02/17/1994 01:30 PM House FIN

  HOUSE BILL NO. 397                                                           
                                                                               
       "An Act relating to the power to levy property taxes in                 
       second class cities.                                                    
                                                                               
  REPRESENTATIVE  HARLEY  OLBERG  noted   that  SSHB  397  was                 
  requested by the City  of Whittier.  He explained  that SSHB
 would place  second class  cities at the  same level  as                 
  first  class  cities and  home rule  cities in  statute with                 
  regards to  their taxing ability.   This would  allow second                 
  class  cities to raise  additional revenues.   He noted that                 
  second class cities  are facing  reductions in state  shared                 
  funding sources.                                                             
                                                                               
  Representative Hanley asked if  formulas for revenue sharing                 
  (RS)   or  municipal  assistance  (MA)  would  be  effected.                 
  Representative  Olberg  did not  believe revenue  sharing or                 
  municipal assistance would be effected.                                      
                                                                               
  Representative  Hanley questioned  if educational  powers of                 
  cities  would be effected.   Mr. Olberg stressed that second                 
  class cities would be  on an equal footing with  first class                 
  and home rule  cities in  regards to their  ability to  tax.                 
  Statutes regarding the  requirement of first class  and home                 
  rule cities to provide education would not be effected.                      
                                                                               
  Representative Hanley  expressed concern  that second  class                 
                                                                               
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  cities would be allowed  to tax to the level of  first class                 
  cities  but would  not  be allowed  to  take over  education                 
  responsibilities.    Representative  Olberg reiterated  that                 
  there  is   no  intention  to   impact  statutes   regarding                 
  education.                                                                   
                                                                               
  Representative Navarre commented that  revenue sharing would                 
  be impacted since it is based on local tax effort.  He added                 
  that the impact would not be significant.                                    
                                                                               
  Representative Hanley noted that AS  29.35.260 states that a                 
  "second  class  city  outside  a  borough  is not  a  school                 
  district and may not establish a system of public schools."                  
                                                                               
  Representative  Martin stressed  that increased  revenues of                 
  second class cities would allow resolution of more community                 
  problems.                                                                    
                                                                               
  GARY WILLIAMS, CITY OF WHITTIER testified in support of SSHB
.  He emphasized  that there are 117 second  class cities                 
  in  Alaska.    He  observed  that  second class  cities  are                 
  dependent  on outside  revenue  sources  such  as  municipal                 
  assistance and revenue sharing.                                              
                                                                               
  Mr. Williams pointed  out that  the assessed  value of  real                 
  property in Whittier is $33.5 million dollars.   After state                 
  allowed exemptions are  deducted the taxable  assessed value                 
  is only  $8.3 million  dollars.   He noted  that the  Alaska                 
  Railroad owns  60 percent  of the  land in  Whittier and  is                 
  exempt  from  paying city  tax.   At  5  mills  the city  of                 
  Whittier can only  raise $40.0 thousand dollars  on assessed                 
  property value.  He asserted that:   "It is inappropriate to                 
  tie  a  knot in  the shared  revenue  stream and  yet expect                 
  second class cities to  not only survive but to  be actively                 
  involved in developing  local economies."  He  observed that                 
  the  Whittier City Council  is in unanimous  support of SSHB
.                                                                         
                                                                               
  Representative  Hoffman spoke in  support of  SSHB 397.   He                 
  emphasized that second class cities have grown accustomed to                 
  receiving state support through RS and MA.  He stressed that                 
  some second class  cities do  not collect taxes  due to  the                 
  inability  to   administer  the   paper  work  involved   in                 
  collection  of taxes.    He asserted  that services  will be                 
  diminished if a revenue source is not provided to substitute                 
  for lost state support.                                                      
                                                                               
  (Tape Change, HFC 94-36, Side 2)                                             
                                                                               
  Representative  Foster  MOVED  to  report  SSHB 397  out  of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.                                                    
                                                                               
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  Representative Navarre  OBJECTED for purpose  of discussion.                 
  He  expressed  support  for  the  legislation's  intent  but                 
  suggested that a better method might be found.                               
                                                                               
  Mr. Williams  clarified, in  response to  a question  by Co-                 
  Chair Larson, that the city of  Whittier's accessed value is                 
  reduced  by  the  ownership of  exempted  railroad  land and                 
  facilities.                                                                  
                                                                               
  Co-Chair Larson reiterated the motion to report SSHB 397 out                 
  of Committee  with individual  recommendations and  with the                 
  accompanying fiscal note.  There being NO OBJECTION, it  was                 
  so ordered.                                                                  
                                                                               
  SSHB 397  was reported  out of  Committee with  a "do  pass"                 
  recommendation and with a zero fiscal note by the Department                 
  of Community and Regional Affairs, published 2/4/94.