Legislature(2017 - 2018)BARNES 124
04/25/2017 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB156 | |
| SB63 | |
| HB156 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 63 | TELECONFERENCED | |
| += | HB 156 | TELECONFERENCED | |
HB 156-MUNI TAX EXEMPTION: ECON DEVEL PROPERTY
8:05:24 AM
CO-CHAIR PARISH announced that the first order of business would
be HOUSE BILL NO. 156, "An Act relating to a municipal tax
exemption or deferral for economic development property."
8:06:06 AM
CO-CHAIR PARISH highlighted the main focus of HB 156 [which is
specified in the fourth paragraph of the sponsor's statement,
which read as follows, original punctuation provided]:
HB 156 (Municipal Tax Exemptions) amends AS
29.45.050(m) to remove the requirement that a full or
partial property tax exemption or deferral for
economic development property be limited to five
years, with possible renewals. This legislation would
authorize a municipality's discretion to establish a
full or partial property tax exemption or deferral
over a designated period of time without limitation in
state law, and to designate a period of time for an
exemption or deferral that differs based on the type
of economic development property. In addition, AS
29.45.050(m) would be amended to augment the
requirements for eligibility for a full or partial
property tax exemption or deferral for economic
development property by including economic development
property that involves a "significant capital
investment in physical infrastructure" that expands
the tax base of the municipality and that will
generate property tax revenue after the exemption
expires.
CO-CHAIR PARISH directed attention to language on page 3, lines
1-8, of HB 156, which read as follows:
(3) HAS NOT BEEN USED IN THE SAME TRADE OR BUSINESS IN
ANOTHER MUNICIPALITY FOR AT LEAST SIX MONTHS BEFORE
THE APPLICATION FOR DEFERRAL OR EXEMPTION IS FILED;
THIS PARAGRAPH DOES NOT APPLY IF THE PROPERTY WAS USED
IN THE SAME TRADE OR BUSINESS IN AN AREA THAT HAS BEEN
ANNEXED TO THE MUNICIPALITY WITHIN SIX MONTHS BEFORE
THE APPLICATION FOR DEFERRAL OR EXEMPTION IS FILED;
THIS PARAGRAPH DOES NOT APPLY TO INVENTORIES
CO-CHAIR PARISH offered his understanding that this means if
someone has a property tax exemption on properties in one
community, then someone in another community would not be
allowed to have "a property exemption of the same sort" for a
period of six months, if that property is in the same trade or
business. He said that is problematic and "a peculiar piece of
language."
8:08:58 AM
REPRESENTATIVE DRUMMOND stated her assumption that because the
language was going to be deleted, the committee would not
concern itself with it. Notwithstanding that, she offered that
"a piece of property can't move"; however, she acknowledged that
boundaries of municipalities can move - usually in expansion.
CO-CHAIR PARISH observed that the aforementioned language [on
page 3, lines 1-8,] had been moved to page 2, [lines 11-16].
8:10:01 AM
The committee took an at-ease from 8:10 a.m. to 8:16 a.m.
8:16:29 AM
CO-CHAIR PARISH returned to the language being discussed prior
to the at-ease, and he stated his intent to ask someone from the
Department of Commerce, Community & Economic Development (DCCED)
to provide clarity.
8:17:22 AM
REPRESENTATIVE SADDLER suggested the bill's prime sponsor or the
prime sponsor's staff could shed light on the language in
question.
8:18:06 AM
CO-CHAIR PARISH noted that the phrase "a municipality that is a
school district" was in the original statute, and he said he
does not know how many municipalities that are school districts
have the power to levy property taxation, except perhaps
municipalities that overlap with school districts, such as the
City & Borough of Juneau School District. He remarked that he
recently learned that even the Alaska Gasline Development
Corporation is a municipality.
8:18:54 AM
The committee took an at-ease from 8:19 a.m. to 8:20 a.m.
8:20:23 AM
CO-CHAIR PARISH announced that the committee would set aside HB
156 [to be taken up later in the meeting].
HB 156-MUNI TAX EXEMPTION: ECON DEVEL PROPERTY
9:11:25 AM
CO-CHAIR PARISH announced that the final order of business would
be the committee's return to discussion of HB 156.
CO-CHAIR PARISH directed attention to language on page 2, lines
11-16, of HB 156, which read as follows:
(1) that has not been used in the same
trade or business in another municipality for at least
six months before the application for deferral or
exemption is filed; this paragraph does not apply if
the property was used in the same trade or business in
an area that has been annexed to the municipality
within six months before the application for deferral
or exemption is filed; this paragraph does not apply
to inventories; or
CO-CHAIR PARISH said he would like to better understand "the
import of that paragraph."
9:14:10 AM
MARTY MCGEE, State Assessor, Municipal and Community Policy and
Research Section, Division of Community and Regional Affairs
(DCRA), Department of Commerce, Community & Economic Development
(DCCED), offered his understanding that the purpose of the
proposed language is to "not erode the tax base" and to not
"create a competitive advantage for one property owner over
another," because the purpose is "to encourage new investment
and new equipment." He added, "Another interpretation of that
is that ... property ... that has been subject to tax remains
subject to tax, and any new property would be subject to the
exemption under this provision."
CO-CHAIR PARISH asked for the reason for "in another
municipality".
MR. MCGEE offered an example: equipment associated with a fish
processing plant moves from one processing plant to another. He
said he "never dealt with property that was subject to that
provision." He added that he was the assessor for the
[Municipality of] Anchorage for 17 years.
CO-CHAIR PARISH asked for confirmation that "this provision
applies to personal property rather than real property."
MR. MCGEE answered yes, but noted that the distinction is
difficult to make, because it is not explicit in law. He said
once a piece of equipment becomes affixed, it becomes real
property, even though it can be detached and moved. He said he
thinks the idea is to avoid a situation in which "an operator"
shops different tax jurisdictions for a tax break and moves
his/her equipment just to avoid taxation." He added that this
is not a common practice [in Anchorage] where the tax
jurisdictions are large.
CO-CHAIR PARISH expressed concern that if a tax exemption was
granted for a particular trade or business in one municipality,
then it could not be granted in a different municipality for a
six-month period.
MR. MCGEE offered his understanding that that is correct.
CO-CHAIR PARISH asked for confirmation that if someone in one
municipality received a property tax exemption for an economic
development property in housing, "that someone" would not be
able to receive a property tax exemption in housing in another
municipality for six months.
MR. MCGEE answered, "Only if it were the same property." He
said there is nothing preventing a separate action for exemption
in the two municipalities.
CO-CHAIR PARISH asked, "So, it'd only be if there were physical
property transferred from the one location to the other?"
MR. MCGEE answered that is correct. He returned to his example
of someone moving a significant piece of equipment "from one
location to another."
9:18:50 AM
CO-CHAIR PARISH next directed attention to two sentences in
existing statute [AS 29.45.050(m)], which would be deleted under
HB 156 and are found on page 1, lines 7-12, of HB 156, and which
read:
THE MUNICIPALITY MAY PROVIDE FOR RENEWAL OF THE
EXEMPTION UNDER CONDITIONS ESTABLISHED IN THE
ORDINANCE. HOWEVER, UNDER A RENEWAL, A MUNICIPALITY
THAT IS A SCHOOL DISTRICT MAY ONLY EXEMPT ALL OR A
PORTION OF THE AMOUNT OF TAXES THAT EXCEEDS THE AMOUNT
LEVIED ON OTHER PROPERTY FOR THE SCHOOL DISTRICT
CO-CHAIR PARISH asked for examples of municipalities that are
school districts.
MR. MCGEE responded that boroughs and first-class cities are
school districts. He offered his understanding that "the
legislative intent ... of the original language was to preserve
and protect funding for schools."
CO-CHAIR PARISH asked for confirmation that by deleting the
aforementioned language, the committee would be removing some
requirements for the support of schools.
MR. MCGEE responded yes. He added, "Typically, when you look at
the total millage for all the (indisc.) jurisdiction in the
state, about half of the millage is associated with education in
schools."
CO-CHAIR PARISH remarked that is concerning.
9:21:14 AM
REPRESENTATIVE SADDLER requested the committee hear from the
prime sponsor's staff for an explanation of the reason behind
the aforementioned proposed language on page 2, lines 11-16.
9:22:10 AM
HEATH HILYARD, Staff, Representative Cathy Tilton, Alaska State
Legislature, on behalf of Representative Tilton, prime sponsor
of HB 156, explained that the language on page 2, lines 11-16,
is not new, but was moved from another part of statute by the
bill drafter, who thought it was more appropriate placed "in
front of these qualifying sections rather than at the back where
it's currently structured." He said it is difficult to
determine the specific effect of the language, because "the
legislative history on the original statute is relatively thin."
He offered examples.
REPRESENTATIVE SADDLER asked what the practical effect of an
amendment in the committee packet, labeled 30-LS0602\A.3,
Shutts, 4/24/17, would be. [This amendment had not been offered
and was never offered in the future.]
MR. HILYARD indicated that he had not been able to study the
amendment, but said after a cursory glance, he thinks it is not
in line with sponsor's intent for HB 156.
9:25:28 AM
REPRESENTATIVE SADDLER expressed his wish to be given time to
study the amendment before the committee may be asked to vote on
it.
9:25:48 AM
CO-CHAIR PARISH stated his intent to hold HB 156 and any
amendments.
9:26:14 AM
REPRESENTATIVE WESTLAKE asked if HB 156, as currently written,
would do away with the school tax "out there at that local
level."
MR. MCGEE responded no.
9:26:40 AM
REPRESENTATIVE DRUMMOND offered a comment regarding the
unoffered amendment, then upon ascertaining that Mr. McGee did
not have a copy of the amendment, suggested the committee needed
time to study it.
9:27:42 AM
REPRESENTATIVE PARISH announced that HB 156 was held over.
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