Legislature(1999 - 2000)
03/06/2000 01:37 PM Senate CRA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SB 227-MUNICIPAL PROPERTY TAX LEVY LIMITATION
SENATOR KIM ELTON, sponsor of SB 227, stated if the initiative
passes it will accomplish three things. It will replace the
current 30 mill or 3 percent limitation with a 10 mill or 1 percent
levy, it will require payments on bonded indebtedness to be
included within the tax cap, and it will prohibit local property
assessments from rising more than 2 percent annually.
SB 227 allows local voters the ability to set a tax cap of higher
than 10 mills in a general election. SB 227 prohibits people in
one municipality from setting the mill rate for another
municipality. If the initiative passes municipalities have the
ability to lower the mill rate, but can't raise the mill rate above
10. SB 227 also exempts school bond debt from the tax cap.
SENATOR PHILLIPS asked if SB 227 would change the intent of
initiative.
SENATOR ELTON stated no. SB 227 loosens provisions of the
initiative, and moves school bond debt out from under the tax cap.
The Alaska Municipal League agrees that people in one part of the
State should not govern the tax cap in individual communities in
other parts of the State. Each community's voters should have the
option to determine mill rates and taxes for that community.
Financial pressure will be added to municipalities if the
initiative passes, and the public doesn't have the option to vote.
SENATOR ELTON gave examples of property values plummeting. SB 227
will not change the initiative, it gives alternative options if the
initiative passes. The Alaska Constitution states Alaska should
act within its powers to "provide for maximum local self government
with a minimum of local government units, and to prevent
duplication of tax levying jurisdictions." Without an opportunity
for local governments to set appropriate tax rates, the initiative
will discourage consolidation of local government units and local
taxing authorities.
Number 174
SENATOR PHILLIPS stated local governments should be educated on the
impacts of the initiative and SB 227.
SENATOR ELTON agreed and stated people in unorganized boroughs
should not be allowed to dictate what happens in other
municipalities in the State. The legislature should not focus on
tactics against the initiative but should create a safety net for
the people in municipalities. That is what SB 227 represents.
SENATOR PHILLIPS stated SB 227 would be a mechanism to prepare for
the initiative.
VICE-CHAIR MACKIE stated SB 227 gives people more reason to vote
for the initiative and fall back on SB 227, instead of trying to
fight the initiative.
SENATOR ELTON stated SB 227 won't make a difference in voter
behavior. People will vote for the initiative or not, but SB 227
will go into effect if the initiative passes.
VICE-CHAIR MACKIE asked, if the initiative gets voted down whether
SB 227 will go into effect.
SENATOR ELTON stated it will not. Some cities are contributing
more than the 4 mill property tax for their local contribution to
schools. A 10 mill tax limit with no safety net will pressure
municipalities to lower the 4 mill local contribution to schools to
still provide for other services.
SENATOR PHILLIPS stated SB 227 isn't a safety net, it represents a
transition. He asked how the votes were broken down to represent
each region of Alaska.
SENATOR ELTON stated most opinions came from Southcentral Alaska.
Number 333
MS. BONNIE WILLIAMS, Chair of finance committee for Fairbanks/North
Star Borough, stated support for SB 227. If the initiative passes
it will negatively affect Fairbanks' current year budget. The
schools, road service areas, and fire departments would suffer the
most if the initiative passes.
The Fairbanks North Star Borough has voted for a revenue cap which
prohibits the borough from spending above the current year revenue;
except for inflation, new construction, and new bonds that are
voter approved. Ms. Williams referred to California's tax
initiative that went into effect in 1978. From 1978 to 2000
California's population has grown from 22 million to 31 million
with no new schools being built to accommodate those children.
Number 420
MR. TED SMITH, Mayor of City of Petersburg, stated support for SB
227. SB 227 allows municipalities control over their taxation
destiny. Petersburg already has a 10 mill rate limit that was set
at the local level and can be changed by a vote of the people.
MR. GENE DUSEK, Director, Office of Management & Budget for the
Municipality of Anchorage, stated support for SB 227. Anchorage
mill rates for 2000 are estimated to be 17.91 mills. The school
board is asking the assembly for a mill rate of 8.09 mills. The
mill rate for city services differs from area to area, the average
mill rate is 9.82 mills. The total debt, excluding debt services,
is 14.66 mills. That will need to be cut to 10 mills if the
initiative passes. Mr. Dusek referred to charts given to the
committee.
SENATOR PHILLIPS moved SB 227 out of committee with individual
recommendations. Without objection, the motion carried.
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