Legislature(2013 - 2014)SENATE FINANCE 532
04/16/2014 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB379 | |
| SB220 | |
| HB308 | |
| HB361 | |
| HB160 | |
| HB116 | |
| SB48 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 278 | TELECONFERENCED | |
| + | HB 385 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 379 | ||
| = | SB 220 | ||
| = | HB 308 | ||
| = | HB 361 | ||
| = | HB 160 | ||
| = | SB 48 | ||
| = | HB 116 | ||
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."
1:39:52 PM
Senator Olson pointed out that the legislation was the top
priority for the North Slope Borough. He shared that the
industry did not have a problem with the bill, and there
was no loss of revenue to the state.
REPRESENTATIVE BENJAMIN NAGEAK, stated that he was there to
answer any questions on the bill. He stressed that his
constituents had been waiting a long time for the
legislation. He felt that the bill was a workable solution
to the issue.
Senator Olson wondered how Representative Nageak, as the
former mayor of the North Slope Borough, saw the budget
advantages. Representative Nageak replied that the
legislation would be very helpful to the borough's
operating budget. He remarked that infrastructure was built
when the borough was established, and stressed that the
legislation would provide the proper maintenance to the
infrastructure.
Co-Chair Meyer surmised that the legislation would provide
the North Slope Borough more flexibility for use of capital
and operating funds. He queried the borough's current mil-
rate. Representative Nageak replied that the current mil-
rate was 18.5. He stated that the borough only had one year
of a higher, 19.5 mil-rate.
Co-Chair Meyer wondered if there was a proposal to change
the mil-rate. Representative Nageak replied that there was
no proposal to change the mil-rate. He stressed that the
legislation was intended to allow some flexibility of fund
usage.
Co-Chair Meyer understood that there was no difference in
the amount that the state received from oil proceeds or any
difference in the amount that the oil companies paid.
Representative Nageak agreed with that summation.
1:45:12 PM
ANGELA RODELL, COMMISSIONER, DEPARTMENT OF REVENUE, shared
that the Department of Revenue (DOR) worked to ensure that
the bill was revenue neutral. She recognized that
municipalities throughout the state who had oil and gas
property may need flexibility to differentiate between
their operating and debt service. She felt that the
legislation provided the opportunity for the municipalities
to address that issue, without impacting the state's
financial picture, nor increase the taxes within the
communities.
Co-Chair Meyer wondered if the bill would impact the
neighboring cities. Commissioner Rodell replied that the
bill would affect any community that had oil and gas
property.
Co-Chair Meyer asked if the Kenai and Soldotna was included
in the legislation. Commissioner Rodell deferred to Mr.
Fonder.
Senator Olson wondered if the communities in the
unorganized boroughs would be affected by the legislation.
Commissioner Rodell deferred to Mr. Fonder.
MATT FONDER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE
(via teleconference), looked at page 48 of the DOR Revenue
Sources Book, and announced that there was a table that
indicated the breakdown of property taxes and how they were
shared. He stated that the chart indicated that the Kenai
had oil and gas property. The tax was $19.8 million in the
year prior was $19.8 million, and the local share was $9.7
million, so the state received $10.1 million in property
taxes on the oil and gas property in Kenai. He stated that
the unorganized boroughs did not assess property taxes, so
the local share on the unorganized line of the chart was
zero. The tax on oil and gas property in unorganized
boroughs was $58.9 million, and was wholly contributed to
the state.
Senator Dunleavy surmised that the state would not be
financially impacted by the legislation. Commissioner
Rodell replied in the affirmative, if the locals kept their
property taxes the same.
Senator Dunleavy asked if there would be an impact to the
state if the boroughs made changes to their current
property taxes. Commissioner Rodell replied that there
could be an impact to the state, because that was written
in statute.
Senator Dunleavy wondered if the legislation would change
the borough's status negatively or positively. Commissioner
Rodell responded that it was possible that certain
communities could receive a positive impact, if they have
very low tax rates. She stated that any municipalities that
was at the 20 mil rate would not see any change.
Senator Dunleavy surmised that Valdez would not be harmed
by the legislation. Commissioner Rodell agreed.
Senator Dunleavy asked if the Fairbanks Northstar Borough
would be affected by the legislation. Commissioner Rodell
responded that the borough should not be harmed by the
bill.
1:51:06 PM
Senator Hoffman wondered why the law was initially enacted
for 9.08 mil-rate for the operating budget, and the
difference for the capital budget. Commissioner Rodell
asked for clarification.
Senator Hoffman wondered why the current statute was set at
9.08 mil-rate. Commissioner Rodell responded that she
understood that the 9.08 mil-rate was set by the local
communities. The state had a statute that directed all
localities, whether or not there was oil and gas property
tax, at a rate of 30 mils. She stated that the number was
adjusted through the multiplier factor into a corresponding
mil-rate. The North Slope Borough had a 9.08 mil-rate for
the operating budget.
Senator Hoffman looked at the third paragraph of a document
provided by the sponsor, which stated that the restriction
applied to the 18.5 rate. The current law required the
municipalities to spend $9.8 million on operating costs and
$9.45 million capital costs. He queried the reason for that
restriction. Commissioner Rodell replied that the
multiplier put a cap on oil and gas property was because of
an issue of fairness and equity. The state had a desire to
help some communities that did not have oil and gas
property.
Senator Olson pointed out that the sponsor statement
clearly pointed out the restrictions of the tax revenue
usage.
ROB ELKINS, DEPUTY DIRECTOR, NORTH SLOPE BOROUGH,
ANCHORAGE, stated that the committee was dealing with the
mil-rate for the current operating year. The mil-rate was
determined through the calculation, which was a statewide
per capita value multiplied by the 225 percent currently in
statute. It was then multiplied by the total number
residents, to arrive at an equivalent tax base. The
equivalent tax base was then multiplied by the 30 mil-rate
cap. He stated that the calculation provided a maximum
dollar amount that could be spent on operations. The amount
was then converted into a mil-rate based on the total
assessed value. He stated that the North Slope Borough had
continued to limit itself with the 18.5 mil rate.
Senator Olson wondered why the original formula was
established, which used so much money for debt service. Mr.
Elkins responded that he understood that the statute was
put in place in order to achieve equity. It would limit the
borough's ability to sell debt.
Co-Chair Meyer asked why the fiscal note was indeterminate.
Commissioner Rodell replied that the fiscal note was
indeterminate. The fiscal note would be zero if the
communities continue to operate as they were currently.
There could be positive adjustments to the state, if the
communities lowered their mil-rate to take advantage of the
greater operating flexibility. Adversely, if the community
raises their mil-rate, it will have a negative impact to
the state.
1:59:40 PM
AT EASE
2:01:53 PM
RECONVENED
Co-Chair Meyer CLOSED public testimony.
Vice-Chair Fairclough announced that she would like to hear
testimony on the legislation from the State Assessor's
Office.
CSHB 379(FIN) was HEARD and HELD in committee for further
consideration.
Co-Chair Meyer handed the gavel to Co-Chair Kelly.
2:03:07 PM
AT EASE
2:16:47 PM
RECONVENED