04/19/2002 03:32 PM Senate RES

        CSHB 358(CRA)-EXEMPTION FROM PROPERTY TAX: TIMBER                                                                   
                                                                                                                              
CHAIRMAN  TORGERSON   announced  CSHB   358(CRA)  to  be   up  for                                                              
consideration.                                                                                                                  
                                                                                                                                
REPRESENTATIVE   CHENAULT,  sponsor,  said   that  HB   358  gives                                                              
municipalities  an additional  tool to  lower the  threat of  wild                                                              
fires on the  spruce bark beetle killed forest land  by giving the                                                              
municipalities the  option of raising  property taxes on  roads or                                                              
other property  improvements  that facilitate  the removal  of the                                                              
beetle killed timber.                                                                                                           
                                                                                                                                
The Kenai Peninsula has about 2.2  million acres of timberland and                                                              
of  that a  little over  1  million acres  are  infested with  the                                                              
spruce bark  beetle. These  areas have been  identified as  a high                                                              
fire threat with limited access to firefighting resources.                                                                      
                                                                                                                                
He  said  that  the  Kenai Peninsula  Borough  tried  to  adopt  a                                                              
property  tax and  other  plans as  part  of a  beetle  mitigation                                                              
effort,  but it  was  blocked when  borough  attorneys found  that                                                              
state law  would not allow for  such breaks. CSHB  358(CRA) simply                                                              
makes changes to law that would allow  the Kenai Peninsula Borough                                                              
and other  municipalities in a  similar situation to  protect them                                                              
without having to take on additional  tax liabilities. It does not                                                              
mandate tax breaks but allows the option.                                                                                       
                                                                                                                                
SENATOR ELTON  said he was  assuming on page  2, line 1,  that the                                                              
municipalities  would be the  ones to determine  what "at  risk of                                                              
being infected by insects" means.                                                                                               
                                                                                                                                
REPRESENTATIVE CHENAULT said that was his assumption, also.                                                                     
                                                                                                                                
CHAIRMAN TORGERSON said  that the Kenai Borough has  a forester on                                                              
staff, but the Forest Service is also right there.                                                                              
                                                                                                                                
SENATOR ELTON said  he was assuming this problem  was primarily in                                                              
the Kenai region.                                                                                                               
                                                                                                                                
CHAIRMAN TORGERSON added that the Mat-Su area was also infested.                                                                
                                                                                                                                
SENATOR TAYLOR  commented that language  on page 1, line  10 says,                                                              
"The municipality  may provide  that an  exemption for  land under                                                              
this subsection applies  only to increases in  assessed value that                                                              
result from the timber harvest."  He asked how the assessor in the                                                              
area would show  an increase in value because the  timber has been                                                              
removed.                                                                                                                        
                                                                                                                                
REPRESENTATIVE CHENAULT  replied that the increase  would occur if                                                              
the parcel  was of such a configuration  that they had  to build a                                                              
road into it, for instance. The road  would become an improvement.                                                              
                                                                                                                                
SENATOR TAYLOR said:                                                                                                            
                                                                                                                                
     So,  the only  tax  break anybody  is  going  to get  is                                                                   
     they're going to pay the same  amount of taxes they paid                                                                   
     the year  before or the year  before that and  they will                                                                   
     not have to  pay an increased tax because  they improved                                                                   
     the property by removing the bad timber.                                                                                   
                                                                                                                                
REPRESENTATIVE CHENAULT  replied that  that was his  assessment of                                                              
it.                                                                                                                             
                                                                                                                                
SENATOR TAYLOR  said he  wanted it on  the record that  harvesting                                                              
timber can improve  the value of property. He  remarked, "A unique                                                              
concept that most people don't realize."                                                                                        
                                                                                                                                
MR. JEFF  JAHNKE, Director,  Division of  Forestry, Department  of                                                              
Natural Resources (DNR) supported  CSHB 358(CRA) and said he would                                                              
answer any question committee members might have.                                                                               
                                                                                                                                
MR.  TIM  NAVARRE,  Kenai  Borough  Assembly,  said  the  Assembly                                                              
supported CSHB 358(CRA) for all the reasons previously stated.                                                                  
                                                                                                                                
SENATOR TAYLOR  moved to  pass CSHB  358(CRA) from committee  with                                                              
individual recommendations  and its  zero fiscal note.  There were                                                              
no objections and it was so ordered.