Legislature(2001 - 2002)
04/18/2002 10:39 AM Senate RLS
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 4-MUNICIPAL PROPERTY TAX EXEMPTION
SENATOR THERRIAULT moved to adopt Version K of SB 4 as the
working document of the committee. There being no objection,
Version K was adopted.
SENATOR THERRIAULT then explained the change made in Version K.
He said that Senator Donley suggested language in the Senate
Finance Committee that would limit the availability of the
additional property tax exemption in those municipalities with
excessive per capita bonded indebtedness. When the provision that
allows additional property tax exemption for EMS and fire
volunteers was added to the bill, Senator Donley expressed
concern that the provision could be a mechanism used by
municipalities to do an end run so he wanted the same limiting
language placed in that section, which appears on page 2, lines
14-16.
CHAIRMAN PHILLIPS announced that Senator Ellis was present.
SENATOR ELLIS asked for a synopsis of the legislation and whether
it is good for senior citizens and bad for municipalities.
SENATOR THERRIAULT said it will have no impact at all on senior
citizens. Right now anyone with residential property can take a
$10,000 property tax exemption. Section 1 would allow, after
approval by the local voters, increasing that exemption to
$15,000. Section 2 would allow the assembly to grant an
additional $5,000 property tax exemption for a person who is a
volunteer fire fighter or EMS provider. He noted multiplying the
$5,000 by the standard millage rate amounts to $100 to $200.
SENATOR ELLIS asked if the bill will have any impact on
commercial property.
SENATOR THERRIAULT said it could if a local government decided to
grant a property tax exemption and then increase the overall
millage rate to recoup any loss. However, the potential loss of
revenue from the exemption for EMS providers is relatively small.
The North Star Borough estimated the cost at about $25,000. The
reason he wanted the overall exemption increase to go to a vote
was so that business owners could make their case as to why it
should or shouldn't be done.
SENATOR ELLIS asked if the Municipality of Anchorage (MOA) has
taken a position on the bill.
SENATOR THERRIAULT replied that right now the MOA does not take
advantage of the current $10,000 exemption.
CHAIRMAN PHILLIPS recognized the presence of Senator Cowdery.
SENATOR HALFORD asked how the exemptions can stack on top of each
other.
SENATOR THERRIAULT explained that a municipality can grant up to
a $15,000 exemption per resident.
SENATOR HALFORD remarked:
Okay, so that's the $15,000 or 20 percent of the
assessed value, whichever is less. Then you add the
emergency medical service - fire fighting service - and
this shows that you can have two individuals compounded
so if you have a couple, both of whom are part of the
volunteer fire fighting department, which is in many
cases the case, you go from $15,000 to $25,000 so the
size of the exemption is really $25,000 at the top end
- from 10 to 25 thousand. The second question I have is
how this affects the formulas where the combined total
property assessed valuation triggers a requirement in
education - the 4 percent - or any other segment of a
state-funding component. Does this take those
properties off the calculation or do those values still
remain part of the calculation, which requires the
local effort?
SENATOR THERRIAULT answered that those mechanisms operate
independent of anything in the bill. The bill applies to the
amount of property tax that can be assessed on the property and
those formulas operate on the total assessment of the property
value.
SENATOR HALFORD asked if the total assessed property value is
changed by what you exempt from the taxation on that assessment.
SENATOR THERRIAULT said it is not.
SENATOR HALFORD asked who this will apply to.
SENATOR THERRIAULT said it will apply all across the state. Some
municipalities do not take advantage of the current $10,000
exemption and whether they will take advantage of this bill is
unknown. However, it will not be available to the North Slope
Borough because of its overall bonded indebtedness.
SENATOR HALFORD asked about Valdez.
SENATOR THERRIAULT said it would be available to Valdez.
SENATOR HALFORD asked if the Mat-Su and Kenai Boroughs apply the
$10,000 exemption.
MS. WILDA RODMAN, staff to Senator Therriault, said that
currently the North Slope Borough has a total per capita bonded
indebtedness of $15,000 so it is the only borough that will be
affected by that clause. Regarding the Kenai and Mat-Su Boroughs,
she said that Bristol Bay, Valdez, Kenai, the North Slope and
North Star Boroughs use the existing $10,000 exemption.
SENATOR THERRIAULT added that some of the municipalities that
have chosen not to grant the general residential exemption may
take advantage of Section 2, which applies to volunteers, if they
are having difficulty attracting volunteers.
There being no further questions, SENATOR THERRIAULT moved to
calendar CSSB 4(RLS) at the Chairman's discretion with its
accompanying fiscal note that shows a potential loss of $200,000.
He explained the fiscal note assumes that all municipalities will
grant the exemptions and increase the overall millage rate on oil
and gas properties, lowering the state's take.
SENATOR HALFORD asked if the Finance Committee version estimated
a loss of $714,000.
SENATOR THERRIAULT said that fiscal note applied when the bill
allowed the residential property tax exemption to go up to
$30,000. It has been decreased to $5,000 so the fiscal note
decreased substantially.
CHAIRMAN PHILLIPS asked how much it would cost if all communities
opted into this program.
MS. RODMAN said she did not know.
SENATOR THERRIAULT said he does not know the cost of the current
program to the state treasury.
CHAIRMAN PHILLIPS said he would like to get an answer to that
question.
CHAIRMAN PHILLIPS announced that hearing no objections, CSSB 4
(RLS) would be calendared.
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