Legislature(2007 - 2008)BARNES 124
05/03/2007 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB199 | |
| HB60 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 199 | TELECONFERENCED | |
| += | HB 60 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 60-MUNICIPAL PROPERTY TAX EXEMPTION 9:08:04 AM CO-CHAIR FAIRCLOUGH announced that the final order of business would be HOUSE BILL NO. 60, "An Act relating to and increasing the municipal property tax exemption on residences of certain seniors and others; and providing for an effective date." 9:08:15 AM REPRESENTATIVE VIC KOHRING, Alaska State Legislature, sponsor, explained that HB 60 would increase the property tax exemption for senior citizens and disabled veterans to $250,000. The exemption was originally established in 1985 at the $150,000 level. Representative Kohring highlighted that seniors have taken a real hit due to inflation, loss of the longevity bonus, and the floundering senior care legislation. Therefore, he related his desire to help the seniors by increasing their exemption. 9:12:31 AM WOLFGANG FALKE said he supports HB 60. He then pointed out that the law specifies that an application for this exemption must be submitted by January 15. Therefore, he questioned whether an individual who turns 65 in May would qualify for the exemption for the next fiscal year, which begins July 1st. LUKE HOPKINS Member, Fairbanks North Star Borough Assembly, Fairbanks North Star Borough, recalled that the borough recently passed an ordinance that moved the deadline for exemptions to April 1st. MR. FALKE pointed out that HB 60 refers to a state application. Mr. Falke opined that HB 60 proposes a fair increase. Returning to his earlier question, he emphasized that HB 60 should refer to an individual who is 65 upon the date of application in order to clarify when an individual qualifies and avoid the three different possibilities. 9:18:42 AM LISA PEGER related her understanding that the average home in Alaska is [assessed at] $187,000 and in the nation it's $212,000. Therefore, she suggested that the senior and disabled veteran exemption be increased by no more than $200,000 unless the remaining homeowners are given the $100,000 exemption. Otherwise, the burden of the senior [and disabled veteran] exemption will be shifted on to the rest of the working class. She then spoke in favor of inflation-proofing the $100,000 exemption or not having that [limit] at all. 9:20:05 AM JAMES SKINNER, speaking at the request of a number senior citizens, related support for HB 60. He informed the committee that his taxes have increased $60,000 in assessment in two years. If his property continues to be taxed at that rate and HB 60 is in place, he pointed out that he would be taxed in three years. Therefore, he suggested that HB 60 should be changed such that every year taxes are increased the exemption is increased by a comparable amount. He highlighted that seniors and disabled veterans spend money in the state. He concluded by commented that he doesn't want to be taxed out of his home, which he opined will happen if the exemption isn't increased and tied to inflation and the value of the properties. 9:22:33 AM EILEEN JOHNSON explained her situation in which there is much [newer] development around her house, which has caused her property taxes to increase. Mr. Johnson related her support for HB 60, which she said would aid her in staying in her own home. 9:24:02 AM ELEANOR RIENDL related much thanks for the introduction of HB 60. She then inquired as to how much land one can own [and receive the exemption] under HB 60. She suggested that the age at which this exemption should be available is 65. 9:26:40 AM MARTY MCGEE, Municipal Assessor, Municipality of Anchorage (MOA), related that MOA doesn't support HB 60 as written. Although the municipality doesn't oppose the first $150,000 as a mandatory exemption, anything over that should be left as a local option with voter approval. Furthermore, MOA would like to see an index on the amount of value indexed over $150,000. He mentioned that the consumer price index (CPI) isn't a good index for real estate value. Mr. McGee related that the mayor of MOA would like this matter to be on the ballot as soon as possible if it's enacted as a local option requiring voter approval. 9:27:58 AM CO-CHAIR FAIRCLOUGH asked if, currently, local municipalities can exempt whatever amount they desire. MR. MCGEE replied no, municipalities are limited by the current state law. In further response to Co-Chair Fairclough, Mr. McGee related his understanding that the Kenai exemption preceded the enactment of the law. 9:28:37 AM STEVE VAN SANT, State Assessor, Division of Community Advocacy, Department of Commerce, Community, & Economic Development, pointed out that under AS 29.45.050 a municipality has the ability to exempt all senior citizen exemption above the $150,000, which is how the Kenai Peninsula Borough has exempted the total tax of property owned by senior citizens. In response to an earlier question, Mr. Van Sant specified that the effective date for senior citizens receiving the exemption is January 1. The tax year for all exemption determinations is made as of January 1. 9:30:13 AM JAVEN OSE related his support for HB 60. He opined that if seniors are given these exemptions, then they'll stay in the state. He characterized [HB 60] as a simple matter to amend the statute from the current senior exemption of $150,000 to $250,000-$300,000, which would reflect the original intent of the law. 9:34:08 AM SHANE HORAN, Assessor, Kenai Peninsula Borough, related that the Kenai Peninsula Borough doesn't support HB 60, which he characterized as an unfunded mandate. Based on the current forecast of the 2007 assessment rolls, the mandatory exempted assessed value for the Kenai Peninsula Borough would increase from $3.6 million to $4.5 million in revenue lost. 9:35:29 AM KATHY WASSERMAN, Alaska Municipal League (AML), reminded the committee that AML has stated in its policy that it won't oppose any optional exemption. However, AML opposes mandatory exemptions as would be the case with HB 60. Based on the $150,000 exemption, $39 million is the amount exempted. If HB 60 were to take effect, even with the governor's $48 million for revenue sharing, it would cost municipalities $53 million to put the $250,000 exemption in place. Ms. Wasserman said that AML doesn't understand why the legislature doesn't address those in need rather than all those of a certain age. She highlighted that there has been much discussion with regard to the "brain drain," which is impacted by proposed tax shifts from seniors with money to young families. The AML is all about local control, and therefore it desires addressing those in need. Ms. Wasserman emphasized that the drafters of the original program realized that in order to exempt seniors and disabled veterans and not create tax shift the state would need to agree to pay the municipalities that money, which the state did. However, the state eventually found that it couldn't provide those funds. The aforementioned is when the tax shifting started. Ms. Wasserman concluded, "I agree, if some members of the state think that this is the right thing to do, then I would suggest that the state, indeed, step out and do that right thing and fund this bill." 9:38:43 AM REPRESENTATIVE NEUMAN pointed out that the state is mandated to fund schools, roads, and public safety. He asked if Ms. Wasserman has calculated the amount of other funds that go to communities in the state through other capital projects and revenue-type sharing programs. MS. WASSERMAN said that would be difficult to do because depending upon where one lives, public safety may or may not exist. The AML hasn't done what Representative Neuman suggested. REPRESENTATIVE NEUMAN related his assumption that the total [of other capital projects and revenue-type sharing programs] would be more than $46 million. MR. WASSERMAN said that she would agree if he was speaking of capital improvements. However, she pointed out that those capital improvements come at a cost due to the maintenance, fuel, and heating required to continue them and thus again raises costs to communities. 9:40:11 AM TAMMIE WILSON said she likes the idea proposed in HB 60. However, she expressed concern because in the Fairbanks Northstar Borough there are fire and road service districts. She explained that more seniors are staying in the area. In fact, some areas are mainly comprised of seniors, which cause the mill rates to increase in order to keep the roads up to par. Therefore, those who aren't seniors and don't receive the exemption have to pay more. Ms. Wilson opined that revenue sharing doesn't necessarily help in this situation because the funds don't necessarily go toward making up the difference in the aforementioned situations. Another concern is that if this legislation mandates a certain amount, the community can't go lower. 9:42:52 AM CO-CHAIR FAIRCLOUGH, upon determining no one else wished to testify, closed public testimony. 9:43:35 AM REPRESENTATIVE BILL THOMAS explained that his amendment would, after two years [of an increased senior property tax exemption], grandfather in those seniors receiving the exemption and make the senior tax exemption a local option. He further explained that doing so would provide a tool to assist local communities and those [homeowners] not receiving the exemption. The proposed amendment [labeled 24-LS0299\A.1, Cook, 5/2/07] read as follows: Page 1, line 1: Delete "and increasing the" Insert "a mandatory and an optional" Page 1, line 4, through page 2, line 14: Delete all material and insert: "* Section 1. AS 28.10.181(d) is amended to read: (d) Vehicles owned by veterans with disabilities, including persons disabled in the line of duty while serving in the Alaska Territorial Guard, or other persons with disabilities. Upon the request of a person with a disability that limits or impairs the ability to walk, as defined in 23 C.F.R. 1235.2, the department shall (1) register one motor vehicle in the name of the person without charge; and (2) issue a specially designed registration plate that displays (A) recognition of the disabled veteran if the applicant's disability originated from the applicant's service with the Alaska Territorial Guard or the armed forces of the United States; (B) the international symbol of accessibility (the wheelchair logo); and (C) if the applicant is a veteran, the Alaska and United States flags and red, white, and blue colors. A person who is not otherwise qualified under this subsection, but who meets the qualifications of a disabled veteran under AS 29.45.050(i)(2) [AS 29.45.030(i)], may register one motor vehicle without charge, and the department shall issue a specially designed registration plate that displays recognition of the disabled veteran that does not display the international symbol of accessibility and does not carry with it special parking privileges. For purposes of this subsection, proof of disability may be provided by a person licensed as a physician or physician assistant under AS 08.64 or as an advanced nurse practitioner under AS 08.68. * Sec. 2. AS 29.45.030(a) is amended to read: (a) The following property is exempt from general taxation: (1) municipal property, including property held by a public corporation of a municipality, state property, property of the University of Alaska, or land that is in the trust established by the Alaska Mental Health Enabling Act of 1956, P.L. 84-830, 70 Stat. 709, except that (A) a private leasehold, contract, or other interest in the property is taxable to the extent of the interest; however, an interest created by a nonexclusive use agreement between the Alaska Industrial Development and Export Authority and a user of an integrated transportation and port facility owned by the authority and initially placed in service before January 1, 1999, is taxable only to the extent of, and for the value associated with, those specific improvements used for lodging purposes; (B) notwithstanding any other provision of law, property acquired by an agency, corporation, or other entity of the state through foreclosure or deed in lieu of foreclosure and retained as an investment of a state entity is taxable; this subparagraph does not apply to federal land granted to the University of Alaska under AS 14.40.380 or 14.40.390, to other land granted to the university by the state to replace land that had been granted under AS 14.40.380 or 14.40.390, or to land conveyed by the state to the university under AS 14.40.365; (C) an ownership interest of a municipality in real property located outside the municipality acquired after December 31, 1990, is taxable by another municipality; however, a borough may not tax an interest in real property located in the borough and owned by a city in that borough; (2) household furniture and personal effects of members of a household; (3) property used exclusively for nonprofit religious, charitable, cemetery, hospital, or educational purposes; (4) property of a nonbusiness organization composed entirely of persons with 90 days or more of active service in the armed forces of the United States whose conditions of service and separation were other than dishonorable, or the property of an auxiliary of that organization; (5) money on deposit; (6) [THE REAL PROPERTY OF CERTAIN RESIDENTS OF THE STATE TO THE EXTENT AND SUBJECT TO THE CONDITIONS PROVIDED IN (e) OF THIS SECTION; (7)] real property or an interest in real property that is exempt from taxation under 43 U.S.C. 1620(d), as amended; (7) [(8)] property of a political subdivision, agency, corporation, or other entity of the United States to the extent required by federal law; except that a private leasehold, contract, or other interest in the property is taxable to the extent of that interest unless the property is located on a military base or installation and the property interest is created under 10 U.S.C. 2871 - 2885 (Military Housing Privatization Initiative), provided that the leaseholder enters into an agreement to make a payment in lieu of taxes to the political subdivision that has taxing authority; (8) [(9)] natural resources in place including coal, ore bodies, mineral deposits, and other proven and unproven deposits of valuable materials laid down by natural processes, unharvested aquatic plants and animals, and timber. * Sec. 3. AS 29.45.030(j) is amended to read: (j) One motor vehicle for each [PER] household owned by a resident 65 years of age or older on January 1 of the assessment year is exempt either from taxation on its assessed value or from the registration tax under AS 28.10.431. An exemption may be granted under this subsection only upon written application on a form prescribed by the Department of Administration. Nothing in this subsection affects a similar exemption from property taxes granted by a municipality on September 10, 1972. The department shall adopt regulations to implement this subsection. * Sec. 4. AS 29.45.030(m) is amended to read: (m) For the purpose of determining property exempt under (a)(6) [(a)(7)] of this section, the following definitions apply to terms used in 43 U.S.C. 1620(d) unless superseded by applicable federal law: (1) "developed" means a purposeful modification of the property from its original state that effectuates a condition of gainful and productive present use without further substantial modification; surveying, construction of roads, providing utilities or other similar actions normally considered to be component parts of the development process, but that do not create the condition described in this paragraph, do not constitute a developed state within the meaning of this paragraph; developed property, in order to remove the exemption, must be developed for purposes other than exploration, and be limited to the smallest practicable tract of the property actually used in the developed state; (2) "exploration" means the examination and investigation of undeveloped land to determine the existence of subsurface nonrenewable resources; (3) "lease" means a grant of primary possession entered into for gainful purposes with a determinable fee remaining in the hands of the grantor; with respect to a lease that conveys rights of exploration and development, this exemption shall continue with respect to that portion of the leased tract that is used solely for the purpose of exploration. * Sec. 5. AS 29.45.030(n) is amended to read: (n) If property or an interest in property that is determined not to be exempt under (a)(6) [(a)(7)] of this section reverts to an undeveloped state, or if the lease is terminated, the exemption shall be granted, subject to the provisions of (a)(6) [(a)(7)] and (m) of this section. * Sec. 6. AS 29.45.040(f) is amended to read: (f) In this section "disabled veteran" has the meaning given in AS 29.45.050(i)(2) [AS 29.45.030(i)]. * Sec. 7. AS 29.45.050(i) is amended to read: (i) A municipality may by ordinance [APPROVED BY THE VOTERS] exempt from taxation the first $150,000 of the assessed value or, if the ordinance is approved by the voters, the entire assessed value [THAT EXCEEDS $150,000] of real property, including a mobile home whether classified as real or personal property for other municipal tax purposes, owned and occupied as a permanent place of abode by a resident who is (1) 65 years of age or older; (2) a disabled veteran; for purposes of this paragraph, "disabled veteran" means a disabled state resident who (A) is separated from the military service of the United States under a condition that is not dishonorable, whose disability was incurred or aggravated in the line of duty in the military service of the United States, and whose disability has been rated as 50 percent or more by the branch of service in which that resident served or by the United States Department of Veterans Affairs; or (B) served in the Alaska Territorial Guard, whose disability was incurred or aggravated [, INCLUDING A PERSON WHO WAS DISABLED] in the line of duty while serving in the Alaska Territorial Guard, and whose disability has been rated as 50 percent or more; or (3) at least 60 years old and a widow or widower of a person who qualified for an exemption under (1) or (2) of this subsection. * Sec. 8. AS 29.45.295 is amended to read: Sec. 29.45.295. Collection of delinquent taxes on certain governmental property. AS 29.45.300 - 29.45.490 do not apply to property taxable under AS 29.45.030(a)(1)(B) or (C) or to federal property not exempted under AS 29.45.030(a)(7) [AS 29.45.030(a)(8)]. A municipality may bring an action in the superior court to compel payment of property taxes due from the state, municipal, or federal entity if the entity does not pay the amount due within six months after the date that the taxes are due. * Sec. 9. AS 29.45.030(e), 29.45.030(f), 29.45.030(g), 29.45.030(h), 29.45.030(i), and 29.45.030(k) are repealed. * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to read: RESIDENTIAL PROPERTY TAX EXEMPTION TO BE MAINTAINED. Notwithstanding the repeal of AS 29.45.030(e) - (k) by sec. 9 of this Act, a person who, under AS 29.45.030(e) - (k), was entitled to receive the benefit of a real property tax exemption on the day before the effective date of the repeal of those subsections may continue to obtain a real property tax exemption for that real property under AS 29.45.030(e) - (k) as those subsections read on the day before the effective date of their repeal. * Sec. 11. This Act takes effect January 1, 2010." 9:45:33 AM REPRESENTATIVE NEUMAN asked if Representative Thomas's amendment would make the senior exemption optional, whether it's $150,000 or $250,000. REPRESENTATIVE THOMAS replied yes, for the municipalities. 9:46:43 AM REPRESENTATIVE THOMAS, in response to Co-Chair LeDoux, clarified that his amendment would make the senior exemption optional to local governments after two years. CO-CHAIR LEDOUX related her understanding then that [with the passage of this legislation and the proposed amendment] the senior exemption would be an unfunded mandatory exemption for the next two years and then become optional. REPRESENTATIVE THOMAS replied yes. CO-CHAIR FAIRCLOUGH surmised that Representative Thomas intends to provide notice to municipalities to take over local control and manage the exemption. 9:47:30 AM REPRESENTATIVE CISSNA mentioned that as long as she is able she wants to pay her property taxes. If [the amendment] is adopted, would it mandate that a local community make the senior exemption mandatory, she asked. REPRESENTATIVE THOMAS indicated that seniors could opt to continue to pay their property tax. 9:48:53 AM CO-CHAIR LEDOUX related her understanding that currently the senior exemption is mandatory on the first $150,000. She asked if it's the intention of the amendment not to increase the amount of the exemption, but simply to make it optional within two years. REPRESENTATIVE THOMAS clarified that his amendment would make the senior exemption [at whatever level specified in the legislation] a local option after two years. 9:50:10 AM CO-CHAIR FAIRCLOUGH noted that she had provided the committee with a visual regarding the cost shifting that occurs when there are properties that receive exemptions. She then informed the committee that in Alaska the average full value of a home is $113,000. Once the oil and gas value is removed from that average, the average value of a house amounts to $91,000. She highlighted that her documents list the average price of homes on the assessed value in various communities. 9:53:16 AM REPRESENTATIVE NEUMAN suggested that the sponsor be given time to review the proposed amendment and provide comments at the next meeting on HB 60. 9:53:24 AM REPRESENTATIVE THOMAS offered to speak with the sponsor. He then mentioned the concern [under the current situation] in which the burden is placed on younger people. 9:54:41 AM CO-CHAIR FAIRCLOUGH requested that the sponsor research what happens in a down-turn market. [HB 60 was held over.]
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