Legislature(2023 - 2024)BARNES 124
03/07/2024 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| HB5 | |
| HB317 | |
| SJR13 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 5 | TELECONFERENCED | |
| *+ | HB 317 | TELECONFERENCED | |
| + | SJR 13 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 317-FARM USE LAND/STRUCTURES: TAX EXEMPTION
8:24:14 AM
CHAIR MCCORMICK announced that the next order of business would
be HOUSE BILL NO. 317, "An Act relating to the municipal tax
exemption of farm use land and structures on farm use land;
requiring a vote in municipalities that do not currently provide
a general tax exemption for structures used in farming activity;
and providing for an effective date."
8:24:51 AM
REPRESENTATIVE BEN CARPENTER, Alaska State Representative, prime
sponsor, presented HB 317. He paraphrased the sponsor statement
[included in the committee packet], which read as follows
[original punctuation provided]:
House Bill 317 is a proactive measure designed to
foster a favorable environment for agricultural growth
and sustainability in Alaska. By providing tax
incentives for farm structures and preserving farm use
land, we aim to incentivize farming practices,
stimulate economic activity, and strengthen our food
production systems.
Alaska is the largest U.S. state, yet it has one of
the smallest agricultural industries according to the
USDA. As such, the food supply does not yet meet
demand. Alaska relies heavily on imported food and is
thus more vulnerable to interruptions in the food
import supply chain. Currently, only 5% of the food
Alaskans consume is produced in Alaska.
House Bill 317 amends current statute giving
municipalities the authority to partially or fully
exempt farm structures used exclusively for farming
activities from taxation. This exemption applies to
structures engaged in various farming-related
functions, such as crop production, feed storage, and
dairy operations.
The Bill also ensures that farm use land and
structures dedicated to farming operations are
assessed based on their agricultural value, rather
than being subject to taxation as if used for non-
agricultural purposes. This provision safeguards the
integrity of agricultural land and supports its
continued use for farming activities.
Alaska statutes currently help with the cost of
farming, through limited property tax assessments and
local option tax exemptions. Alaska state law allows
farmland to be assessed at the farmland use rate,
which can be lower than the highest and best use tax
rate for the property. This helps encourage farmers to
keep their land in production, rather than selling it
or converting it for other uses. HB 317 removes all
current statutory requirements that operators have to
be commercial farmers, to receive the tax breaks.
REPRESENTATIVE CARPENTER shared a personal anecdote about the
agricultural infrastructure he witnessed in South Korea. He
explained how property taxes increase when a structure, like a
greenhouse, is built on a residential lot. He said HB 317 would
attempt to incentivize the growth of agriculture by reducing the
tax burden on agriculture use.
8:30:03 AM
KENDRA BROUSSARD, Staff, Representative Ben Carpenter, Alaska
State Legislature, on behalf of Representative Carpenter, prime
sponsor of HB 317, presented the sectional analysis [included in
the committee packet], which read as follows [original
punctuation provided]:
Sections 1
Amends Property tax exemptions for farm use structure
by removing the requirement that the person engaged in
farming derive at least 10 percent of the person's
yearly gross income from farming.
Section 2
Amends farm use land assessment statute to add
structures for farm purposes.
Section 3
Amends farm use land assessment statute to remove
requirement for first time farmers to file intended
percentage of income, as that requirement is being
removed from law.
Section 4
Amends farm use land assessment statute by removing
the requirement that the person engaged in farming
derive at least 10 percent of the person's yearly
gross income from farming.
Section 5
Repeals the ability to waive, for crop failure, the 10
percent of income requirement, as that requirement is
being removed from law.
8:31:42 AM
MS. BROUSSARD directed attention to a PowerPoint presentation,
titled "Let's Grow, Alaska" [included in the committee packet].
She began on slide 2, "Proactive Measure," which read as follows
[original punctuation provided]:
Alaska is the largest U.S. state, yet it has one of
the smallest agricultural industries according to the
USDA. As such, the food supply does not yet meet
demand. Alaska relies heavily on imported food and is
thus more vulnerable to interruptions in the food
import supply chain. Currently, only 5% of the food
Alaskans consume is produced in Alaska.
House Bill 317 is a proactive measure designed to
foster a favorable environment for agricultural growth
and sustainability in Alaska. By providing tax
incentives for farm structures and preserving farm use
land, we aim to incentivize farming practices,
stimulate economic activity, and strengthen our food
production systems.
MS. BROUSSARD continued to slide 3, "Alaska Food Security and
Independence Task Force 2022," which read as follows [original
punctuation provided]:
Alaska's supply chain is vulnerable and in turn, our
food supply is unstable, of which 95% of purchased
foods are imported.
Extreme weather events and seasonality make rural
communities, far beyond the end of the road,
susceptible to weeks without food delivery and the
food that arrives often has a high spoilage rate due
to long travel time and poor storage conditions.
Additionally, by importing most of our food supplies,
around $2 billion is sent out of state each year.
Alaska is past due for activating a strategic approach
to creating a more inclusive, equitable, and resilient
food system for all.
8:33:20 AM
MS. BROUSSARD advanced to slide 4, "What's Hindering Alaska
Agriculture?" Slide 4 read as follows [original punctuation
provided]:
Sustainability Challenges
Marketing Issues
Business Plans
Access to Affordable & Adequate Land
MS. BROUSSARD turned to slide 5, "Promising Efforts Underway,"
which read as follows [original punctuation provided]:
Seaweed Supply
Farmers Markets and Food Hub Activity
Room For Growth
Current Economic Impact
8:33:40 AM
MS. BROUSSARD proceeded to slide 6, "Agriculture Tax Breaks in
the U.S.," which read as follows [original punctuation
provided]:
You don't have to be a full-time farmer to take
advantage of a variety of agricultural tax breaks that
will help you with your property taxes. In some cases,
all you need is a piece of land that's not currently
being used. You can use the land to preserve timber,
for example, or put it to some kind of agricultural
use to save on property taxes.
The size of agricultural property tax exemptions
varies from state to state. Qualifications for
agricultural tax exemptions vary from state to state,
too. Some states base eligibility on the size of the
property, while others set a minimum dollar amount for
agricultural sales of goods produced on the property.
Many use a combination of gross sales and acreage
requirements. Grazing a single cow on your property
can be enough to trigger tax breaks in some places.
If you qualify, an agricultural tax exemption can
knock thousands off your property tax bill. Depending
on your state's rules, one way to execute this tax
strategy is to offer use of your land to a local
farmer. For example, you could allow a nearby farmer
to harvest hay on acres you're not using or rent your
land to a farmer. You don't necessarily have to do the
work yourself to claim the exemption for your
property.
8:35:04 AM
MS. BROUSSARD continued to slide 7, "Current Agriculture Tax
Breaks in Alaska," which read as follows [original punctuation
provided]:
AS 29.45
Allows for commercial farmland to be assessed for
property tax purposes as farmland rather than if the
land was used for some other purpose.
AS 29.45
Allows municipalities to allow voters to approve
reduced tax rates for farm structures use for farming
activity.
8:35:34 AM
MS. BROUSSARD presented slides 8 and 9, which read as follows
[original punctuation provided]:
House Bill 317 ensure that not only farm use land, but
also structures dedicated to farming operations, are
assessed based on their agricultural value, rather
than being subject to taxation as if used for non-
agricultural purposes. This provision safeguards the
integrity of agricultural land and supports its
continued use for farming activities.
HB 317 also removes the requirement that the farm use
land or structures be used for commercial activities
to lower the barrier of entry for start-up farmers and
small operations. Which encourages growth in both
commercial farming and farming to feed your family and
community.
8:36:15 AM
MS. BROUSSARD concluded on slide 10, which read as follows
[original punctuation provided]:
Current statute gives municipalities the authority to
partially or fully exempt farm structures used
exclusively for farming activities from taxation. This
exemption applies to structures engaged in various
farming-related functions, such as crop production,
feed storage, and dairy operations.
HB 317 requires municipalities, who do not currently
give tax rate exemptions for farm use structures, to
place a partial or total tax exemption before their
voters in the next general election.
CHAIR MCCORMICK sought questions from committee members.
8:37:02 AM
REPRESENTATIVE MEARS commented on the increased interest in
gardening and agriculture during the pandemic and expressed
concern that the bill is "too fine" on that point and "the
ability of the assessment to be able to fully capture that that
be beneficial."
REPRESENTATIVE CARPENTER explained that currently, when a
greenhouse is added to a property, the assessor changes the
property value assessment because it's considered an improvement
to the land. If the bill were to pass, the value assessment on
greenhouses would be lowered and a municipal tax reduction would
be offered. He noted that current statute allows for the
reduction in tax rolls to be covered by state funds. Lowering
the tax burden through a reduction in property tax would
incentivize people to build greenhouses, he said.
8:41:40 AM
REPRESENTATIVE HIMSCHOOT sought to clarify the definition of
"agriculture" and whether growing a garden for personal
consumption would be included.
REPRESENTATIVE CARPENTER clarified that the bill would not
change the statutory definition of "agriculture" or "agriculture
use."
REPRESENTATIVE HIMSCHOOT expressed concern that anyone could
call a cultivated raspberry bush an agricultural endeavor to
reduce the property tax. She asked sought to verify that an
actual structure must be built to qualify for the tax break.
REPRESENTATIVE CARPENTER pointed out that if everyone started
growing raspberries, raspberries would no longer need to be
imported to Alaska, thereby decreasing the cost of out-of-state
food purchases.
8:44:58 AM
DONNA ARDUIN, Staff, Representative Ben Carpenter, Alaska State
Legislature, on behalf of Representative Carpenter, prime
sponsor of HB 317, defined farming activity and farm use as
raising and harvesting crops; feeding, breeding, managing
livestock; dairying; or any combination of these activities.
She further clarified that the assessor would still be
responsible for determining whether a raspberry bush, for
example, is truly farm use, which would make a difference.
REPRESENTATIVE HIMSCHOOT sought to confirm that the bill would
remove existing thresholds to be considered a farm.
REPRESENTATIVE CARPENTER confirmed that the bill would remove
the dollar figure associated with an agricultural commercial
venture in statute.
REPRESENTATIVE HIMSCHOOT asked for verification that the
statutory definition of "farming" would still need to be met by
growing crops, dairy, or livestock.
REPRESENTATIVE CARPENTER agreed, adding that a claim of
"agriculture use" or "agriculture land" would still need to be
verified by an assessor.
8:47:35 AM
REPRESENTATIVE HIMSCHOOT said she was concerned about the burden
that would be placed on municipal tax assessors. She asked why
the municipal vote in Section 6 of the bill would be required,
not optional.
REPRESENTATIVE CARPENTER explained that the requirement is
intended to prompt a conversation and incentivize local food
production.
REPRESENTATIVE HIMSCHOOT opined that the goal is worthy;
however, she felt uncomfortable with imposing a municipal
mandate. She mentioned the barrier to growing crops presented
by Alaska's climate.
REPRESENTATIVE CARPENTER agreed that certain things do not grow
in Alaska and that food importation would never be entirely
replaced; however, any money saved by food production would be
good for local economy, he said.
8:52:23 AM
REPRESENTATIVE RUFFRIDGE asked whether a meat processing plant
on a chicken farm could apply for the tax incentive.
REPRESENTATIVE CARPENTER reiterated that the bill would remove
the requirement that only commercial operations are eligible for
a tax reduction. Consequently, individuals, families, and
businesses would be treated the same by the assessor.
8:53:48 AM
CHAIR MCCORMICK sought closing remarks from the bill sponsor.
8:54:00 AM
REPRESENTATIVE CARPENTER stated that Alaska has the capacity to
grow more food, but he questioned whether the will is there. He
opined that by the government encouraging that behavior,
Alaskans would be healthier, stronger, and more resilient.
CHAIR MCCORMICK announced that HB 317 would be held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 5 Sectional Analysis.pdf |
HCRA 3/7/2024 8:00:00 AM |
HB 5 |
| HB 5 Sponsor Statement.pdf |
HCRA 3/7/2024 8:00:00 AM |
HB 5 |
| HB 5 Version A.PDF |
HCRA 3/7/2024 8:00:00 AM |
HB 5 |
| HB 317 Sectional Analysis - Version A.pdf |
HCRA 3/7/2024 8:00:00 AM |
HB 317 |
| HB 317 Sponsor Statement - Version A.pdf |
HCRA 3/7/2024 8:00:00 AM |
HB 317 |
| HB 317 Version A.pdf |
HCRA 3/7/2024 8:00:00 AM |
HB 317 |
| SJR 13 Fiscal Note.pdf |
HCRA 3/7/2024 8:00:00 AM |
SJR 13 |
| SJR 13 Sponsor Statement.pdf |
HCRA 3/7/2024 8:00:00 AM |
SJR 13 |
| SJR 13 MLT Presentation to SCRA 2023-04-20.pdf |
HCRA 3/7/2024 8:00:00 AM |
SJR 13 |
| SJR 13 Support Documents Received by 1.30.2024.pdf |
HCRA 3/7/2024 8:00:00 AM |
SJR 13 |
| SJR 13 Version A.pdf |
HCRA 3/7/2024 8:00:00 AM |
SJR 13 |
| HB317 Presentation 3.7.24.pdf |
HCRA 3/7/2024 8:00:00 AM |
HB 317 |
| HB 5 Letter of Opposition 5.2.24.pdf |
HCRA 3/7/2024 8:00:00 AM |
HB 5 |