Legislature(2011 - 2012)BARNES 124
02/02/2012 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB170 | |
| HB290 | |
| HB184 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 184 | TELECONFERENCED | |
| += | HB 290 | TELECONFERENCED | |
| += | HB 170 | TELECONFERENCED | |
HB 170-MUNI TAX EXEMPTION FOR CERTAIN VOLUNTEERS
8:06:41 AM
CHAIR MUNOZ announced that the first order of business would be
HOUSE BILL NO. 170, "An Act relating to municipal property tax
exemptions on residences of certain volunteer emergency services
personnel and the widows and widowers of volunteer emergency
services personnel; and providing for an effective date."
8:07:40 AM
REPRESENTATIVE AUSTERMAN moved to adopt Version 27-LS0562\I,
Bullard, 4/6/11, as the working document. There being no
objection, Version I was before the committee.
8:08:01 AM
REPRESENTATIVE ERIC FEIGE, Alaska State Legislature, speaking as
the sponsor of HB 170, reminded the committee that it heard HB
170 last year and several questions arose last year. He related
that over the interim changes to HB 170 were made to address
those concerns.
8:08:43 AM
MICHAEL PASCHALL, Staff, Representative Eric Feige, Alaska State
Legislature, explained that HB 170 provides the state the
opportunity to reimburse to municipalities the property taxes
paid by first responders, fire and emergency medical services
(EMS) personnel, if the municipality chooses to enact an
ordinance to do so. Originally, the legislation proposed an
opt-out program, but has now been changed to an opt-in program.
Therefore, there is no obligation on behalf of the municipality
to do this unless they choose to do so. This legislation allows
municipalities to provide an incentive [for first responders to
stay as such] if the municipality so chooses. He recalled that
last year there were questions regarding whether there was an
annual application, which is left to the municipality to decide.
However, since it's an annual property tax it would seem to make
sense that one would be required to apply annually in order to
receive the exemption. There was also a question regarding
qualifying an "active volunteer." The legislation defines
"volunteer" in statute by using an existing definition in
statute, but if the municipality wants a smaller group or to
clarify the group further, the municipality can decide that.
There was also a question regarding the widow/widower provision
and whether a widow/widower who remarries would qualify. Again,
the municipality can define that and any parameters around it.
He also recalled that last year there was a question regarding
"paid on-call volunteers" and, again said that it would be left
to the municipality to determine.
8:12:31 AM
REPRESENTATIVE DICK requested explanation of the provision on
page 3, lines 4-10.
MR. PASCHALL explained that the aforementioned provision
provides an opportunity for the state to reimburse the
municipality for the exemptions, just as is done for the senior
property tax exemption. Therefore, if the state recognized this
proposed exemption as a need, the legislature could fund a
reimbursement for the lost revenue the municipalities would
experience.
REPRESENTATIVE DICK pointed out that the provision on page 3,
line 4 uses the term "shall".
MR. PASCHALL said that "shall" is the normal language for such
programs. Since the legislature has to provide separate
legislation to fund the program, the program/exemption is
dependent on that.
8:13:44 AM
CHAIR MUNOZ inquired as to how long it has been since the state
has actively reimbursed the municipalities for the senior tax
exemption.
MR. PASCHALL answered that it has been about 10-12 years.
8:14:01 AM
MR. PASCHALL, in response to Representative Saddler, stated that
the language "only to the extent that the loss exceeds an
exemption that was granted by the municipality" on page 3, lines
6-7, was taken from the senior exemption language. The
language relates that the municipality can't be reimbursed
twice.
8:14:31 AM
REPRESENTATIVE DICK inquired as to what prohibits a large
increase in the number of volunteer firefighters to take
advantage of this proposed property tax exemption.
MR. PASCHALL opined that he didn't believe people would put the
time in to do so. He indicated that the municipality could
specify rules regarding the number of hours one must serve to be
able to apply for the exemption.
8:15:14 AM
REPRESENTATIVE GARDNER asked how the sponsor would feel about
amending the language on page 3, line 4, from "shall" to "may"
since she understood the sponsor's intention is not to mandate
the reimbursement.
MR. PASCHALL said that the sponsor wouldn't object to that.
8:15:46 AM
REPRESENTATIVE SADDLER inquired as to the number of volunteer
fire departments in the state that could be impacted by this.
MR. PASCHALL responded that he counted 78 fire departments
located within a municipality that has a property tax. There
are approximately 250 fire departments in the state and
approximately 7,000 firefighters of which about 4,000 are
volunteers. Approximately 1,500 firefighters live in a
municipality that assesses property taxes. He recalled that the
Girdwood Fire Department has 30-some volunteers of which 14
owned property within the community.
REPRESENTATIVE SADDLER questioned whether all the voters in the
Municipality of Anchorage would have to vote on whether to grant
this proposed exemption. He pointed out that in Anchorage there
is a city fire department, a volunteer fire department within
the municipal borders, and fire service areas.
MR. PASCHALL replied no, and clarified that this legislation
provides a provision on page 1, line 12, that the governing body
of the municipality can grant the exemption. Therefore, in the
case of Anchorage, the Anchorage Assembly would be able to grant
the exemption.
REPRESENTATIVE SADDLER related his understanding that there is
no guarantee the state would fund this proposed exemption, it's
subject to appropriations. He then asked if the pro rata
provision exists to address a limited appropriation.
MR. PASCHALL replied yes.
REPRESENTATIVE SADDLER then inquired as to the potential cost to
the state.
MR. PASCHALL explained that in determining an answer to the
aforementioned, the question then becomes how much time should
legislative research spend on such. He used Girdwood as a
typical example. The Girdwood Fire Department has 51 members
listed in the state registry of which 12 properties were held in
names matching members of the Girdwood Fire Department. These
properties had an assessed value of $3.9 million and the average
property value was $329,500. The property values ranged from
$194,000-$765,000. Mr. Paschall reminded the committee that
most of those who are very active in local fire departments are
involved in them for years. Still, there are many firefighters
who come and go and those people often don't own property.
Therefore, this proposed exemption could be an incentive for
those who serve the community to remain in it.
8:21:00 AM
REPRESENTATIVE CISSNA noted that most fire departments include
emergency medical services (EMS) personnel as well.
MR. PASCHALL confirmed that in most communities in Alaska the
fire departments include EMS personnel. He informed the
committee that the numbers he used for the fire department
includes the EMS personnel as well.
REPRESENTATIVE CISSNA, drawing from her time reviewing EMS,
related that a large percentage of EMS personnel are volunteers.
In fact, in small communities the EMS personnel are often
helping in the clinics. She opined that [EMS and firefighters]
do really good work.
8:22:46 AM
REPRESENTATIVE SADDLER inquired as to what happens to a
community that goes forward with this proposed exemption, but
the state stops funding it after a few years.
MR. PASCHALL opined that the volunteers would accept the fact
that the state doesn't have the funds. He also pointed out that
the municipality would be able to repeal the ordinance and the
program were the state to end the funding to the program.
REPRESENTATIVE SADDLER asked if the municipalities would
actually repeal the program.
MR. PASCHALL said he couldn't answer that. He then related that
the Homer Fire Department newsletter related that in 2010 the
[Homer] Fire Department's budget was $971,000, but the total
cost in normal wages for the same services as the volunteer
firefighters would be an estimated $3.6 million.
REPRESENTATIVE SADDLER stated that he admired the motivation of
this effort and monetarily supports his local fire department.
However, he expressed concern that [this legislation]
establishes a situation, a worst case scenario, in which the
proposed exemption is offered, boroughs and municipalities take
advantage of it and enjoy it while those who aren't firefighters
in the community have to pay for the exemption. In fact, he
related that he has heard testimony that local businesses are
concerned that their property taxes may increase.
MR. PASCHALL agreed that would be the worst case scenario.
However, he highlighted these volunteers are taking their own
time to help those who aren't providing the funding for the
service.
8:27:16 AM
REPRESENTATIVE FEIGE interjected that the municipality receives
what it pays for in terms of emergency services. The more
capability and the greater the ability to fight fires and
provide EMS, the better service it provides to the citizens.
Furthermore, it directly impacts home insurance rates in the
community. He related that for those homeowners who participate
in the fire department in his community, there is about a 15-20
percent savings on their home insurance rates. Ultimately, if a
municipality has the demand for a certain quality of fire
department, the municipality can decide to pay for it out of its
coffers such that it has professional firefighters or it can
choose to utilize a far cheaper labor force from volunteer
firefighters. This legislation, HB 170, gives them a large
degree of flexibility in terms of providing an opportunity for
the exemption not a mandate.
8:29:55 AM
MR. PASCHALL, in response to Representative Austerman, clarified
that there was a zero fiscal note attached to the original
legislation because there is no administration required for the
state and there is no appropriation for it.
REPRESENTATIVE AUSTERMAN pointed out that the legislation uses
"shall" language.
MR. PASCHALL clarified that until the legislature appropriates
the funds, there are no funds to be spent.
REPRESENTATIVE AUSTERMAN remarked that part of the discussion of
this committee and the House Finance committee will be to make
such determinations. While the fiscal note is zero, it would
behoove the committee to recognize that there will be costs if
the state pays for the exemption. Therefore, he suggested that
the fiscal note should be indeterminate.
8:31:10 AM
REPRESENTATIVE CISSNA highlighted communities such as Girdwood
and Hope where volunteers are the lifeline for emergency
services.
MR. PASCHALL related that [the Delta Junction] volunteer fire
department has 33 members, which doesn't include EMS personnel
as that's provided by another volunteer department. He pointed
out that the area the [Delta Junction Volunteer Fire Department]
serves is the size of Vermont.
8:34:07 AM
CHAIR MUNOZ added that this exemption isn't free. If HB 170
becomes law, the average taxes on homes in the City & Borough of
Juneau would be about $2,000. Therefore, if this exemption goes
forward, the state should [fund it] otherwise it would be
another unfunded mandate.
8:34:50 AM
REPRESENTATIVE AUSTERMAN explained that he felt the legislation
should have an indeterminate fiscal note because he doesn't want
municipalities to think the state "shall" reimburse the
municipalities that opt-in to this program. He said that he
wanted to be sure the aforementioned is clear on the record.
8:35:41 AM
REPRESENTATIVE CISSNA emphasized that often the cost of not
having a service isn't taken into account with the fiscal note.
8:36:28 AM
REPRESENTATIVE SADDLER directed attention to written testimony
from Thomas Andriesen that says, "There is already an optional
tax reduction for emergency responders that boroughs can adopt
and I believe it is a 15% reduction in a members' tax. Making
this a mandate would be more appropriate than the current
proposed House Bill." He inquired as to what Mr. Andriesen is
referring.
MR. PASCHALL responded that he wasn't sure, although he recalled
that an assembly or the voters in a municipality can enact a
$20,000 property value exemption for any purpose.
REPRESENTATIVE SADDLER expressed interest in knowing more.
8:38:05 AM
REPRESENTATIVE CISSNA related her understanding that usually
smaller communities have larger numbers of volunteer
firefighters whereas larger communities most often have paid
firefighters. She inquired as to whether department staff could
speak to the benefit of giving the exemption versus having to
pay for volunteer services and the property values in smaller
communities such as Hope and Girdwood.
8:39:51 AM
STEVE VAN SANT, State Assessor, Division Programs, Division of
Community and Regional Affairs, Department of Commerce,
Community & Economic Development, said that he doesn't have
value information on Hope since it's not a city. However, the
property values in the following locations are as listed: Craig
and Cordova - $105,000-$124,000; Nenana - $74,000; Tanana -
$37,000; Petersburg - $118,000; Pelican - $162,000; Nome -
$90,000. The aforementioned are per capita values, he noted.
8:41:21 AM
REPRESENTATIVE CISSNA surmised that the taxation rate will vary
from community to community. She then inquired as to the range
of property tax.
MR. VAN SANT informed the committee that the following
communities have the specified rates: Craig - 6 mills; Cordova
- 9.7 mills; Nome - 10 mills; Nenana - 12 mills; Pelican - 7
mills; Petersburg - 11 mills; Valdez - 20 mills; and Whittier -
5 mills. Therefore, the range is 5 to 20 mills with most
communities having a mill rate of 6-11.
CHAIR MUNOZ, in further response to Representative Cissna,
explained that under a mill rate of 10, roughly for every
$100,000 in assessed value, the property tax would be $1,000.
8:42:59 AM
SCOTT RUBY, Director, Division Programs, Division of Community
and Regional Affairs, Department of Commerce, Community &
Economic Development, related that he has a home in Moose Pass
with an approximate value of $140,000 and they pay $634 in
property tax to the borough. Therefore, if the proposed
$150,000 exemption was in place, the entire $634 tax would be
exempted.
8:43:45 AM
REPRESENTATIVE GARDNER pointed out that one of the letters of
support references a tax exemption on the first $200,000 value
whereas the legislation refers to the first $150,000.
MR. PASCHALL responded that the original version of the
legislation did propose a tax exemption on the first $200,000.
8:44:19 AM
CHAIR MUNOZ, referring to page 2, lines 24-27, of Version I,
inquired as to why the sponsor would want to reward those
applications that aren't filed in a timely manner.
MR. PASCHALL related that this is the language used for existing
optional exemptions.
8:45:15 AM
REPRESENTATIVE SADDLER asked if anything prohibits
municipalities from doing this proposed exemption without a
state authorizing statute.
MR. PASCHALL reiterated his understanding that municipalities
have the ability to provide a $20,000 exemption.
8:45:50 AM
REPRESENTATIVE GARDNER recalled that some of the other property
tax exemptions are only eligible to those who are eligible for
the permanent fund dividend (PFD).
MR. PASCHALL said HB 170 includes a provision that in order for
an individual to receive the exemption, he/she must be eligible
for the PFD.
8:46:16 AM
CHAIR MUNOZ inquired as to whether the committee wanted to
maintain or remove the language regarding timely application.
REPRESENTATIVE AUSTERMAN said he was fine with it [as it is].
REPRESENTATIVE GARDNER surmised that Chair Munoz, drawing from
her time on the Juneau Assembly, is likely viewing the provision
as would an assembly. She said she would be fine with whatever
Chair Munoz wanted.
CHAIR MUNOZ announced that she would like to remove the language
because an applicant should apply in a timely manner.
REPRESENTATIVE SADDLER highlighted that the legislation
specifies that one has to be a volunteer fire department
employee for two years prior to applying for the exemption.
8:47:21 AM
REPRESENTATIVE GARDNER moved to adopt Amendment 1:
Page 2, lines 24-27;
Delete the following language: "The governing
body of the municipality for good cause shown may
waive the claimant's failure to make timely
application for exemption and authorize the assessor
to accept the application as if timely filed."
There being no objection, Amendment 1 was adopted.
8:48:06 AM
REPRESENTATIVE GARDNER moved to adopt Amendment 2, as follows:
Page 3, line 4
Delete "shall"
Insert "may"
REPRESENTATIVE GARDNER explained that she didn't want to give
municipalities a false sense of security that they can expect
the state to fund this proposed exemption.
REPRESENTATIVE FEIGE said that he didn't have a problem with
Amendment 2.
8:49:01 AM
CHAIR MUNOZ related her belief that the state should pay for it,
if the exemption is going to be law. However, she also
understood Representative Gardner's point that the state may not
fund the exemption.
REPRESENTATIVE GARDNER reminded the committee that the state has
chosen, on occasion, not to fund a host of other programs, such
as power cost equalization and municipal revenue sharing.
8:49:34 AM
There being no objection, Amendment 2 was adopted.
8:49:48 AM
REPRESENTATIVE SADDLER suggested that it would be appropriate to
have some mechanism whereby neighbors who would enjoy the
benefits of the improved volunteer firefighter services would
incur some obligation for this exemption rather than have it be
a state subsidy. He suggested perhaps the local community could
be obligated to provide a one-third match for the state funding
for the exemption. He inquired if the aforementioned would be
appropriate.
REPRESENTATIVE FEIGE explained that by granting the exemption, a
municipality is not taking in revenue, and therefore the only
way for the municipality to make that up is to increase the mill
rate. The state, he further explained, may choose to refund a
certain percentage of the exemption up to 100 percent. He
assumed that if the municipality granted the exemption and then
found itself short of funds to operate, it would have to
increase the mill rate if the state didn't provide a 100 percent
reimbursement. Adjusting the municipality's income is within
the purview of the municipality, the separate issue is the
state's decision whether to provide a refund at a percentage up
to 100 percent.
REPRESENTATIVE SADDLER clarified that he is trying to avoid a
situation similar to that of the senior property tax exemption
in which the state funded it during a time of plenty, but did
not during leaner times. In those leaner times, it was left to
the municipality to fund.
REPRESENTATIVE FEIGE said he understood the concern, but
emphasized that the local municipality still has the job of
increasing or lowering its mill rates or assessed values in
order to raise revenue. There are so many unknowns with regard
to this exemption that, perhaps the reimbursement should be left
at 100 percent and see what happens. He reminded the committee
that if a municipality isn't having a recruitment problem, then
it doesn't have to enact the exemption. However, he understood
there may be some political pressure, although it won't be from
many people because it will likely be from those volunteers who
own property. With regard to how much of a bill HB 170 will
generate for the state, he said he was unsure. On the other
hand, there is something of a moral obligation, he remarked.
8:55:05 AM
CHAIR MUNOZ pointed out that if the state doesn't participate,
the municipality has 100 percent "skin" in the game [and thus a
30 percent requirement as proposed by Representative Saddler]
would be difficult.
8:55:36 AM
REPRESENTATIVE AUSTERMAN moved to report CSHB 170, Version 27-
LS0562\I, Bullard, 4/6/11, as amended, and with an indeterminate
fiscal note, out of committee with individual recommendations
and the accompanying fiscal notes. There being no objection,
CSHB 170(CRA) was reported from the House Community and Regional
Affairs Standing Committee.
8:56:12 AM
The committee took an at-ease from 8:56 a.m. to 9:00 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSHB170-Sponsor Memo on changes Version I.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 170 |
| HB170 CS 27-LS05621I.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 170 |
| HB184 (H)CRA Amendment.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184 DOR Share Credit Analysis.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184 DOR Tax Div. Summary Definition.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184 City of Homer response to CRA question.msg |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184-DCCED-DCRA-01-26-12.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| CSHB184 Ver R CRA.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| HB184-DOR-TAX-01-25-12.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 184 |
| CSHB290 National Standards Compliance.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 290 |
| CSHB290 Version D.PDF |
HCRA 2/2/2012 8:00:00 AM |
HB 290 |
| HB290 Changes from Version B to Version D.pdf |
HCRA 2/2/2012 8:00:00 AM |
HB 290 |