Legislature(2001 - 2002)
05/09/2002 08:35 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 4-FIREFIGHTER/EMT MUNI. PROP. TAX EXEMPTION [Contains discussion of HB 6.] CO-CHAIR MEYER announced that the first order of business would be CS FOR SENATE BILL NO. 4(RLS) am, "An Act relating to optional exemptions from municipal property taxes on residential property and limiting an optional exclusion or exemption to the assessed value of $10,000 for a residence in a municipality with a total bonded indebtedness that equals or exceeds $15,000 multiplied by the number of residents in the municipality; and providing for an effective date." Number 0114 REPRESENTATIVE SCALZI moved to adopt Version 22-LS0190\E, Cook, 5/7/02, as the working document. No objection was stated. [Version E was treated as adopted.] CO-CHAIR MEYER informed the committee that Version E raises the taxation exemption amount from $5,000 to $10,000. He reminded the committee that at the last hearing the committee had been discussing Amendment 2, which was ultimately withdrawn. Amendment 2 reads as follows: Page 1, line 13 - page 2, line 2 Delete "in a municipality with a level of total bonded indebtedness that equals or exceeds $15,000 multiplied by the number of residents in the municipality." SENATOR GENE THERRIAULT, Alaska State Legislature, testified as the sponsor of SB 4. He pointed out that the Department of Revenue put together a spreadsheet [regarding the impact of including or excluding the North Slope Borough]. Senator Therriault turned to the fiscal notes. The fiscal notes were originally written such that if the borough increased the property tax exemption and suffered a loss, [the fiscal notes showed both] the amount the borough would have to increase the mill rate to merely recoup the loss and the potential impact of that to the state treasury. The calculation to merely recoup the loss is fairly minimal. However, the oil and gas properties of the North Slope Borough are vast; the borough assessed valuation is over $10 billion. The Senate was concerned that if the additional $5,000 property tax exemption was granted, the mill rate would be raised to completely erode the aforementioned exemption. Therefore, the property owner would pay the same tax bill and [the borough] would more than recoup the loss from the property tax. Senator Therriault explained: That slight increase in the millage rate that it would take to erode that and make it net zero to you the residential property taxpayer - when you multiple that by the $10 billion of assessed valuation, you can see in the last column there [of the spreadsheet] the potential impact. ...I think he [Mr. Dickinson, Department of Revenue] did the calculation [as] if you made the entire $15,000 of property tax exemption net zero. The impact to the state treasury from the North Slope Borough alone would be over $11 million. SENATOR THERRIAULT said that if the calculation was made on the complete $15,000, then adding $5,000 would be one-third of that. Under the companion bill, HB 6, with an increase in the millage rate to make the net impact to the residential payer net zero, the impact would potentially be over $100 million to the state treasury. Senator Therriault pointed out that places such as Fairbanks, Kenai, and Valdez have a mix of residential property and small business owners, which help keep the millage rate in check. Such a dynamic doesn't really exist in the North Slope Borough because so much of their property tax base consists of oil and gas properties. Therefore, there isn't pressure from the local community to keep the millage rate in check. Number 0583 REPRESENTATIVE GUESS inquired as to the difference between the fiscal note for the new valuation versus the fiscal note for the alternative method. SENATOR THERRIAULT said it was difficult to decide what to put on the fiscal note because the decision isn't controlled by the legislature [but rather by the local government]. REPRESENTATIVE GUESS requested that the Department of Revenue explain the model presented via the department's spreadsheet entitled, "Effect on Oil Gas Property Tax (AS 43.56) Revenues from Using Higher Mill Rates to Recoup the Effect of Certain Property Tax Exemptions." Number 0741 DAN DICKINSON, Director, Tax Division, Department of Revenue, testified via teleconference. He related his understanding that the committee wanted him to focus on the different numbers in the last column of the spreadsheet. He explained that if the alternative method, excluding the North Slope Borough, was used with the current version of SB 4, then the $1.4 million would be used in the fiscal note. However, if the language was changed such that the North Slope Borough could take advantage of this, then the fiscal note would increase to $12.7 million. Mr. Dickinson directed attention to the third block of text down on the spreadsheet and pointed out that it's based on an additional $5,000 exemption, which has be recouped against the rest of the [value] of the home, $85,000. He noted that he used the assumption of $100,000 value for the home. Therefore, in that sense it already includes the $10,000 being exempt. If the $100,000 for the average home is wrong, then the correct average home [valuation] will drive the figures. For example, if the average home is worth less, then the fiscal note impacts will be driven up because the mill rate will have to be increased more to offset the $5,000 against the smaller base. Mr. Dickinson recalled Senator Therriault's earlier point that the actual base of residences in the North Slope Borough is fairly small. MR. DICKINSON turned to column B of the spreadsheet and pointed out that the effect of the current $10,000 exemption only amounts to $2.3 million, which suggests that there are only about 237 homes that are able to take advantage of the full amount of the credit. Number 0976 REPRESENTATIVE GUESS requested that Mr. Dickinson walk her through the entire spreadsheet and the assumptions used for the current fiscal note and the alternative, but only relating to SB 4. MR. DICKINSON began with column A, which illustrates that the total assessed value in the four boroughs taking advantage of the $10,000 exemption. The numbers illustrate that the North Slope is three times the size of the Fairbanks or Kenai Peninsula, and one-tenth of the size of Valdez. In response to Representative Guess, Mr. Dickinson confirmed that it is all property, but he wasn't sure if the personal property was included in those figures. However, the numbers include residential, commercial, and oil and gas property. Column B specifies the value of the $10,000 exemption that those municipalities/boroughs are currently taking, which is the effect on their tax base. Therefore, the current tax base is the difference between [column A and column B]. Mr. Dickinson related his belief that the total assessed value includes the senior citizens' and the disabled veterans' exemption. MR. DICKINSON continued with column D, which expresses the mill rate as a percentage. Column E merely multiplies the current tax base by the mill rate which results in the amount of revenue a particular municipality raises from their property taxes. Column F, which is the first place where there is a difference between SB 4 and HB 6, determines how much the exemption would be if it were $15,000 instead of $10,000. Although it's not going to be a precise comparison, as an order of magnitude it's a reasonable way to determine the increase in the exemption that would occur if the exemption was raised to $15,000 under SB 4 or $40,000 under HB 6. Column G simply takes the new exemption and subtracts it from the total assessed value listed in column A and the result is the new tax base given the new exemption rate. The new tax base is then divided by the amount of revenue that would be raised under the current tax base in order derive a mill rate [as expressed in column H]. He pointed out that the mill rate increases in all cases because when there is a smaller base, a slightly higher percentage rate must be charged in order to result in the same [revenue]. Column I subtracts the old mill rate from the new rate in order to determine the incremental rate, that is how much additional millage will be charged. Column J specifies the tax base, which is from AS 43.56 properties. The AS 43.56 properties base in Fairbanks, Kenai, and Valdez is significantly less than the total assessed value whereas it doesn't change much for the North Slope. The new incremental rate is then multiplied by the tax base in order to determine the effect on the AS 43.56 property base from the higher mill rate. Mr. Dickinson posed a situation in which the state tax is at 20 mills but allows a credit for any local property taxes. In such a situation, if local property taxes increase, the state's revenue from this source decreases dollar for dollar. For SB 4, in summary, if all four boroughs are included, [the effect on AS 43.56 collections under the new mill rate] would amount to $238,000. If the $21,000 effect from the North Slope Borough is subtracted, the result is $216,000. He noted that these [figures] were rounded to the nearest $100,000. Number 1441 REPRESENTATIVE KERTTULA inquired as to why a homeowner property exemption automatically places the impact against the oil and gas property. Why can't that impact be split, she asked. MR. DICKINSON answered that the statute requires that a locality tax its residential, commercial, and oil and gas properties at the same rate. In further response to Representative Kerttula, Mr. Dickinson said he didn't know precisely what other states do. He said that Alaska is unusual because it has a single mill rate and allows for a credit for the local municipalities. He related his belief that typically one would find states in which the legislature would establish one rate for commercial property and one rate for industrial property, and often the farming property is given a higher exemption/lower rate. "The point there is they are looking at the state as a whole and what you don't have is a town or a municipality that's fortunate enough to have a very large industrial complex in it, asking that complex to bear the entire burden and exempting the homeowners," he explained. However, a state, as Alaska illustrates, can decide that one industry can bear the burden. In response to Co-Chair Meyer, Mr. Dickinson agreed that this has been the situation in Alaska for some time, since the early 1970s before the Trans-Alaska Pipeline System (TAPS) was put in place. In the early 1970s, the local mill rates were 7-8 mills and thus the state was picking up approximately two-thirds of the tax, not the much smaller portion that it is now. CO-CHAIR MEYER surmised then that a community such as Valdez could exempt all the residents from any taxes and merely tax all the commercial properties. MR. DICKINSON agreed, and pointed out that roughly two-thirds of Valdez' property value resides in the marine terminal. The maximum rate by a different law is 30 mills. Therefore, if Valdez simply raised the mill rate to 30 mills and exempted all residential property, the budget of the City of Valdez would remain about the same. Number 1711 MR. DICKINSON continued the review of the spreadsheet and turned to the alternative method, which begins with a column for the current mill rate. The next column, column E, specifies the amount of the proposed exemption. He said that the title for column E, "Amount saved by each homeowner taking exemption," is inaccurate. Column F is the amount being saved by a homeowner taking the additional exemption, assuming that there is no change in the mill rate. The next column specifies that after the $15,000 exemption is utilized on a $100,000 home, $85,000 worth of [value] would be left to tax. Therefore, the question is what mill rate would be necessary so that the homeowner notices no difference between taking the exemption and paying a higher mill rate. Mr. Dickinson said that no municipality can design a system to accomplish the aforementioned with a single mill rate because the higher the value of the home, the easier it will be to make up the $5,000 exemption. "In other words, if you have a fixed exemption but the tax is calculated as a percentage, you're going to have to make the average homeowner come out ... neutral - you can't do it for every homeowner," he specified. Mr. Dickinson returned to the question of how much money is necessary against the $85,000 of value left in the home to make up [the difference in the exemption]. The answer is an incremental nine-tenths of a mill, he said. That amount is determined by dividing the amount saved, [the estimated value of the proposed exemption to the homeowner], into the amount that remains taxable. The new incremental mill rate is multiplied by the AS 43.56 tax base. Because the incremental mill rates are higher than the current fiscal note analysis, all of the values increase. Therefore, if the AS 43.56 tax base is large, the amount significantly increases as illustrated by the North Slope Borough's number. All the numbers increase, which is the result of the amount of the incremental mill rate in column I and the amount in the tax base. When including all four boroughs under the alternative method, the effect on AS 43.56 collections would be $12.7 million whereas without the North Slope Borough it would amount to almost $1.4 million. He noted that these are maximums. Furthermore, under HB 6 and its $40,000 exemption there would be other limitations with regard to the North Slope Borough and possibly Valdez. CO-CHAIR MEYER asked if the $200,000 fiscal note attached to the current bill would remain accurate. MR. DICKINSON remarked that "as-if" exercises are difficult to characterize as good or bad. Number 2050 REPRESENTATIVE KERTTULA inquired as to why the homeowner has to be held harmless. MR. DICKINSON explained that if the exemption were increased to $5,000, the homeowner has now had the benefit. The alternative method analysis assumes that the $5,000 exemption wasn't used to provide a benefit to the homeowner but is going to be used to hold the homeowner harmless and raise additional revenue from the AS 43.56 property. Although the technical term may be "hold harmless," it's actually not allowing the advantage of the $5,000 exemption to flow to the [homeowner] but rather raising the average tax so that there is no notice that there was an exemption. SENATOR THERRIAULT posed a situation in which an individual's tax bill is $100. With an additional exemption, the tax bill decreases to $80 and the borough raises the mill rate. Therefore, the borough gives the individual $20 and then takes it back [via the mill rate]. The same is true for every property payer in the borough. REPRESENTATIVE KERTTULA identified the [dilemma] as how to keep [the borough] from getting the $20 back from the homeowner. SENATOR THERRIAULT answered that the borough raises the mill rate that it controls so that by "taking advantage of this thing, you don't see any [lessening] of your property tax." That is, the overall mill rate has been raised such that it's net zero to [the homeowner]. However, in the process of raising the overall millage rate on all properties, including oil and gas properties, a large amount of money has been swept in [to the borough] from the state treasury. REPRESENTATIVE KERTTULA surmised then that "net zero" to the homeowner means that the homeowner gets nothing for [the exemption]. MR. DICKINSON replied yes. He explained, "The math is designed so that the average homeowner sees no net effect." However, the amount of revenue increases and thus there may be more services, et cetera. Mr. Dickinson reiterated that this is a maximum effect, but noted that [the effect] could be less depending upon the reaction of each community. Number 2272 REPRESENTATIVE SCALZI turned to column I and pointed out that the highest millage of the four communities is the North Slope Borough with a rate of 0.111 percent. However, the effect to personal property in the North Slope Borough under the $5,000 exemption wouldn't be as much as the other municipalities. "And having a larger tax base of $10 billion, it would seem that that number would be the lowest instead of the highest, as far as the increased millage. Because you don't need that much in the North Slope to neutralize the effect as far as the amount of homes that are up there," he said. He inquired as to why the 0.111 percent is the highest. MR. DICKINSON explained that the analysis is based on one $100,000 home in the North Slope Borough. Therefore, the size of the base doesn't matter in this analysis for the alternative method. He explained that the 0.111 percent is derived because $94 on $85,000 must be recouped. The incremental mill rate to accomplish the aforementioned is driven by the fact that the North Slope Borough's mill rate is the highest of the three. REPRESENTATIVE SCALZI said that the analysis seems inaccurate if it's based on one individual home rather than the true amount of homes for which this would be applicable. MR. DICKINSON reiterated that these are "as-if" analyses. Although he said he is very comfortable with the fiscal note analysis, which looks at the total revenue, he acknowledged that looking at this with only one home could be a shortcoming of the [alternative method] analysis. REPRESENTATIVE SCALZI noted his belief that basing the analysis on one home is inaccurate. MR. DICKINSON explained that the result is that [the North Slope Borough] would raise $11 million more in new revenue save the the $20,000 the borough would keep so that the one homeowner wouldn't feel the effect of the increased exemption. Mr. Dickinson reiterated that the fiscal note method looks at the actual size of the exemption as it's spread across all homes. REPRESENTATIVE SCALZI posited that if $20,000 is all that's necessary to raise [the mill rate to zero out the exemption], then the $11 million isn't necessary. MR. DICKINSON agreed, and clarified that the $11 million doesn't suggest that the revenue is being replaced but rather it ensures that the average homeowner doesn't notice the effect of the exemption. Number 2552 SENATOR THERRIAULT surmised that Representative Scalzi's question assumes that the local government would only raise the millage to recoup the lost revenue suffered by allowing the exemption. He returned to his $100 tax bill example from which the local government suffers a $20 loss in revenue due to the exemption. Therefore, the question becomes: how much would the local government have to raise the millage rate across all property classes in order to recoup that lost revenue. Across all [property classes] the individual with the $100 tax bill would [receive the $20 exemption] and the local government would take back $1 from that individual and the other $19 from all the businesses. Senator Therriault pointed out that local government isn't merely trying to recoup the lost revenue [from this exemption]. The local government is also trying to make it net zero to the property owner and thus the mill rate will be raised high enough that the $20 exemption the individual receives will be taken back. Furthermore, that same mill rate will be placed on all the businesses too. In Fairbanks and Kenai, there isn't much motivation to do that because [this will impact] many residential property owners and small businesses. However, on the North Slope Borough almost all the property is oil and gas property, which means that every dollar that is collected from those oil and gas properties is a dollar from the state treasury. Number 2686 REPRESENTATIVE GUESS surmised that the first analysis answers the question of how much the mill rate would need to be increased in order to keep revenues harmless, while the second analysis answers how much the mill rate would need to be increased in order to keep residential property taxpayers harmless. SENATOR THERRIAULT agreed. MR. DICKINSON agreed, but specified that the second analysis refers to the average homeowner. REPRESENTATIVE GUESS pointed out that this [legislation] extends a current program, and inquired as to the reaction of municipalities to this program. SENATOR THERRIAULT answered that the current millage rates tell the story. Those communities with tremendous oil and gas properties are at the cap and thus divert dollars from the state treasury. REPRESENTATIVE GUESS noted, "And those who wouldn't want a sales tax." Number 2761 REPRESENTATIVE GUESS turned to the alternative method analysis and related her understanding that the numbers are based on the entire $15,000 exemption rather than the difference. Therefore, she questioned why the final analysis doesn't divide the final numbers by three because the actual difference between the $10,000 and $15,000 exemption is one-third. SENATOR THERRIAULT said that he misspoke earlier with regard to the amounts in the final column. The amounts in the final columns are calculated only on the additional $5,000. MR. DICKINSON agreed. "Again, the numbers are going to show up both in column E and column G ... it's the total effect from adding the $5,000 to what is there." SENATOR THERRIAULT surmised then that amounts wouldn't be divided by three. Using the $15,000 in the calculations would mean that the property owner would now lose the benefit from the $10,000 for years and years, which he didn't believe was likely to happen. REPRESENTATIVE GUESS inquired as to why this isn't an evaluation of the entire $15,000 [exemption]. SENATOR THERRIAULT said it's not. He explained that the $85,000 is present because the value of the home that still remains for tax purposes is necessary so that there could be something to apply the millage rate. REPRESENTATIVE GUESS pointed out that the first evaluation refers to the change in the millage rate while [the second evaluation] refers to the impact to the entire millage rate. Those are two different questions. MR. DICKINSON highlighted that column I, in both cases, is the incremental mill rate required to solve the question. REPRESENTATIVE GUESS inquired as to how that can be the case when the current evaluation of a home is $90,000. She said that she didn't understand how the entire $15,000 is being evaluated. MR. DICKINSON pointed out that column D [under the alternative method] already includes the effect of the $10,000. If $15,000 were placed in column E [under the alternative method], then the value to the proposed homeowner would be the total exemption, which would be roughly three times the numbers specified. Then the homeowner's taxes would be raised to the point that the new taxes under this analysis would take away the $10,000 they currently have. Number 2967 REPRESENTATIVE GUESS announced that she understood now. If there is concern with regard to the oil and gas property taxes, why didn't the Senate see the need to exclude Valdez as well, she asked. SENATOR THERRIAULT recalled that Valdez is already at the maximum [cap]. He said that he didn't believe Valdez could use the mechanism in the same manner. Furthermore, the oil and gas properties in Valdez are magnitudes less than those in the North Slope Borough. MR. DICKINSON informed the committee that there is an informal maximum of 20 mills. That maximum is informal because up to 20 mills, the companies aren't really going to ... TAPE 02-26, SIDE B MR. DICKINSON pointed out that in law [the maximum] is 30 mills. In the area between 20 mills and 30 mills, things become more complex. He noted that there is some debate in the Department of Revenue and the Department of Law over the [following interpretation]. If the City of Valdez were to go to a mill rate of 21, the credit would eat into the amount the state receives from the pipeline in the unorganized boroughs because most of that property is pipeline property. In other words, a taxpayer who has property inside and outside Valdez could take the credit outside of Valdez against the Valdez area. Although part of that would be offset the way it is now, an organization that has spill clean up equipment, for example, only in Valdez would feel the pain when Valdez rose above 20 mills. Mr. Dickinson indicated that [Valdez] could [increase its mill rate]. He agreed with Senator Therriault's observation that the mill rate, in general, seems to be directly proportional to the amount of oil and gas in that jurisdiction. Number 2941 REPRESENTATIVE GUESS continued with the assumption that no one goes over 20 mills and pointed out that the North Slope Borough only has a small ways to go [before reaching 20 mills]. Furthermore, the assumption of 0.111 percent [under the alternative method] would put the North Slope Borough's mill rate to 30. MR. DICKINSON clarified that the North Slope Borough would increase to about 20 mills [under SB 4]. In the HB 6 analysis Valdez would be at 30 mills. Mr. Dickinson pointed out that there are other factors going on in the North Slope. He related his belief that the bonding and rating agencies are probably a major influence on the mill rate. REPRESENTATIVE GUESS asked why the Senate didn't send over a more accurate fiscal note if the reason for excluding the North Slope Borough was because of the potential problem. She estimated that the fiscal note should have been about $1.4 million rather than $200,000. SENATOR THERRIAULT said that the fiscal note could have been an [indeterminate] with pages of explanation because of the many dynamics to evaluate. REPRESENTATIVE GUESS passed out an amendment for the committee to review. Number 2812 SARA FELIX, Assistant Attorney General, Civil Division (Juneau), Department of Law, informed the committee that she was present in place of Marjorie Vandor. REPRESENTATIVE GUESS highlighted the question as to whether the exclusion of one specific borough would raise constitutional concerns. MS. FELIX noted that the bill doesn't specifically exempt a borough, [although that may be the effect]. Ms. Felix reported that it seems that the analysis under an equal protection challenge would be judged under the lowest level of scrutiny. As long as the state has a reasonable basis for having the distinction in the bill, it should survive an equal protection [challenge]. She pointed out that this is an optional exemption. "As long as there's a reasonable state interest underlying this bill and there's no discriminatory intent, ... we think that it would be Okay," she said. CO-CHAIR MEYER asked if Ms. Felix believes there is discriminatory intent as the bill is currently drafted. MS. FELIX answered that she had no reason to believe such. She clarified that she's merely stating the standard in the case law she reviewed. REPRESENTATIVE KERTTULA asked if there has been any situation in which different rates have been used for different properties. MS. FELIX pointed out that Alaska Statute says that oil and gas property can't be taxed at a higher rate than other property. Within that constraint, Ms. Felix supposed that differential tax rates could be established as long as there was no discrimination against oil and gas property. In further response to Representative Kerttula, Ms. Felix agreed that it's within the legislature's purview to decide to change the statute specifying that oil and gas property can't be taxed at a higher rate than other property. Number 2645 REPRESENTATIVE GUESS moved that the committee adopt Amendment 1, which reads as follows: Page 1, line 11 to page 2, line 2, Delete "exclusion or exemption authorized by this subsection may not exceed the assessed value of $10,000 for any one residence in a municipality with a level of total bonded indebtedness that equals or exceeds $15,000 multiplied by the number of residents in the municipality. Otherwise, an" Page 2, lines 6-7, Delete ";or (2) the assessed value of $10,000" REPRESENTATIVE SCALZI objected. REPRESENTATIVE GUESS explained the she didn't like, as a policy matter, excluding areas. The current law [for the existing exemption] extends to all boroughs, and therefore she said she believes that an extension of the exemption should be to all boroughs. REPRESENTATIVE SCALZI announced his agreement, in principle, with the amendment. Furthermore, he noted that he wasn't comfortable with the [fiscal] analysis. However, he deferred to the experts in the taxation department with regard to their comments that [including the North Slope Borough] would potentially create a significant impact to the state treasury. Upon learning that SB 4 has a committee referral to the House Finance Committee, Representative Scalzi announced that he would object to moving the [current version] of the bill. CO-CHAIR MEYER noted his agreement with Representative Scalzi's comments. He related his belief that "this" won't have an adverse impact on those living in the North Slope Borough, although it could potentially have a large impact on the state treasury. REPRESENTATIVE KERTTULA questioned why homeowners in one part of the state should be allowed to pay less, held harmless, than other homeowners. She mentioned her concern of a potentially discriminatory effect with this legislation. Therefore, she announced her support of the amendment. Number 2439 SENATOR THERRIAULT encouraged the committee to not lose sight of the volunteer section, which would accrue to the North Slope Borough. Furthermore, the [volunteers] would keep the current $10,000 exemption. Senator Therriault predicted that if this amendment is successful, then this legislation would [die]. REPRESENTATIVE GUESS asked if the legislation would survive if Section 1 was deleted. SENATOR THERRIAULT replied that he didn't know. REPRESENTATIVE MURKOWSKI agreed with the sponsor that there is great value [with the volunteer section of the legislation]. Although she acknowledged the concern everyone should have with the potential impact to the state treasury, she also agreed with Representative Kerttula. She, too, asked whether the section of the bill that everyone agrees on could move forward [without the other section]. Number 2277 REPRESENTATIVE GUESS withdrew Amendment 1. She, then, moved that the committee adopt conceptual Amendment 2, which reads as follows: Delete Section 1. REPRESENTATIVE SCALZI objected. SENATOR THERRIAULT pointed out that Section 1 is an optional tool for communities. This legislation was [initially developed] from the property tax issue that was on the ballot at the last general election. This legislation attempts to provide local governments with a tool that would save [homeowners] on their property tax by implementing a sales tax. Therefore, he didn't support eliminating that tool on the basis of the stated concern. Senator Therriault noted his opposition to Amendment 2. A roll call vote was taken. Representatives Murkowski, Guess, and Kerttula voted for the adoption of conceptual Amendment 2. Representatives Scalzi, Morgan, and Meyer voted against the adoption of conceptual Amendment 2. Therefore, Amendment 2 failed by a vote of 3:3. Number 2152 REPRESENTATIVE GUESS moved that the committee adopt Amendment 1. REPRESENTATIVE SCALZI objected. Representative Scalzi said that he intended to meet with Steve Van Sant, State Assessor, Department of Community & Economic Development, to review the analysis because he remained uncomfortable with it. He explained that if [he remained uncomfortable] with the analysis after talking with Mr. Van Sant, then he would offer the same amendment to the House Finance Committee. CO-CHAIR MEYER pointed out that there is also the opportunity to deal with this on the floor. REPRESENTATIVE KERTTULA interjected that this is where the work should be done on this legislation. She reiterated her belief that it's not fundamentally correct to discriminate against residents of the state. REPRESENTATIVE SCALZI agreed that the work should be done in this committee. "My problem is that in erring, I would rather err conservatively on not reducing the state coffers if the analysis is correct," he said. He said he didn't want to slow the bill, and there is the opportunity to address this in the House Finance Committee and on the House floor if [the analysis is incorrect]. The committee took a brief at-ease from 9:45 a.m. to 9:47 a.m. Number 1998 REPRESENTATIVE GUESS withdrew Amendment 1. She moved to rescind the committee's action in failing to adopt conceptual Amendment . There being no objection, the committee's action was rescinded. REPRESENTATIVE GUESS moved that the committee adopt conceptual Amendment , which reads as follows: Delete Section 1. There being no objection, conceptual Amendment  was adopted. REPRESENTATIVE GUESS suggested that the committee zero out the fiscal note because of the minimal fiscal impact and because it could help the legislation bypass the House Finance Committee. SENATOR THERRIAULT said that there is still going to be a fiscal note of some magnitude because of the volunteer exemption. CO-CHAIR MEYER agreed that the legislation should go to the House Finance Committee. Number 1870 REPRESENTATIVE MURKOWSKI moved to report HCS CSSB 4, Version 22- LS0190\E, Cook, 5/7/02, as amended out of committee with individual recommendations and the accompanying fiscal note. There being no objection, HCS CSSB 4(CRA) was reported from the House Community and Regional Affairs Standing Committee.