04/16/2014 09:00 AM Senate FINANCE

CS FOR HOUSE BILL NO. 379(FIN)                                                                                                
                                                                                                                                
     "An Act relating to the limitation on the value of                                                                         
     property taxable by a municipality; and providing for                                                                      
     an effective date."                                                                                                        
                                                                                                                                
10:47:17 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE BENJAMIN NAGEAK, presented  HB 379 and stated                                                                    
that  HB 379  sought to  make  a legislative  change to  the                                                                    
formula  on  how  a  municipality  might  use  oil  and  gas                                                                    
property tax revenue.  The bill, which he  and Senator Olson                                                                    
championed, gave municipalities with  oil and gas properties                                                                    
the  flexibility  to use  the  revenue  for their  operating                                                                    
budget. The bill was clear-cut  but there was a long history                                                                    
in  the law's  origin. He  provided a  recap of  history. He                                                                    
reported that the oil and  gas property tax laws were passed                                                                    
in 1973;  a cap was  written into  state law about  how much                                                                    
property  tax   revenue  could  be  used   for  a  municipal                                                                    
operating budget.  It was  a struggle in  the early  days to                                                                    
form the  North Slope Borough.  Forty years ago  the borough                                                                    
was sued  by the State  of Alaska  and by the  oil companies                                                                    
and was  told it was  not capable of governing.  At present,                                                                    
the  borough  was  operating well.  The  borough  had  built                                                                    
schools,  roads, airports,  and utilities  with its  wealth.                                                                    
Additionally,  it paid  for services  that in  other regions                                                                    
were  provided by  the  state. He  listed  examples such  as                                                                    
search  and rescue,  police,  and  wildlife management.  The                                                                    
departments of  the North Slope Borough  cooperated with the                                                                    
state, saving the state time  and resources. The borough had                                                                    
kept property taxes lower than  the state cap. Over the past                                                                    
34 years the lower rate  amounted to about $1 billion return                                                                    
to the state. He affirmed that  the borough did this to be a                                                                    
good  partner.  The  borough's  intent  was  to  retain  the                                                                    
current mill  rate. However, the  bill gave the  borough the                                                                    
flexibility  to  move  revenue  from  debt  service  to  the                                                                    
operating  budget.  The borough  no  longer  needed as  much                                                                    
revenue  for  debt services.  It  needed  funds to  maintain                                                                    
existing  infrastructure. He  requested the  support of  the                                                                    
committee to advance HB 379.                                                                                                    
                                                                                                                                
Senator  Meyer   indicated  that  there  would   be  further                                                                    
questions on the bill.                                                                                                          
                                                                                                                                
HB  379  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.