Legislature(2003 - 2004)
04/08/2003 08:07 AM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 209-MUNI.TAX: PROPERTY AFFECTED BY DISASTER CHAIR MORGAN announced that the first order of business would be HOUSE BILL NO. 209, "An Act relating to municipal property tax adjustments for property affected by a disaster." Number 0130 REPRESENTATIVE MIKE CHENAULT, Alaska State Legislature, testified as the sponsor. He explained that the intent of HB 209 is to give boroughs the opportunity to provide tax breaks to owners in the event of casualty loss such as from a fire in the home. Representative Chenault said: HB 209 will allow municipalities to provide a tax reduction for properties destroyed, damaged or otherwise reduced in value as a result of a disaster. A municipality can adopt, by ordinance, criteria for assessment or reassessment of the property values. What this legislation is intended to do is to broaden the municipalities' authority to define "disaster" to include for example, a fire or flood that occurs within a home. It repeals Section 29.45.230(e). In this section "disaster" means a major disaster declared by the President of the United States under federal law or a disaster declared by the governor. Currently, there are other states: Arizona, California, Idaho, Mississippi, Pennsylvania, and South Dakota ... that currently provide pro-ration of taxes for casualty loss. Other states are currently considering similar legislation. Number 0315 REPRESENTATIVE CISSNA inquired as to why this hasn't been done before. REPRESENTATIVE CHENAULT said that he didn't know. He noted that he has been approached by [the Kenai Peninsula Borough]. Representative Chenault posed a situation in which an individual's taxes are due on the first of January and that individual's house burns on the fifth of January. Under HB 209, the borough could opt to pro-rate the individual's taxes based upon the number of months the house was livable. This is currently not allowed under state law and thus HB 209 would place this power in the hands of the borough where he indicated it should be. REPRESENTATIVE ANDERSON inquired as to the current process with regard to a disaster. REPRESENTATIVE CHENAULT reiterated that a disaster has to be declared by the President of the United States or the governor. He was not aware of any process by which boroughs could take into consideration an event [such as a fire] and declare it as a disaster. In response to Chair Morgan, Representative Chenault confirmed that HB 209 also includes municipalities. Number 0561 KEVIN RITCHIE, Executive Director, Alaska Municipal League (AML), said that AML likes bills such as HB 209 because of its optional nature. Therefore, AML supports the concept embodied in HB 209, he said. REPRESENTATIVE KOTT specified that HB 209 broadens the opportunities for municipalities and boroughs to declare property taxed at a reduced level based on the category of disaster, not natural disaster, as construed by municipalities or boroughs. MR. RITCHIE agreed. REPRESENTATIVE CISSNA restated her earlier question with regard to why this hasn't been done before. MR. RITCHIE answered that he didn't know, although he noted that HB 209 provides the municipalities a broader hand to make decisions with regard to timing and standards for what constitutes a disaster. Number 0691 REPRESENTATIVE KOTT asked if there could be a situation in which a homeowner has to pay taxes on real property that is no longer real, such as a house that burned and for which there is no value. MR. RITCHIE said that he couldn't answer the question, although he offered his belief that it would be a matter of timing in the tax year. Number 0832 DAN BOCKHORST, Local Boundary Commission, Division of Community and Business Development, Department of Community & Economic Development (DCED), answered Chair Morgan by saying that the department hasn't taken a position on the legislation. Number 0848 ED OBERTS, Mayor's Assistant, Kenai Peninsula Borough Mayor's Office, informed the committee [that the borough] would like to have the flexibility to address smaller situations in which a single house or a few houses burn or are destroyed [after the assessed value and taxes have been determined by the local area government]. Under current statutes, [boroughs and municipalities] establish assessed values and taxes January 1st, but the billing occurs in the fall. Therefore, an individual who lost his/her house in the spring could receive a bill based on the assessed value of the house before its demise, although the house wouldn't have any value at that point. If the individual doesn't have insurance, the individual can't afford to rebuild a livable structure very quickly. Individuals in such situations come to the mayor and plea their case, although the mayor has no authority to grant an exception. This legislation attempts to provide flexibility to establish criteria in order to address the aforementioned situations. REPRESENTATIVE KOTT directed attention to Section 2 of HB 209 and asked whether the requirement that the boroughs establish criteria for the reduction of taxes would cause any difficulty for the boroughs and municipalities. He also inquired as to the extent such would be accomplished. Number 1003 MR. OBERTS remarked that the committee might want to consider changing the "shall" to "may" in Section 2. REPRESENTATIVE WOLF inquired as to the sponsor's thoughts with regard to the suggestion to change "shall" to "may." REPRESENTATIVE CHENAULT said that he believes boroughs and municipalities should be given all the options, without forcing a change. Therefore, he said he didn't have any "major heartburn" with such a change. CHAIR MORGAN closed public testimony. Number 1132 REPRESENTATIVE KOTT moved that the committee adopt Amendment 1, which read: Page 1, line 10, Delete "shall" Insert "may" REPRESENTATIVE KOTT explained that this change would provide the municipalities and boroughs with the greatest level of flexibility. He said, "I'm not really too keen on mandating something on an entity that is already suffering financially and we're adding one more layer of government." There being no objection, Amendment 1 was adopted. Number 1205 REPRESENTATIVE KOTT moved to report HB 209 as amended out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSHB 209(CRA) was reported from the House Community and Regional Affairs Standing Committee.
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