04/07/1995 03:43 PM Senate RES

           SB 147 MUNICIPAL RIVER HABITAT TAX CREDIT                          
                                                                              
 SENATOR LEMAN announced SB 147 to be up for consideration.                    
                                                                               
 SENATOR TORGERSON, sponsor, said SB 147 was introduced to correct             
 and change part of the original legislation established in 1994 to            
 allow for tax credits for improvements along the Kenai River as               
 long as the improvements would protect or enhance the fish habitat.           
 The current law requires ADF&G to establish criteria by regulation            
 on how the improvements and credits would be taken.  It also                  
 requires the Department to review and certify the improvements for            
 the tax credits.  These credits are only available when certified             
 by ADF&G, he explained.                                                       
                                                                               
 SB 147 gives ADF&G more of an oversight role and has them work more           
 directly with the Kenai Peninsula Borough.  The Municipality would            
 be required to establish the criteria by ordinance.  This revised             
 process would allow improvements to go forward so that habitat can            
 be protected and land owners would receive their credit.                      
                                                                               
 Number 122                                                                    
                                                                               
 MAYOR DON GILMAN, Kenai, noted that he had sent a position paper to           
 the committee.  SENATOR LEMAN acknowledged receipt of that paper.             
 MAYOR GILMAN said that SB 147 tries to limit what the Commissioner            
 of ADF&G could review, because there needs to be more criteria.               
                                                                               
 SENATOR TAYLOR said he wasn't sure why the legislature should be              
 mandating back to a taxing entity the standards by which they will            
 choose to either grant or deny a tax exemption nor does he think it           
 is appropriate for the legislature to place an executive level                
 bureaucrat in charge of either approving or disapproving an area              
 for which they may wish to grant a tax credit for.  It seems they             
 are authorized to grant credits just as they are authorized to                
 impose taxes.  Let them establish the standards for which they wish           
 to grant such taxes in their own community which is what they are             
 hurting or helping.                                                           
                                                                               
 MR. GILMAN responded that he couldn't argue with that at all.                 
                                                                               
 SENATOR TAYLOR said he would be willing to grant a much broader               
 authority to people wishing to do projects of this type.                      
                                                                               
 Number 222                                                                    
                                                                               
 GERON BRUCE, Alaska Department of Fish and Game, clarified that the           
 Department wants to know exactly what is expected of them.  They do           
 support SB 147 with that clarification.                                       
                                                                               
 Number 244                                                                    
                                                                               
 SENATOR PEARCE explained that, as the sponsor last year of the                
 Senate version of HB 306, the original intent, which she worked               
 closely with Mayor Gilman on, was to allow the borough to give                
 credits for those people who spend their monies trying to do                  
 habitat restoration and protection along the Kenai River, as kind             
 of a pilot project.  They all thought that was a laudable goal.  As           
 the committee process followed, at the request of the Department              
 and some legislators, it was decided that ADF&G would promulgate              
 regulations that would set up other criteria that the borough had             
 to use before the borough could do their tax credit ordinance.                
 Unfortunately, there still aren't regulations under the old bill,             
 but the borough is facing a January 1 deadline to have an ordinance           
 in place or they will not be able to allow any tax credits for the            
 1996 calendar year.                                                           
                                                                               
 She thought it was clear that it is not up to ADF&G to decide                 
 whether the scope of protection and restoration is equal to the               
 value of the tax credit, but it is up to the borough.  The only               
 thing they want ADF&G to certify is that the criteria that the                
 borough includes in their ordinance is certified by the                       
 commissioner as being helpful and of benefit to the habitat along             
 the stream bed.                                                               
                                                                               
 Number 282                                                                    
                                                                               
 DALE BONDURANT supported SB 147 saying this was an added incentive            
 to get people to save the river.                                              
                                                                               
 GARY HINKLE said he thought the money and control should be local.            
 He thought the permitting process still left the habitat agencies             
 in control as they ought to be.  He said that the permitting                  
 process is very involved which is a concern.  Every agencies agrees           
 with what they are going to do, but the inconsistencies between the           
 agencies' regulations make it very hard to get them to agree on any           
 one project.  The most habitat friendly projects on the river are             
 highly maintenance oriented.  The less habitat friendly will last             
 a long time, like putting rock along the bank.  Most of the habitat           
 friendly projects need to be reworked.  He asked the committee to             
 particularly realize the importance of the tax credit for the on              
 going maintenance.                                                            
                                                                               
 SENATOR TAYLOR asked about the 50% limitation for one year, but               
 then it says that the credit may be given for more than one.  He              
 asked if it was contemplated that these tax credits might be on-              
 going for maybe 20, 30, or 40 years.  MAYOR GILMAN said he didn't             
 think it would go on for 20 to 40 years, but there is another                 
 restriction saying it can't exceed more than 50% of whatever the              
 cost is.  It's conceivable that it could go over two or more years.           
                                                                               
 SENATOR TAYLOR said it was a commendable credit, but he was                   
 concerned that it was a percentage of 50% of a person's taxes which           
 could very well pay for the whole project each year.  MAYOR GILMAN            
 answered that that was correct and it depends on the value that's             
 established on the property.  He said they are talking about 50% of           
 the value, not necessarily 50% of the project.  SENATOR TAYLOR said           
 he didn't have any objection to that.                                         
                                                                               
 Number 380                                                                    
                                                                               
 SENATOR PEARCE moved to pass SB 147 from committee with individual            
 recommendations with the accompanying fiscal note.  There were no             
 objections and it was so ordered.