Legislature(1999 - 2000)

03/06/2000 01:37 PM Senate CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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         SB 227-MUNICIPAL PROPERTY TAX LEVY LIMITATION                                                                          
                                                                                                                                
SENATOR KIM ELTON, sponsor of SB 227, stated if the initiative                                                                  
passes it will accomplish three things.  It will replace the                                                                    
current 30 mill or 3 percent limitation with a 10 mill or 1 percent                                                             
levy, it will require payments on bonded indebtedness to be                                                                     
included within the tax cap, and it will prohibit local property                                                                
assessments from rising more than 2 percent annually.                                                                           
                                                                                                                                
SB 227 allows local voters the ability to set a tax cap of higher                                                               
than 10 mills in a general election.  SB 227 prohibits people in                                                                
one municipality from setting the mill rate for another                                                                         
municipality.  If the initiative passes municipalities have the                                                                 
ability to lower the mill rate, but can't raise the mill rate above                                                             
10.  SB 227 also exempts school bond debt from the tax cap.                                                                     
                                                                                                                                
SENATOR PHILLIPS asked if SB 227 would change the intent of                                                                     
initiative.                                                                                                                     
                                                                                                                                
SENATOR ELTON stated no.  SB 227 loosens provisions of the                                                                      
initiative, and moves school bond debt out from under the tax cap.                                                              
The Alaska Municipal League agrees that people in one part of the                                                               
State should not govern the tax cap in individual communities in                                                                
other parts of the State.  Each community's voters should have the                                                              
option to determine mill rates and taxes for that community.                                                                    
Financial pressure will be added to municipalities if the                                                                       
initiative passes, and the public doesn't have the option to vote.                                                              
                                                                                                                                
                                                                                                                                
SENATOR ELTON gave examples of property values plummeting.  SB 227                                                              
will not change the initiative, it gives alternative options if the                                                             
initiative passes.  The Alaska Constitution states Alaska should                                                                
act within its powers to "provide for maximum local self government                                                             
with a minimum of local government units, and to prevent                                                                        
duplication of tax levying jurisdictions."  Without an opportunity                                                              
for local governments to set appropriate tax rates,  the initiative                                                             
will discourage consolidation of local government units and local                                                               
taxing authorities.                                                                                                             
                                                                                                                                
Number 174                                                                                                                      
                                                                                                                                
SENATOR PHILLIPS stated local governments should be educated on the                                                             
impacts of the initiative and SB 227.                                                                                           
                                                                                                                                
SENATOR ELTON agreed and stated people in unorganized boroughs                                                                  
should not be allowed to dictate what happens in other                                                                          
municipalities in the State.  The legislature should not focus on                                                               
tactics against the initiative but should create a safety net for                                                               
the people in municipalities.  That is what SB 227 represents.                                                                  
                                                                                                                                
SENATOR PHILLIPS stated SB 227 would be a mechanism to prepare for                                                              
the initiative.                                                                                                                 
                                                                                                                                
VICE-CHAIR MACKIE stated SB 227 gives people more reason to vote                                                                
for the initiative and fall back on SB 227, instead of trying to                                                                
fight the initiative.                                                                                                           
                                                                                                                                
SENATOR ELTON stated SB 227 won't make a difference in voter                                                                    
behavior.  People will vote for the initiative or not, but SB 227                                                               
will go into effect if the initiative passes.                                                                                   
                                                                                                                                
VICE-CHAIR MACKIE asked, if the initiative gets voted down whether                                                              
SB 227 will go into effect.                                                                                                     
                                                                                                                                
SENATOR ELTON stated it will not.  Some cities are contributing                                                                 
more than the 4 mill property tax for their local contribution to                                                               
schools.  A 10 mill tax limit with no safety net will pressure                                                                  
municipalities to lower the 4 mill local contribution to schools to                                                             
still provide for other services.                                                                                               
                                                                                                                                
SENATOR PHILLIPS stated SB 227 isn't a safety net, it represents a                                                              
transition.  He asked how the votes were broken down to represent                                                               
each region of Alaska.                                                                                                          
                                                                                                                                
SENATOR ELTON stated most opinions came from Southcentral Alaska.                                                               
                                                                                                                                
Number 333                                                                                                                      
                                                                                                                                
MS. BONNIE WILLIAMS, Chair of finance committee for Fairbanks/North                                                             
Star Borough, stated support for SB 227.  If the initiative passes                                                              
it will negatively affect Fairbanks' current year budget.  The                                                                  
schools, road service areas, and fire departments would suffer the                                                              
most if the initiative passes.                                                                                                  
                                                                                                                                
The Fairbanks North Star Borough has voted for a revenue cap which                                                              
prohibits the borough from spending above the current year revenue;                                                             
except for inflation, new construction, and new bonds that are                                                                  
voter approved.  Ms. Williams referred to California's tax                                                                      
initiative that went into effect in 1978.  From 1978 to 2000                                                                    
California's population has grown from 22 million to 31 million                                                                 
with no new schools being built to accommodate those children.                                                                  
                                                                                                                                
Number 420                                                                                                                      
                                                                                                                                
MR. TED SMITH, Mayor of City of Petersburg, stated support for SB
227.  SB 227 allows municipalities control over their taxation                                                                  
destiny.  Petersburg already has a 10 mill rate limit that was set                                                              
at the local level and can be changed by a vote of the people.                                                                  
                                                                                                                                
MR. GENE DUSEK, Director, Office of Management & Budget for the                                                                 
Municipality of Anchorage, stated support for SB 227.  Anchorage                                                                
mill rates for 2000 are estimated to be 17.91 mills.  The school                                                                
board is asking the assembly for a mill rate of 8.09 mills.  The                                                                
mill rate for city services differs from area to area, the average                                                              
mill rate is 9.82 mills.  The total debt, excluding debt services,                                                              
is 14.66 mills.  That will need to be cut to 10 mills if the                                                                    
initiative passes.  Mr. Dusek referred to charts given to the                                                                   
committee.                                                                                                                      
                                                                                                                                
SENATOR PHILLIPS moved SB 227 out of committee with individual                                                                  
recommendations.  Without objection, the motion carried.                                                                        

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