Legislature(2021 - 2022)BELTZ 105 (TSBldg)
02/17/2022 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB177 | |
| SB172 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 177 | TELECONFERENCED | |
| *+ | SB 172 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 172-PROPERTY TAX EXEMPTION
4:33:31 PM
CHAIR HUGHES announced the consideration of SENATE BILL NO. 172
"An Act increasing the residential property tax exemption."
4:34:25 PM
NICK MOE, Staff, Senator Bill Wielechowski, Alaska State
Legislature, Juneau, Alaska, introduced SB 172 with a
PowerPoint, "SB 172 An Act Increasing the Residential Property
Tax Exemption." He began with slide 2, discussing the highlights
of property tax relief reflected in SB 172:
• SB 172 increases the residential property tax
exemption from $50,000 to $75,000
• Optional tool for local communities to use to
reduce tax burden
• Increased exemption amount equals more than $400
in annual savings to average homeowner
• More than $12,000 in savings over the life of a
30-year residential mortgage
MR. MOE described why property tax relief in needed:
• Property taxes have dramatically increased
• The cost of living in Alaska has increased the
last few decades as well
• Average income has not even doubled during the
same time
MR. MOE spoke to the property tax burden SB 172 seeks to remedy:
• Anchorage saw the second largest property tax
growth in the country between 2019 and 2020
• Property assessment cards were sent out recently
in Anchorage, Mat-Su, and North Star Borough.
Some property owners saw 10% increases in
appraisals or more.
• Many Alaskans are looking for solutions to
increasing property taxes
MR. MOE provided some of the history of the property tax
exemption:
• On August 28, 2012, the Alaskan voters passed
Proposition 1, Property Tax Exemption Act
• Prop 1 Increased the residential property tax
exemption from $20,000 to $50,000
• Six boroughs and municipalities now take
advantage of the exemption set by the state.
• 54% of Alaskans enjoy property tax relief through
this exemption
4:37:10 PM
CHAIR HUGHES asked how many boroughs and municipalities that
have property tax were not taking advantage of the exemption.
MR. MOE answered that 12 of the 18 boroughs that are allowed to
collect property taxes are not taking advantage of the
exemption.
CHAIR HUGHES asked if that was both boroughs and municipalities.
MR. MOE said he would follow up with a definitive number.
MR. MOE turned to the state map on slide 6, that identifies six
boroughs and communities that take advantage of the $50,000
property tax exemption. These are: North Slope Borough,
Fairbanks North Star Borough, City of Valdez, Municipality of
Anchorage, Kenai Peninsula Borough, and Bristol Bay Borough.
MR. MOE mentioned the recent media coverage regarding property
tax values, including an article in the News Miner last week
that described dramatic increases. One homeowner saw the
assessed value of their home double from one year to the next.
MR. MOE advanced to the US map on slide 8 to illustrate that
property tax is the largest tax that most Alaska home owners
pay. The state is ranked second nationwide.
MR. MOE displayed the chart on slide 9 that shows that Alaska
ranked second in the nation for the highest property tax
increase from 2019 to 2020. He also provided charts to show
increases in the price of gasoline and natural gas compared to
the slow growth of personal income over the last 20 years.
4:39:16 PM
MR. MOE concluded the presentation with the following
highlights:
• Property tax relief is needed now
• The cost of living for Alaskans has increased
dramatically
• SB 172 increases the allowable residential
property tax [exemption] from $50,000 to $75,000
• Optional tool for local communities to use to
reduce tax burden, most Alaskans utilize current
exemption
• Homeowners could save $400 a year, and $12,000
over the life of a mortgage
4:39:39 PM
CHAIR HUGHES asked him to go through the sectional analysis.
MR. MOE stated that the bill has just one section, which
increases the property tax exemption from $50,000 to $75,000. It
is tied to the Consumer Price Index (CPI).
CHAIR HUGHES observed that ten years ago the exemption was based
on CPI for Anchorage and SB 172 changes that to the CPI for
urban Alaska.
MR. MOE agreed that was his understanding.
SENATOR HUGHES offered her understanding that the Mat-Su Borough
was not taking advantage of the exemption.
Mr. Moe agreed.
4:41:45 PM
SENATOR GRAY-JACKSON noted that she was a co-sponsor. She
corrected the record, advising that a homeowner whose assessment
doubles will see their tax assessment double as well.
4:42:27 PM
SENATOR MYERS referred to the US map that shows that Alaska
ranks second in the nation for property tax burden. He noted
that Alaska has a local property tax and a petroleum property
tax that is assessed at both the borough and state level,
depending on location. He wondered where Alaska would rank if
the petroleum tax were removed from the calculation.
MR. MOE offered to follow up with the information.
SENATOR MYERS asked if Anchorage had a tax cap.
MR. MOE answered yes.
SENATOR MYERS noted that Fairbanks also had a tax cap. He
offered his view that the discussion wasn't so much about
property tax relief as tax shifting because taxing jurisdictions
would still try to raise the same amount of revenue. The policy
call is whether or not to shift the tax burden from residential
property owners to commercial property owners.
4:44:37 PM
MR. MOE responded that each borough assesses differently
according to what works best for that jurisdiction. He
acknowledged that with a tax cap, there will be a little
redistribution as opposed to an overall decrease.
SENATOR GRAY-JACKSON explained that the tax burden is spread
throughout the entire tax base and everybody tax burden
increases based on the assessment.
SENATOR MYERS said it will be interesting to see what happens in
areas like North Pole that have both property and sales tax. If
the dollar amount coming in from residential property tax is
less, he wondered whether the mill rate or the sales tax would
be increased to make up the difference.
4:46:43 PM
CHAIR HUGHES pointed out that this was optional and North Pole
might decide not to take advantage of the exemption. She
questioned whether Palmer would be interested because it was
trying to attract more businesses. By comparison, Anchorage has
a much broader business base so each individual business
wouldn't see that much increase. She noted that the bill was
currently written so that a local assembly or city council could
decide to take advantage of this option. She offered her
perspective that it was a good idea to allow the voters as a
whole decide on the merits of a tax shift. She asked whether the
sponsor had considered getting voter approval.
MR. MOE said he didn't know, but would find out. To the comments
about increasing the burden on commercial properties, he pointed
out that in the Mat-Su and the Fairbanks North Star Borough,
both residential and commercial property assessments were
increasing so each group will pay more overall. He noted that
assessors in different parts of the state also thought both
groups would be similarly affected.
4:50:28 PM
SENATOR GRAY-JACKSON said she cares about the entire state and
wants property taxes to be distributed fairly, but in District I
the assessed values for commercial properties have not been what
they should be for many years and this year the assessed value
for residential properties increased more than 10 percent in
some areas.
4:51:13 PM
SENATOR MYERS reported that his property in the Fairbanks area
went up 10 percent this year and several friends saw a 25
percent increase. He noted that while a property owner has the
ability to challenge the assessment, the burden is on the
property owner to prove the valuation is wrong. He described
that as a large power imbalance between the homeowner and the
borough. He wondered whether the sponsor would be interested in
addressing the tax issue by shifting the burden of proof for
property tax valuations to the borough instead of increasing the
exemption for homeowners.
4:52:27 PM
SENATOR BILL WIELECHOWSKI, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 172, answered that he could do some
research and check with local communities, but he wasn't sure
that the state could regulate property tax assessments. He
acknowledged that it also seemed odd that the state could
regulate the size of the property tax exemptions that local
communities can offer.
SENATOR MYERS relayed that state statute places the burden on
the homeowner to prove the borough's assessment of a property
was wrong.
4:53:55 PM
SENATOR GRAY-JACKSON related that in Anchorage assessments are
typically based on the assessed value of nearby properties. The
municipal property appraisal division works with individuals who
question their assessments and minor disagreements are generally
resolved before the matter goes to the next level.
CHAIR HUGHES noted that the presentation indicated that the
average savings would be $400 per homeowner. Using Anchorage as
an example, she asked what the average property tax increase
will be for homeowners based on the higher assessments and,
should the bill pass, what the average increase would be for the
higher assessed residential and commercial properties.
4:55:19 PM
SENATOR WIELECHOWSKI answered that he didnt know what the
average increase would be with the new property tax assessments,
because the Anchorage Assembly sets the mill rate. The estimated
savings of $400 was based on what the tax would be under the
current mill rate and increasing the exemption from $50,000 to
$75,000.
4:55:53 PM
CHAIR HUGHES asked, if the assessments go up 13 percent on
average, will the property taxes also increase 13 percent.
SENATOR WIELECHOWSKI answered not necessarily; it depends on the
mill rate.
CHAIR HUGHES narrowed the question to include the same mill
rate.
SENATOR WIELECHOWSKI deferred the question to Senator Gray-
Jackson.
4:56:30 PM
SENATOR GRAY-JACKSON responded with a hypothetical example. If a
residential assessment increased $100,000 and the mill rate is
14.5 percent, the homeowner would pay an additional $1,450 in
taxes.
CHAIR HUGHES asked the sponsor if he had considered asking the
voters to weigh in.
SENATOR WIELECHOWSKI stated that he had no strong feelings one
way or the other.
CHAIR HUGHES asked Senator Gray-Jackson if anything in the
Municipality of Anchorage charter would automatically send a
question like this to the voters.
4:58:18 PM
SENATOR GRAY-JACKSON answered she didn't think so, but if it did
go to the voters she was sure it would pass with at least a 70
percent margin.
CHAIR HUGHES asked the sponsor what kind of support or
opposition he'd heard.
SENATOR WIELECHOWSKI said he had not heard of any formal
opposition, but he would defer to Mr. Moe.
4:58:48 PM
MR. MOE added that there had been a lot of support for the bill
and realtors were eager about the potential to lower property
taxes. He'd heard no formal opposition.
CHAIR HUGHES asked if chambers of commerce or the Alaska
Municipal League had weighed in.
MR. MOE answered no.
4:59:13 PM
SENATOR MYERS commented that it was a concern if realtors were
excited because they were likely thinking it would result in the
increase in both homes sales and valuations.
SENATOR WIELECHOWSKI offered his experience that realtors
typically oppose property tax increases because people are more
likely to purchase when the prices are lower. He acknowledged
the possibility that future property tax appraisals might be
affected.
MR. MOE offered his perspective that in smaller communities,
lowering the homeowner property taxes with an exemption helps to
encourage people to stay in the community because they are not
priced out of their homes.
5:00:39 PM
CHAIR HUGHES held SB 172 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 177 Govenor Dunleavy Transmittal Letter.pdf |
SCRA 2/15/2022 3:30:00 PM SCRA 2/17/2022 3:30:00 PM SCRA 3/8/2022 3:30:00 PM |
SB 177 |
| SB 177 Sectional Analysis Version A.pdf |
SCRA 2/15/2022 3:30:00 PM SCRA 2/17/2022 3:30:00 PM SCRA 3/8/2022 3:30:00 PM |
SB 177 |
| SB 177 Testimony - Received as of 02.07.22.pdf |
SCRA 2/15/2022 3:30:00 PM SCRA 2/17/2022 3:30:00 PM SCRA 3/8/2022 3:30:00 PM |
SB 177 |
| SB 177 Research ACEP Nuclear Report 1.1.2021.pdf |
SCRA 2/15/2022 3:30:00 PM SCRA 2/17/2022 3:30:00 PM SCRA 3/8/2022 3:30:00 PM |
SB 177 |
| SB 177 Research UAA CED Microreactors in Alaska.pdf |
SCRA 2/15/2022 3:30:00 PM SCRA 2/17/2022 3:30:00 PM SCRA 3/8/2022 3:30:00 PM |
SB 177 |
| SB 177 Presenation Dr. Ashley Finan 2.17.2022.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 3/8/2022 3:30:00 PM |
SB 177 |
| SB 172 Sponsor Statement version A.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 172 Supporting Doc 1 - PP Presentation.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 172 Supporting Doc 2 - ATTOM Data Solutions, Highest Property Tax Growth.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 172 Supporting Doc 3 - Tax Foundation, Property Tax Rank.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 172 Supporting Doc 4 - U.S. EIA, Natural Gas Prices.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 172 Supporting Doc 5 - AAA, Gas Prices.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 172 Supporting Doc 6 - Satista Research, Median Income in Alaska.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 172 Supporting Doc 7 - ADN Article, Anchorage Homeowners See Jump in Values.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 172 Supporting Doc 8 - Alaska News Source Article, Anchorage Green Cards Are Out.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 172 Supporting Doc 9 - Mat-Su Borough 2022 Property Appraisal Annual Report Exerpt.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 2/22/2022 3:30:00 PM |
SB 172 |
| SB 177 Research Response to Committee Question from 2.15.2022.pdf |
SCRA 2/17/2022 3:30:00 PM SCRA 3/8/2022 3:30:00 PM |
SB 177 |