 would not cover
the shopping center idea because commercial use is not one
of the six items listed there. Representative Gara agreed.
2:36:29 PM
Vice Chair Stoltze MOVED to REPORT CSHB 67 (FIN), as
amended, out of Committee with individual recommendations
and the accompanying fiscal note. There being NO OBJECTION,
it was so ordered.
CSHB 67 (FIN) was REPORTED out of Committee with a "no
recommendation" and with zero fiscal note #1 by the
Department of Commerce, Community and Economic Development.
2:38:03 PM
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