Legislature(2023 - 2024)BARNES 124

04/06/2023 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change Back to 8 AM --
Heard & Held
Moved CSHB 69(CRA) Out of Committee
-- Public Testimony <Time Limit May Be Set> --
Moved HB 123 Out of Committee
-- Public Testimony <Time Limit May Be Set> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
            HB  70-MUNICIPAL PROPERTY TAX EXEMPTIONS                                                                        
8:03:50 AM                                                                                                                    
CHAIR MCCORMICK announced that the  first order of business would                                                               
be HOUSE  BILL NO. 70, "An  Act relating to property  exempt from                                                               
municipal taxation."                                                                                                            
8:04:18 AM                                                                                                                    
REPRESENTATIVE  FRANK TOMASZEWSKI,  Alaska State  Legislature, as                                                               
prime  sponsor,  thanked the  committee  for  hearing HB  70  and                                                               
introduced his staff to give an overview of the bill.                                                                           
8:04:43 AM                                                                                                                    
MICHAELLA  ANDERSON,  Staff,  Representative  Frank  Tomaszewski,                                                               
Alaska  State Legislature,  gave a  brief  overview of  HB 70  on                                                               
behalf  of  Representative  Tomaszewski,   prime  sponsor.    She                                                               
paraphrased  the sponsor  statement  [included  in the  committee                                                               
packet] which read as follows [original punctuation provided]:                                                                  
          House  Bill 70  adds new  language exempting  non-                                                                    
     profits from municipal  taxation on certain properties.                                                                    
     This  includes parking  lots owned  by non-profits  and                                                                    
     used for  parking or  other uses  free of  charge. This                                                                    
     also includes property of a store operated by a non-                                                                       
       profit that distributes food, shelter, clothes, or                                                                       
          health care for below market value or free.                                                                           
     Additionally,   this  maintains   a  non-profit's   tax                                                                    
     exemption if  they rent out  their property  to another                                                                    
          The Fairbanks  Community Food Bank was  founded in                                                                    
     1982  in   the  midst  of  a   recession.  People  were                                                                    
     struggling to put  food on their table,  but stores had                                                                    
     an excess  and food  was going to  waste. While  in the                                                                    
     first  year  they  collected   and  distributed  a  few                                                                    
     thousand  pounds of  food to  a couple  hundred people,                                                                    
     they  now  collect  and distribute  approximately  five                                                                    
     million pounds of food.                                                                                                    
          Food banks and other  charitable non-profits are a                                                                    
     pillar of  our communities. They help  our communities'                                                                    
     least  fortunate   when  they  need  basic   goods  and                                                                    
     services.   Of   course,   many  nonprofits   turn   to                                                                    
     fundraising and  facility rentals to keep  their lights                                                                    
     on  and doors  open  so they  can  continue to  provide                                                                    
     their essential services.                                                                                                  
          This  bill aims  to support  our non-profits  in a                                                                    
     time  of  economic  uncertainty   in  our  state.  With                                                                    
     revenues being down and  permanent fund dividends being                                                                    
     cut creating  a regressive tax on  our least fortunate,                                                                    
     we must help those who help those in need.                                                                                 
MS. ANDERSON pointed out locations  on a service map [included in                                                               
the committee packet], showing all  areas the Fairbanks Community                                                               
Food Bank had assisted with "food through shipping."                                                                            
8:06:38 AM                                                                                                                    
REPRESENTATIVE  HIMSCHOOT asked  if Representative  Tomaszewski's                                                               
office  had  spoken  with  any  local  municipalities  about  the                                                               
possible impact of HB 70 on local revenue.                                                                                      
MS.  ANDERSON  replied  that Representative  Tomaszewski's  staff                                                               
have  talked  to  the  Fairbanks   North  Star  Borough  and  are                                                               
currently working with the borough  on potential minor changes in                                                               
the bill language that would work  better.  She noted she had not                                                               
reached out to any other municipalities.                                                                                        
REPRESENTATIVE  HIMSCHOOT questioned  what the  potential impacts                                                               
to education funding would be in  terms of how the cap is related                                                               
to property tax.                                                                                                                
MS. ANDERSON replied  that she can provide the answer  at a later                                                               
REPRESENTATIVE  HIMSCHOOT presumed  that  this would  be a  state                                                               
statute governing what happens at  the local level while removing                                                               
some of the  tax base at the local level,  and she inquired about                                                               
a tax reimbursement.                                                                                                            
MS. ANDERSON replied  that staff can do research  and provide the                                                               
committee with clarification at a later date.                                                                                   
8:08:35 AM                                                                                                                    
REPRESENTATIVE   TOMASZEWSKI  explained   that   the  food   bank                                                               
traditionally  has  had no  property  taxes;  this would  be  new                                                               
revenue from the municipality.                                                                                                  
8:09:16 AM                                                                                                                    
REPRESENTATIVE  HIMSCHOOT   commented  that  she   favored  local                                                               
control.  She stated she will have to look into HB 70 more.                                                                     
8:09:41 AM                                                                                                                    
REPRESENTATIVE RUFFRIDGE,  [regarding Section  1 of HB  70, which                                                               
lists  property  exempt  from taxation],  referenced  [subsection                                                               
(3)], beginning on page 2, line 16, which read:                                                                                 
     (3) property used exclusively for nonprofit religious,                                                                     
    charitable,   cemetery,    hospital,   or   educational                                                                     
REPRESENTATIVE RUFFRIDGE  questioned why the  additional language                                                               
[proposed  on  page 3,  line  19,  through  page  4, line  2]  is                                                               
necessary and not covered already by subsection (3).                                                                            
MS. ANDERSON replied that the intent  of the added language is to                                                               
make  explicit  in statute  that  the  other instances  would  be                                                               
8:10:43 AM                                                                                                                    
REPRESENTATIVE   MCCABE  asked   Representative  Tomaszewski   to                                                               
confirm  that  the  City  of  Fairbanks  is  trying  to  tax  the                                                               
foodbank, which does not make money.                                                                                            
REPRESENTATIVE TOMASZEWSKI  responded that  the food  bank brings                                                               
in food  donated by  many organizations and  gives the  food away                                                               
for free.                                                                                                                       
8:12:04 AM                                                                                                                    
MS.  ANDERSON  clarified  to  Representative  McCabe  it  is  the                                                               
Fairbanks North Star Borough, not just the City of Fairbanks.                                                                   
8:12:11 AM                                                                                                                    
REPRESENTATIVE MCCABE asked  for clarity that the  food bank does                                                               
not have  any income to  speak of other  than what is  donated to                                                               
them, but under HB 70, it would  have to find a source of revenue                                                               
to pay taxes to the Fairbanks North Star Borough.                                                                               
REPRESENTATIVE TOMASZEWSKI  replied he did not  know about income                                                               
sources; mostly [food  banks] work on grants and  do not generate                                                               
a lot of money.                                                                                                                 
8:13:00 AM                                                                                                                    
MS. ANDERSON gave  the sectional analysis for HB  70 [included in                                                               
committee  packet] which  read as  follows [original  punctuation                                                               
         Section 1: Amends AS 29.45.0303(a) to add new                                                                          
     subsections (11) and (12)                                                                                                  
          (11): Adds parking lots                                                                                               
               (A) owned by organizations incorporated                                                                          
          under state law being exempt under 26 U.S.C.                                                                          
               (B) that is used for parking or other use                                                                        
               free of charge                                                                                                   
          (12): Adds  real and personal property  of a store                                                                    
          operated   by  organizations   incorporated  under                                                                    
          state law  being exempt under 26  U.S.C. 501(c) if                                                                    
          the store                                                                                                             
          (A) deals with exclusively donated inventory                                                                          
               of food, shelter, clothes, or health care                                                                        
          distributed at no cost to needy individuals                                                                           
          (B) sells merchandise below market value to                                                                           
               support a literacy program or a program                                                                          
          providing needy persons with food, shelter,                                                                           
               clothes, or health care free of charge.                                                                          
     Section 2: Amends AS 29.45.030  to add a new subsection                                                                    
     (o)  stating  organizations   exempt  from  (a)(11)  or                                                                    
     (a)(12) may lease property and still qualify if                                                                            
          (1):  the  leasing  organization  is  incorporated                                                                    
          under  state  law  being exempt  under  26  U.S.C.                                                                    
          501(c)  and that  organization  uses the  property                                                                    
          for an exempt activity under (a)(11) or (12)                                                                          
          (2):  the lease  payments are  not the  product of                                                                    
          the owner's main profit motive                                                                                        
          (3):   The  amount   charged  is   incidental  and                                                                    
          reasonable for the exempt use  of the property not                                                                    
          exceeding   operational   requirements   for   the                                                                    
8:15:00 AM                                                                                                                    
REPRESENTATIVE HIMSCHOOT  asked for  understanding on  whether it                                                               
is a local decision to tax a parking lot.                                                                                       
MS.  ANDERSON   offered  her  understanding   it  is   under  the                                                               
discretion of local control.                                                                                                    
[HB 70 was held over.]                                                                                                          

Document Name Date/Time Subjects
HB 70 Fiscal Note CCED.pdf HCRA 4/6/2023 8:00:00 AM
HCRA 4/13/2023 8:00:00 AM
HB 70