Legislature(1997 - 1998)
04/17/1997 08:15 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL 94
"An Act relating to confidentiality of certain
municipal tax records."
JEFF LOGAN, STAFF, REPRESENTATIVE JOE GREEN, noted that HB
94 would allow local governments to classify certain
financial information submitted as confidential if requested
to do so by the taxpayer.
Under State law, income information submitted to the State
by the taxpayer as part of a tax return or report would be
held confidential. AS 43.05.230 prohibits officers or
agents of the State from disclosing the "amount of income or
the particulars" listed in a return. However, when the same
or similar information is submitted to a local government
for the purposes of a tax assessment, there is no such
protection. HB 94 would extend the protection for income
information submitted to the State to also protect
information submitted to local governments.
Mr. Logan continued, HB 94 would not change, alter, amend or
in any way restrict the authority that local government has
to assess a tax. It simply says that once the financial
information is provided to the local taxing authority, it
must be held confidential if the taxpayer makes such a
request.
Mr. Logan commented, following discussion on the proposed
legislation with borough assessors throughout the State, the
sponsor submitted a work draft, #0-LS0419\F, Cook, 4/16/97,
to be the version for the Committee's consideration. The
previous versions include civil penalties for the release of
confidential information. Upon the assessors
recommendation, that information was deleted from the
proposed committee substitute. He added, the penalties for
the release of information could be found in AS 11.56.860.
Mr. Logan summarized the intent of the proposed legislation
which clarifies when a taxpayer submits information to a
local government for the purposes of a property tax
assessment, the information related to the earnings, income,
profit, losses or expenditures of that taxpayer must be held
confidential should the taxpayer make a written request.
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Mr. Logan commented that following discussions with
statewide assessors and the legislative drafter,
Representative Green had attempted to determine what
information would justify confidentiality, those items which
we would not want other competitors to see.
Representative J. Davies suggested current language, "is
acquired", was too broad. Mr. Logan replied that current
language would be the default which would result in a
penalty of a Class A misdemeanor.
Co-Chair Hanley asked if the "valuation" would be kept
confidential. Mr. Logan stated that determination would be
public information. Representative J. Davies pointed out
that information from the appeal process would also be
confidential. Mr. Logan advised that had been discussed
with the drafter, Ms. Cook from Legislative Legal Services.
The State does provide some confidentiality if a tax payer
has a tax assessment which they challenge; that information
is held tightly. He believed that it would be fair for the
taxpayers to have the same privilege.
Representative J. Davies agreed that should be true in
practice, although, only the administrative step had been
undertaken. He believed that would not work in the judicial
step. The first Statute includes both judicial and
administrative steps not requiring the State's involvement.
Representative G. Davis asked how widely the proposed
approach would be used. Mr. Logan understood that there
were three basic approaches to the valuation of property:
1. The market approach determined on the value
of the neighborhood property;
2. Replacement approach; and
3. Income approach based on how much income the
property generates.
KARL BORGLUM, (TESTIFIED VIA TELECONFERENCE), ASSESSOR,
MATSU BOROUGH, MAT-SU, voiced concern that the initial
language was so broad that it would include any entity
beyond the mining community. Once the information goes
before the Board of Equalization (BOE), it would no longer
be confidential.
Co-Chair Therriault asked the number of assessments that
address financial information. Mr. Borglum replied that
income information was mostly relative to commercial
buildings and the income that they can expect to generate.
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The information would not be applicable to single family
housing.
Representative G. Davis questioned owners response to
documents when declassification occurs. Mr. Borglum replied
that he has never experienced a situation in which someone
appealed the confidential information process. Although,
there have been circumstances when the person has not wanted
their information made public.
Representative J. Davies asked if a person sold their house,
would that income be construed as income and/or profits
under this section. Mr. Borglum replied that when dealing
with a company whose business includes real estate
investment, that information could easily be construed to be
earnings, income profits/losses or expenditures. The
acquisition of the property could fall under information of
the bill. He noted concern with the manner in which the
assessor acquires information.
MICHAEL GATTI, (TESTIFIED VIA TELECONFERENCE), MATSU BOROUGH
ATTORNEY, MAT-SU, commented on the proposed legislation. He
explained that the Board of Equalization was a board
consisting of professional individuals who are charged with
deliberating fairly on challenged assessments. Information
submitted to the Board is open to the public.
He continued, one of the most important principles
underlining State government, AS 44.62.312, is titled:
"State policy regarding meetings". That policy requires
open deliberation for people invoking the Board's
jurisdiction. Mr. Gatti submitted that such a procedure
should be the policy of the State. In addition, there
exists a strong public record policy, listed in AS
09.25.110. The Alaska Supreme Court has been protective of
the public's right to receive those public records. It
would not be in the public's best interest to increase the
number of records which are confidential, particularly, when
harsh criminal penalties are associated with the
distribution. He urged that the legislation have the scope
reworked.
Mr. Gatti added, the proposed legislation would be another
"unfunded" mandate burden placed on the local boroughs. He
suggested that passage of the bill would increase the costs
of the assessor in bringing matters before the Board of
Equalization. No more revenue exists to pay those costs.
CYNTHIA KLEPASKI, ASSISTANT BOROUGH ATTORNEY, FAIRBANKS
NORTH STAR BOROUGH, FAIRBANKS, stated that the Fairbanks
North Star Borough is not against the confidentiality of
information. There are good reasons to provide a degree of
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confidentiality of records provided to tax payers at the
assessors request. However, she stated, the scope of HB 94
is overly broad and the bill would severely impact the
proceedings of the Board of Equalization.
HB 94 would prohibit disclosure of a wide range of
information acquired from any source. The bill would add a
new subsection (c) to statute. That language is interpreted
that the source of the information is public, even if the
taxpayer provided the information voluntarily, the
information becomes confidential when the assessor has it.
She stated that there is no reason to require the assessor
to keep the information confidential.
Ms. Klepaski added that HB 94 would severely impact appeals
to the Board of Equalization (BOE) and the courts.
Subsection (c) would add material which would require BOE to
hold executive sessions to consider whatever is relevant to
the assessed value of the property. She asked how would the
BOE be able to make findings and decisions, or the court
determine whether there is substantial evidence to support.
There are legitimate public policy reasons to waive
confidentiality provisions in appeals. Property tax
assessment procedures are generally public because property
valuation for assessment purposes requires a just valuation
of all property. The assessment must have a fair relation
to a uniform and equal rate of taxation. If the procedures
and records involved in property tax assessment are not
public, taxpayers will not be able to determine whether a
particular property is fairly valued in comparison to other
properties.
Ms. Klepaski concluded that similar income information is
produced as a matter of course in other litigation. If a
person or entity files a lawsuit, or a property assessment
appeal, the relevant records must be subjected for
disclosure.
Co-Chair Therriault asked if a dis-interested third party
could appeal a business' tax assessment. Ms. Klepaski
stated that they would not be able to. She added that a
third party could attend a BOD meeting, although, they could
not participate unless requested. A process for public
comment is not included.
(Tape Change HFC 97-102, Side 2).
PAT CARLSON, (TESTIFIED VIA TELECONFERENCE), ASSESSOR,
KODIAK, spoke to the defined narrowness of the document. In
order to address these concerns, he suggested that
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information should be "requested" rather than "required" by
the assessor. The Board of Equalization process should
remain open and public, agreeing that a need does exist to
have confidential information on a municipal level. Co-
Chair Therriault requested that Mr. Carlson fax to the
Committee his suggested language.
DAVE HEIER, (TESTIFIED VIA TELECONFERENCE), NORTH SLOPE
BOROUGH, ANCHORAGE, stated that a problem currently does not
exist. He questioned why the legislation was being
discussed when it had been requested by only one mining
interest. He reiterated that his association has requested
information regarding the current problems and that to date
they have received no word.
If the legislation is passed, it would be important that
confidentiality not be carried out to the level of the Board
of Equalization. He summarized, open government is good
government and is supported by tax payers.
Co-Chair Therriault noted that HB 94 would be placed in
Subcommittee with Representative G. Davis as Chair and with
members Representative Mulder and Representative J. Davies.
Co-Chair Therriault stated that the language needs to be
tightened up with regards to what information covered would
be confidential, clarifying what the default would be, how
the information would be reviewed on appeal, whether the
taxpayer would be required to waive confidentiality if they
chose to go to the BOE or it not, and how the court would
have access to review the information.
HB 94 was HELD in Committee for further discussion.
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