02/15/2012 01:30 PM House FINANCE

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."                                                                      
                                                                                                                                
2:10:06 PM                                                                                                                    
                                                                                                                                
MICHAEL PASCAL, STAFF,  REPRESENTATIVE ERIC FEIGE, disclosed                                                                    
that  Representative   Feige  is  the  Fire   Chief  of  the                                                                    
Chickaloon  Fire  Department  and  also on  their  board  of                                                                    
directors, therefore  he could  benefit from this  bill. Mr.                                                                    
Pascal indicated that he was  an assistant Fire Chief of the                                                                    
rural Deltana  Fire Department, but  would not  benefit from                                                                    
this  bill  because  of  the  department's  location  in  an                                                                    
unorganized  borough  where there  is  no  property tax.  He                                                                    
explained that the bill allows  a municipality that levies a                                                                    
property tax  to provide an  exemption of up to  $150,000 to                                                                    
volunteers for fire emergency  services. The exception could                                                                    
be used  by the  community as a  recruitment tool.  The bill                                                                    
also offers a provision that  the state could, if it chooses                                                                    
to  appropriate funds,  reimburse a  community for  the lost                                                                    
revenue tax. Recruitment of  volunteers is increasingly more                                                                    
difficult  in  Alaska.  Communities throughout  Alaska  have                                                                    
tried many  methods of  volunteer enlistment.  He emphasized                                                                    
that  the bill  could be  used as  an inducement  to attract                                                                    
volunteers, but would not force  a municipality to implement                                                                    
the  program. Co-Chair  Stoltze  indicated  that a  required                                                                    
ordinance  would be  necessary.  Mr. Pascal  agreed that  an                                                                    
ordinance  needed to  be  created to  define  how an  active                                                                    
volunteer is measured and how the exemption would be given.                                                                     
                                                                                                                                
2:13:26 PM                                                                                                                    
                                                                                                                                
Representative  Wilson   asked  for  clarification   on  the                                                                    
financial impact  in the Fairbanks  North Star  Borough. Mr.                                                                    
Pascal indicated  the difficulty  in determining  the impact                                                                    
to various communities throughout  Alaska as the information                                                                    
is not readily  available. In using Girdwood  as an example,                                                                    
out of  the thirty  volunteers, about  eighteen of  them own                                                                    
property with  the maximum evaluation  being $150,000.  If a                                                                    
community  looked  at  the  local mill  rate  based  on  the                                                                    
$150,000  evaluation of  the property,  the local  financial                                                                    
impact could be determined.                                                                                                     
                                                                                                                                
2:15:01 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze inquired if the  debate would take place on                                                                    
the  local level  which is  the  reason for  having a  local                                                                    
option.  Mr. Pascal  agreed that  the local  community would                                                                    
have that debate and decide whether to offer the exemption.                                                                     
                                                                                                                                
Representative Wilson  asked if the current  $20,000 that is                                                                    
stacked on  top of the senior  exemption would go on  top of                                                                    
the proposed  volunteer exemption.  Mr. Pascal  replied that                                                                    
the $150,000  is the sole amount  so it would not  go on top                                                                    
of senior or any other exemption.                                                                                               
                                                                                                                                
Co-Chair  Stoltze  inquired if  the  $150,000  is the  upper                                                                    
limit or could the local  government opt for a lower amount.                                                                    
Mr. Pascal  replied that the  $150,000 limit is  the current                                                                    
one in  statute for the  senior exemption. Since there  is a                                                                    
possibility the  state could fund  the exemption at  a later                                                                    
date, the  $150,000 limit  was put  into the  bill. Co-Chair                                                                    
Stoltze reiterated  if the local  community could opt  for a                                                                    
lesser amount. Mr. Pascal replied that was correct.                                                                             
                                                                                                                                
2:16:36 PM                                                                                                                    
                                                                                                                                
Representative Wilson inquired  about the retroactive status                                                                    
for  widows  and widowers.  Mr.  Pascal  suggested that  the                                                                    
defining  guidelines and  procedures  would be  left to  the                                                                    
municipality.  Co-Chair  Thomas   commented  on  a  personal                                                                    
experience where a friend's widow could miss the exemption.                                                                     
                                                                                                                                
Representative Neuman  read page one,  line 13, of  the bill                                                                    
stating that there  needs to be clarification  in the statue                                                                    
of "up to"  $150,000. Co-Chair Stoltze agreed  that would be                                                                    
a  valid change  to the  bill. He  noted the  bill needs  to                                                                    
reflect the sponsor's  intent. Representative Neuman offered                                                                    
to draft an amendment to reflect the change.                                                                                    
                                                                                                                                
2:19:26 PM                                                                                                                    
                                                                                                                                
Representative   Costello   agreed  that   the   retroactive                                                                    
possibilities  need  further  discussion.  Co-Chair  Stoltze                                                                    
agreed that further discussion  on retroactive options would                                                                    
be  needed.  Co-Chair  Thomas suggested  that  retroactivity                                                                    
could  be  addressed as  a  local  option. Co-Chair  Stoltze                                                                    
noted  that  the   bill  has  an  effective   date  and  any                                                                    
discussions regarding  retroactive exemptions would  need to                                                                    
be placed within the bill.                                                                                                      
                                                                                                                                
2:21:14 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg  referred to  page 2,  line 16-21,                                                                    
determining who is covered if  an individual applies late or                                                                    
forgets to apply. He wondered  who is being covered, besides                                                                    
those that  apply late and  how it would be  determined. Mr.                                                                    
Pascal reported  that the language was  pulled from existing                                                                    
exemptions  already  in   place.  Representative  Guttenberg                                                                    
requested  examples of  other exemptions.  Mr. Pascal  noted                                                                    
the elderly exemption which is  mandatory, but was unable to                                                                    
name others. Co-Chair Stoltze  listed other exemptions, such                                                                    
as  disabled  veterans,  widows of  disabled  veterans,  and                                                                    
widows of senior exemptions.                                                                                                    
                                                                                                                                
2:23:34 PM                                                                                                                    
                                                                                                                                
SCOTT  RUBY  ALASKA  DIVISION   OF  COMMUNITY  AND  REGIONAL                                                                    
AFFAIRS,  DEPARTMENT  OF  COMMERCE, COMMUNITY  AND  ECONOMIC                                                                    
DEVELOPMENT  (via teleconference),  signified that  he would                                                                    
provide a comprehensive list to the committee.                                                                                  
                                                                                                                                
Representative Guttenberg  noted if  someone does  not apply                                                                    
for the  permanent fund for  whatever reason, but  wants the                                                                    
property  tax exemption;  it could  bring up  a policy  call                                                                    
dilemma. He indicated support for  the bill, but needed some                                                                    
policy clarifications.  Co-Chair Stoltze indicated  that the                                                                    
permanent  fund dividend  eligibility is  a constitutionally                                                                    
tested time  for allowable residency.  Representative Edgmon                                                                    
noted various  definitions of permanent  residency. Co-Chair                                                                    
Stoltze agreed,  but indicated that  the permanent  fund had                                                                    
the most universal determination.                                                                                               
                                                                                                                                
2:25:46 PM                                                                                                                    
                                                                                                                                
Representative Doogan wondered if  the bill's assumption was                                                                    
that  people would  not become  volunteer fight  fighters if                                                                    
the benefit  was not offered.  He questioned if  the benefit                                                                    
was an inducement  or a reward. Mr. Pascal  replied that the                                                                    
bill  offers an  inducement.  Over  time volunteerism  often                                                                    
becomes more difficult on the  individual so this inducement                                                                    
would  be   an  added   incentive  to  recruit   and  retain                                                                    
volunteers.                                                                                                                     
                                                                                                                                
2:26:49 PM                                                                                                                    
                                                                                                                                
Co-Chair Thomas  queried if volunteer hospice  workers would                                                                    
be  eligible  for  this benefit.  Mr.  Pascal  replied  that                                                                    
hospice workers would not be  covered in this bill. The bill                                                                    
does   not   cover   scheduled   volunteerism,   but   those                                                                    
individuals responding  to spontaneous  emergency situations                                                                    
on any day  or time. Co-Chair Thomas offered  that a hospice                                                                    
volunteer  and an  emergency medical  responder  may be  one                                                                    
person.  Mr. Pascal  agreed that  most community  volunteers                                                                    
overlap in positions.                                                                                                           
                                                                                                                                
2:28:19 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze pointed out that  he represented one of the                                                                    
largest  volunteer   fire  departments  in  the   state.  He                                                                    
elaborated  that  a  volunteer   board  of  supervisors  was                                                                    
connected to  the fire department  and wondered  about their                                                                    
eligibility. Mr.  Pascal remarked  that the  designation was                                                                    
for  active  volunteers  under   the  definition  the  state                                                                    
provided  for the  hepatitis  vaccine.  The local  community                                                                    
would have  the final  determination on defining  the active                                                                    
volunteer  status.   Co-Chair  Stoltze  remarked   that  the                                                                    
hepatitis  vaccine was  just another  test and  standard for                                                                    
determining  eligibility. Mr.  Pascal  interjected that  the                                                                    
hepatitis  vaccine   is  a  serious  issue   with  increased                                                                    
awareness in communities.                                                                                                       
                                                                                                                                
2:29:38 PM                                                                                                                    
                                                                                                                                
Representative  Wilson  mentioned  that  volunteers  in  her                                                                    
larger community  do not overlap positions.  She opined that                                                                    
the bill was  making one group more  important than another.                                                                    
She  also believed  the  state  could end  up  with a  large                                                                    
financial burden.  Mr. Pascal  indicated that  the volunteer                                                                    
eligibility issue  was discussed  in the  previous committee                                                                    
and  the  agreed upon  distinction  was  the requirement  of                                                                    
immediate sacrifice versus the  scheduling of the sacrifice.                                                                    
Representative Wilson stressed that  true volunteers do make                                                                    
sacrifices even if the service is scheduled.                                                                                    
                                                                                                                                
2:31:14 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze reminded the  committee that the money must                                                                    
derive  from somewhere,  but  signified  that volunteers  do                                                                    
save  the state  money. He  acknowledged that  the financial                                                                    
impact on each community  would be different. Representative                                                                    
Edgmon noted the committee support  for the bill, but needed                                                                    
clarification  with a  definition on  page 2,  line 7,  that                                                                    
reads  a person  qualified as  a volunteer  for purposes  of                                                                    
this section only if the person  has been a volunteer of the                                                                    
fire department,  emergency medical  or rescue  services for                                                                    
at least two years before  the date. He noted Representative                                                                    
Guttenberg's  point  on  line  16-21,  that  referenced  the                                                                    
permanent  fund dividend.  On page  3 another  definition of                                                                    
volunteer is  under Title 18. He  questioned the differences                                                                    
and if  they overlapped.  Mr. Pascal agreed  the definitions                                                                    
were  qualifications designed  so that  an individual  could                                                                    
not sign  up to  volunteer one  day and  immediately receive                                                                    
the  exemption. The  bill's intent  is to  ensure a  minimum                                                                    
qualification for the volunteer definition and eligibility.                                                                     
                                                                                                                                
2:33:48 PM                                                                                                                    
                                                                                                                                
Representative Edgmon  recounted that an individual  must be                                                                    
a volunteer  for two  years and  have residency  verified by                                                                    
the   permanent  fund   dividend.  He   asked  for   further                                                                    
information  regarding volunteer  requirements in  Title 18.                                                                    
Co-Chair Stoltze remarked that  local governments would look                                                                    
at how  it overlaps their  tax cycle. Mr. Pascal  agreed and                                                                    
signified he would provide wording for Section 18.                                                                              
                                                                                                                                
2:34:36 PM                                                                                                                    
                                                                                                                                
Representative   Doogan   questioned    the   problem   this                                                                    
legislation  was  intended  to  solve. He  wondered  if  the                                                                    
problem was not  enough volunteer fire fighters  or the bill                                                                    
would  just   provide  a  compensation  award.   Mr.  Pascal                                                                    
remarked that the  issue addressed in the bill  was the lack                                                                    
of  volunteers in  many  communities. Representative  Doogan                                                                    
questioned if the bill provided  the best method for solving                                                                    
the volunteer problem.                                                                                                          
                                                                                                                                
2:35:45 PM                                                                                                                    
                                                                                                                                
Mr. Pascal  agreed there is  not just one method  to address                                                                    
the  problem.  He stressed  the  great  financial burden  if                                                                    
communities  replaced volunteers  with permanent  employees.                                                                    
Representative Doogan  contended he was not  questioning the                                                                    
value  of the  volunteers, but  trying to  establish whether                                                                    
the inducement  was necessary and  if the bill  provided the                                                                    
most  appropriate  way  to  handle   the  situation  at  the                                                                    
appropriate level. Co-Chair  Thomas interjected that younger                                                                    
members  of some  communities were  not volunteering  at the                                                                    
rate of previous generations. He  believed the bill provided                                                                    
a good incentive to reward and recruit volunteers.                                                                              
                                                                                                                                
2:39:04 PM                                                                                                                    
                                                                                                                                
Representative Costello  stressed that the state  may end up                                                                    
replacing the community's loss  revenue from property taxes.                                                                    
The state  may be in the  red by 2015 and,  without more oil                                                                    
production,  cash reserves  could be  depleted by  2025. The                                                                    
state  could  decide  at  a  later  date  not  to  help  the                                                                    
communities  with  lost  revenue. She  wondered  what  would                                                                    
prevent a local  community from increasing the  mill rate to                                                                    
property owners paying taxes.                                                                                                   
                                                                                                                                
Mr. Pascal remarked that the  provision for the state is not                                                                    
loaded on the front, but only  if the state later chooses to                                                                    
enact legislation  to fund it.  If the state does  decide to                                                                    
fund  the  program and  later  pulls  out, the  municipality                                                                    
would have to fund the program or end the exemption.                                                                            
                                                                                                                                
Co-Chair Stoltze  remarked that clarification was  needed to                                                                    
indicate the possibility of a  lower threshold than $150,000                                                                    
to  provide local  flexibility. He  requested more  detailed                                                                    
information  on eligibility  status, volunteer  definitions,                                                                    
and a list of other exemptions.                                                                                                 
                                                                                                                                
2:42:10 PM                                                                                                                    
                                                                                                                                
Representative Doogan  remarked that fiscal  note discussion                                                                    
was  needed. Co-Chair  Stoltze noted  the  relevance of  the                                                                    
fiscal note  and that local  communities needed to  weigh in                                                                    
on  the fiscal  impact  to  their community.  Representative                                                                    
Doogan  suggested the  fiscal note  be indeterminate  rather                                                                    
than  zero. Decisions  made  regarding  the exemption  would                                                                    
roll into municipalities which could  eventually roll to the                                                                    
legislature. More  information was  needed on  the potential                                                                    
cost of the volunteer exemption program.                                                                                        
                                                                                                                                
2:44:04 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  requested  Mr. Pascal  provide  the  mill                                                                    
rates for cost projections.  He declared most community fire                                                                    
chiefs  could   provide  needed  answers.   Co-Chair  Thomas                                                                    
reminded the committee of an  earlier proposed bill allowing                                                                    
the  municipalities  to phase  out  the  senior citizen  tax                                                                    
exemption  over  a  ten year  period.  If  implemented,  the                                                                    
municipality  could  have  the   option  to  phase  out  the                                                                    
exemption to a volunteer after a declared time period.                                                                          
                                                                                                                                
2:46:31 PM                                                                                                                    
                                                                                                                                
Representative Neuman indicated his  approval of the concept                                                                    
and  local  option  proposed.  He   noted,  in  Willow,  the                                                                    
difficulty in attracting volunteers,  but was concerned over                                                                    
the potential  lost revenue for a  community. Personal taxes                                                                    
in a fire service area  could change depending on the number                                                                    
of  volunteers.  He   questioned  how  municipalities  would                                                                    
distribute the payment to volunteers throughout a borough.                                                                      
                                                                                                                                
2:49:17 PM                                                                                                                    
                                                                                                                                
Mr.  Pascal asked  Representative  Neuman  if he  questioned                                                                    
that the bill  was envisioned to be a  specific fire service                                                                    
area or  for the entire municipality.  Representative Neuman                                                                    
queried, if  the state does  not reimburse  the expenditure,                                                                    
would the  cost be passed  on to  people in a  specific fire                                                                    
service  area or  would  it be  borough  wide taxation.  Mr.                                                                    
Pascal indicated the cost would be borough wide.                                                                                
                                                                                                                                
2:50:22 PM                                                                                                                    
                                                                                                                                
Representative Wilson  agreed that was part  of her concern.                                                                    
The  many  divisions  in  Fairbanks  make  it  difficult  to                                                                    
determine  who would  eventually  pay;  where the  volunteer                                                                    
lives or where the  individual volunteers. She indicated she                                                                    
would run  numbers in  her community  to assess  the impact.                                                                    
Co-Chair Stoltze  suggested working with the  volunteers who                                                                    
would know the demographics of their departments.                                                                               
                                                                                                                                
HB  170  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.