Legislature(2023 - 2024)DAVIS 106
04/04/2024 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB161 | |
| HB221 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 161 | TELECONFERENCED | |
| *+ | HB 221 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 161-TAX EXEMPTION FOR FARM LAND/STRUCTURES
8:02:15 AM
CHAIR MCCORMICK announced that the first order of business would
be CS FOR SENATE BILL NO. 161(CRA) am, "An Act relating to
municipal taxation of farm land and farm structures; and
providing for an effective date."
8:02:40 AM
SENATOR JESSE BJORKMAN, Alaska State Legislature, prime sponsor,
gave an overview of CSSB 161(CRA) am. He stated that the bill
would extend the property tax exemption from farm use lands to
farm use buildings to allow the buildings to be taxed at the
farm rate, not the full and true value assessment. Also, the
bill would extend optional provisions for municipalities and
political subdivisions to incorporate all farm buildings if they
so choose.
8:05:07 AM
LAURA ACHEE, Staff, Senator Jesse Bjorkman, Alaska State
Legislature, on behalf of Senator Bjorkman, prime sponsor of
CSSB 161(CRA) am, said she had nothing to add.
SENATOR BJORKMAN noted that the current version before the
committee included aquaculture.
8:06:03 AM
CHAIR MCCORMICK opened public testimony on SB 161.
8:06:33 AM
CAROLE TRIEM, Program Coordinator, Resilience Economies &
Economies, Alaska Municipal League, testified during the hearing
on CSSB 161(CRA) am. She commented on mandatory exemptions and
how they reduce the local government's ability to raise revenue
while doing nothing to reduce costs. She added that expanding
mandatory exemptions shifts the tax burden to commercial
property owners, residential homeowners, and renters. In
addition, she said that expanding the mandatory exemption would
lower the full value determination, which in turn, would lower
the amount of funding a local government can give to the school
district. She added that optional exemptions allow
municipalities to provide fit for purpose policy that fits their
local needs, so for that reason, she said the AML supports the
removal of the requirement for the optional exemption to be put
to voters, in addition to the expansion of the optional
exemption.
8:08:34 AM
BRAD ST. PIERRE, representing self, testified during the hearing
on CSSB 161(CRA) am. He said he supports the tax exemption for
farmers. He opined that there are two pieces of the bill that
need to be amended, as they would negatively impact young
farmers and their access to farm land. Firstly, he requested
that the committee amend the bill to keep the public engaged and
keep the vote of the people required on all tax exemption
changes. Secondly, he opined that the state should keep the
qualification for applicants to be proof that 10 percent of the
farmer's total income comes from farming. He concluded that
changing it to the ability to produce $1,000 in agricultural
products and filing a schedule F would not support the type of
farming that would bolster Alaska's food system.
8:12:26 AM
SAVANNAH FLETCHER, Presiding Officer, Fairbanks North Star
Borough Assembly, testified during the hearing on CSSB 161(CRA)
am. She confirmed that last year, Fairbanks passed Proposition
2 by an overwhelming majority, which provides a tax exemption
for farm structures used exclusively for farming. Despite the
suggestion from Legislative Legal Services that the bill would
not nullify the municipal exemption, she expressed concern that
the language in Section 1 would not allow the exemption to
continue. She requested that the bill be amended to provide
further clarity on this and sustain local power and local choice
in setting the tax exemption. She explained that the $1,000
threshold would be a huge departure from the current standard of
10 percent of income, which, rather than encouraging additional
farming, may support hobby farmers getting a big tax exemption
without producing more food for the community to consume. In
addition, she expressed concern about use of the word "normally"
[on page 1, line 10] due to the USDA's interpretation of it and
the potential for broad interpretation by assessors. Lastly,
she expressed concern about the ability to assess farm
structures if exclusive use would no longer be a requirement.
REPRESENTATIVE HIMSCHOOT asked Ms. Fletcher to speak to the
difference between 10 percent of yearly gross income versus
$1,000 in sales.
MS. FLETCHER said presumably, [10 percent] is a more stringent
standard. She suggested implementing a flat number that's
higher than $1,000.
REPRESENTATIVE HIMSCHOOT asked whether the sharing of financial
statements is the barrier, or whether the barrier is the money
amount.
MS FLETCHER said either way, some [financial statement] would
need to be shared. She reiterated her concern that $1,000 would
be too low to achieve the policy goal.
REPRESENTATIVE HIMSCHOOT asked what the threshold should be if
not 1,000.
MS. FLETCHER deferred to the Alaska Farmers Market Association.
She estimated that $5,000 would be closer to the target.
8:20:01 AM
REPRESENTATIVE MCCABE questioned the change in revenue in
Fairbanks prior to the public vote on [Proposition 2].
MS. FLETCHER said a conservative estimate suggests that this
could take at least $7 million off the tax roll, as currently
written, based on agricultural land at the 10 percent threshold.
She noted that the tax exemption only passed [six months] ago,
so she did not have the requested data.
REPRESENTATIVE MCCABE expressed concern that the term "hobby
farms" was being used derisively. He opined that hobby farms
are not necessarily a bad thing if they are growing their own
food.
8:22:43 AM
BONNE WOLDSTAD, representing self, testified during the hearing
on CSSB 161(CRA) am. She suggested adding "on or" before the
wording "before May 15" in the language pertaining to the
Schedule F form in Section 3, subsection (f). She said she
found it ironic that last year, the state of Alaska offered
grants for the purchase of livestock feed to help sustain small
farms at the same time that individuals were finding it
increasingly difficult to apply for and receive the farm tax
exemption. She said SB 161 would assist in keeping small farms
operational in Alaska.
CHAIR MCCORMICK closed public testimony on SB 161.
8:25:01 AM
The committee took a brief at-ease.
8:26:05 AM
CHAIR MCCORMICK sought questions from committee members.
8:26:19 AM
REPRESENTATIVE HIMSCHOOT asked the bill sponsor to speak to the
change from 10 percent of yearly gross income to $1,000 in
sales.
SENATOR BJORKMAN said Representative Himschoot was correct in
identifying that the source of the standard to access the tax
deferment came from the Food Strategy Taskforce. He agreed that
farms often start small and then scale as they're able produce
more food. He opined that the $1,000 threshold is a good place
to start because individuls filing a schedule F would be telling
the Internal Revenue Service (IRS) that they are in the business
of farming. He spoke to the purpose of the farm use rate.
8:28:58 AM
REPRESENTATIVE HIMSCHOOT asked whether the schedule F form can
only be filed by farmers.
MS. ACHEE confirmed that only someone in the business of an
agricultural operation would file a schedule F, including
aquaculture and marijuana operations.
REPRESENTATIVE HIMSCHOOT suggested that the filing of a schedule
F would indicate that some portion of an individual's income
came from farming.
SENATOR BJORKMAN said, "That's correct."
MS. ACHEE opined that it isn't practicable to only focus on
large scale operations when it comes to increasing the food
supply in Alaska. She emphasized the importance of making room
for smaller operations that are creating a smaller change.
8:31:19 AM
CHAIR MCCORMICK announced that CSSB 161(CRA) am would be held
over.