Legislature(2005 - 2006)CAPITOL 124

03/31/2005 01:00 PM House MILITARY & VETERANS' AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 208(MLV) Out of Committee
Heard & Held
Bills Previously Heard/Scheduled
HB 212-PROPERTY TAX EXEMPTIONS FOR SENIORS/VETS                                                                               
1:43:57 PM                                                                                                                    
CHAIR LYNN  announced that the  final order of business  would be                                                               
HOUSE  BILL  NO.  212,  "An   Act  relating  to  exemptions  from                                                               
municipal  property taxes  for  certain  primary residences;  and                                                               
providing for an effective date."                                                                                               
REPRESENTATIVE  THOMAS  moved  to  adopt CSHB  212,  Version  24-                                                               
LS0684\F, Cook,  3/31/05, as the  working document.   There being                                                               
no objection, Version F was before the committee.                                                                               
REPRESENTATIVE  THOMAS,  speaking  as  the  sponsor  of  HB  212,                                                               
explained  that current  law mandates  that  senior citizens  and                                                               
disabled veterans  are exempt  from the  first $150,000  of their                                                               
assessed  property value.   In  a community  with 12  mills, that                                                               
amounts to about $1,800 a  year, he specified.  However, revenues                                                               
[from the  state] going  to communities  have been  suspended for                                                               
several  years, which  has cost  many  communities a  significant                                                               
amount.   For instance, since  [the state] has  stopped providing                                                               
funds  for [the  senior  citizens property  tax exemption],  [the                                                               
program]  has cost  Haines over  $  1 million.   Therefore,  this                                                               
legislation  places the  senior citizen  tax exemption  under the                                                               
local municipalities'  jurisdiction.  The effective  date of 2008                                                               
provides the municipalities two years  to decide how to deal with                                                               
this  exemption.   Representative  Thomas also  pointed out  that                                                               
Version  F allows  the  municipalities the  ability  to base  the                                                               
eligibility for the exemption on  financial resources.  Version F                                                               
also includes  a description  of the  term "disabled  veteran" in                                                               
this section of statutes.                                                                                                       
REPRESENTATIVE THOMAS  informed the committee that  the statewide                                                               
revenue loss [for  this exemption] is about 6  percent.  However,                                                               
in Wrangell it's  about 16 percent of the tax  base while it's 13                                                               
percent  of Ketchikan's  tax base  and  9 percent  of the  Mat-Su                                                               
[Borough's]  and Petersburg's  tax base.   Representative  Thomas                                                               
clarified that  the idea  behind this  legislation is  to provide                                                               
the local  municipalities the authority  to phase out  the senior                                                               
tax  exemption  if  they  so   choose.    He  characterized  this                                                               
legislation  as providing  municipalities another  tool [to  deal                                                               
with diminishing revenue sharing].                                                                                              
1:47:56 PM                                                                                                                    
REPRESENTATIVE DAHLSTROM said  she thinks HB 212 is  a good bill,                                                               
but asked whether the word "veteran" needs to be in the title.                                                                  
REPRESENTATIVE GRUENBERG  pointed out that this  legislation also                                                               
affects the  senior citizen property  tax exemption.   Therefore,                                                               
he opined that  the language "veterans" shouldn't  be included in                                                               
the title.                                                                                                                      
REPRESENTATIVE THOMAS  offered to research  the need for  a title                                                               
change  and address  it in  the next  committee of  referral, the                                                               
House Community and Regional Affairs Standing Committee.                                                                        
REPRESENTATIVE  ELKINS expressed  concern  with this  legislation                                                               
because [the senior property tax  exemption] program was mandated                                                               
by  the   legislature.    "For  us   to  opt  out  and   put  the                                                               
responsibilities on the  municipalities is wrong.   And we should                                                               
try to do what's right,"  he stressed.  Therefore, Representative                                                               
Elkins stated  that the  legislature should  either do  away with                                                               
the  program or  help fund  it.   Representative  Elkins said  he                                                               
wouldn't support  this legislation, although  he has served  on a                                                               
municipal   government  and   sympathizes   with  the   sponsor's                                                               
1:50:55 PM                                                                                                                    
REPRESENTATIVE GRUENBERG  agreed with Representative Elkins.   He                                                               
highlighted  programs, such  as the  longevity bonus  and revenue                                                               
sharing,  for   which  the   burden  has   been  placed   on  the                                                               
municipalities.       He    related   his    understanding   that                                                               
Representative Elkins has introduced  legislation that would fund                                                               
the [revenue sharing and municipal assistance] programs.                                                                        
REPRESENTATIVE  THOMAS said  he introduced  this legislation  per                                                               
the request of several communities  and the Southeast Conference.                                                               
He informed  the committee  that he  reviewed the  possibility of                                                               
eliminating the program  and phasing it out over  time.  However,                                                               
he relayed that  he was told that the program  couldn't be phased                                                               
out  over time  and  that the  best option  was  to transfer  the                                                               
authority  to the  local municipalities.   Representative  Thomas                                                               
expressed concern  that when the Baby  Boomers, of which he  is a                                                               
member, reaches the tax  base at the same time, it  will be a big                                                               
problem  statewide.   Representative Thomas  noted that  he, too,                                                               
has  served  at  the  local  government  level,  but  that  local                                                               
government wished it  had the tool to hold local  meetings on the                                                               
option of  phasing out  the program.   Furthermore,  allowing the                                                               
aforementioned to be done via  ordinance versus an election would                                                               
save  the  local government  the  cost  of holding  an  election.                                                               
Representative Thomas  related his understanding that  the Alaska                                                               
Municipal  League (AML)  is  in  support of  this  as  a tool  to                                                               
address the  large problem that  will arise in about  five years.                                                               
He then reminded the committee  that the legislation does provide                                                               
individuals with a means for relief from the municipality.                                                                      
1:54:48 PM                                                                                                                    
REPRESENTATIVE   ELKINS   confirmed   that  he   has   introduced                                                               
legislation to  reimburse municipalities  up to  25 percent.   He                                                               
noted   that   the    aforementioned   legislation   carries   an                                                               
approximately  $29 million  fiscal note.   Returning  to HB  212,                                                               
Representative  Elkins opined  that when  looking at  seniors, in                                                               
general, they should  be viewed in a different light  than HB 212                                                               
provides.   He  suggested that  seniors  should be  viewed as  an                                                               
economic engine,  and offered that  in his community  seniors, as                                                               
an economic engine, provide over  $3 million dollars annually and                                                               
that  dollar is  estimated to  turn three  to five  times in  the                                                               
community.   Furthermore, the  tax exempt  dollars turn  three to                                                               
five times  in a  community.   Representative Elkins  related his                                                               
belief that it's shortsighted to  not view seniors as an economic                                                               
1:56:07 PM                                                                                                                    
REPRESENTATIVE DAHLSTROM said she would  like to do more research                                                               
on this issue, and related her preference for holding HB 212.                                                                   
REPRESENTATIVE THOMAS highlighted that  HB 212 does not eliminate                                                               
the  senior  citizen  tax  exemption.    The  legislation  merely                                                               
provides a  local option.  He  then added that the  [Baby Boomer]                                                               
generation has had the benefit  of inflation and thus should have                                                               
built up enough money  and not be a burden on  society.  In fact,                                                               
some  people   receiving  the  exemption   can  afford   to  pay.                                                               
Representative Thomas  specified that he's not  trying to cripple                                                               
anyone, but merely wants to provide municipalities a tool.                                                                      
1:57:35 PM                                                                                                                    
CHAIR LYNN  noted that he  is a senior  and a veteran,  and would                                                               
hate for the existence of the  exemption to be dependent on where                                                               
one  lives.    He  opined  that there  should  be  some  form  of                                                               
municipal sharing.   In  fact, he informed  the committee  of his                                                               
proposal to fund  municipal governments with some  of the Amerada                                                               
Hess funds.   Chair  Lynn reiterated his  concern with  regard to                                                               
this  exemption  being dependent  upon  where  one lives  in  the                                                               
state.  Therefore, he said he would like to table HB 212.                                                                       
1:59:59 PM                                                                                                                    
REPRESENTATIVE THOMAS  informed the committee that  he introduced                                                               
HB 144,  which would provide  $150 million of the  permanent fund                                                               
earnings   reserve,   by   a   vote,   to   be   distributed   to                                                               
municipalities.   The aforementioned  [and HB  212] are  steps to                                                               
better the health of communities.                                                                                               
REPRESENTATIVE  GRUENBERG  said  that  his  legislation,  HB  52,                                                               
requiring the  state to adopt  a fiscal plan should  include this                                                               
issue before the committee today.                                                                                               
2:02:38 PM                                                                                                                    
CHAIR  LYNN announced  that HB  212 would  be tabled  for further                                                               
discussion and study.                                                                                                           

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