Legislature(2005 - 2006)BELTZ 211
04/15/2005 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB161 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 161 | TELECONFERENCED | |
SB 161-BOROUGH SALES TAX EXEMPTIONS
CHAIR GARY STEVENS announced SB 161 to be up for consideration.
He said the committee heard the bill previously and the concept
makes sense.
2:07:49 PM
SENATOR GENE THERRIAULT, sponsor, said the policy question is
whether current statute should be interpreted to prohibit a
borough government from having an offset for city taxes within
the borough boundary. If an offset or exemption is prohibited,
the two taxes would be stacked and in some instances the tax
would be doubled.
That isn't a correct interpretation, he asserted. The
Legislature did not intend to restrict a borough government from
allowing the offset. An interpretation that is being pushed is
of concern because if it is accepted, it could have a
detrimental impact on the revenues generated across the state
for bed taxes.
The bill language is specific to make it clear that if a borough
government wants to allow the offset, it can. In previous
decisions on taxing powers the Legislature has not made a
decision to force tax stacking.
2:09:44 PM
CHAIR GARY STEVENS said this would make it clear that a borough
may choose to have or not to have stacked taxes.
2:10:22 PM
SENATOR BERT STEDMAN questioned why the Legislature should step
in when litigation is underway.
CHAIR GARY STEVENS cautioned members to discuss the issue rather
than the particular case.
SENATOR THERRIAULT said the real issue in Mason's Manual is that
since the Legislature is a separate branch of government, it
should not be concerned with a potential action of another
branch of government. However, that interpretation is not
binding on a member of the general public that might testify.
That being said, the policy call for the Legislature is to
decide whether it agrees with the interpretation of statute and
whether the statute should be clarified.
SENATOR STEDMAN noted that a borough in his district interprets
the statute in the same way as the Fairbanks North Star Borough
so more than just the one borough would be affected.
SENATOR THERRIAULT said a borough would want to have the option
to exercise that power so it could maintain equal tax rates.
Consumers will shop where the tax is lower when access is the
same.
CHAIR GARY STEVENS asked if a general sales tax could
potentially be exempted.
SENATOR THERRIAULT replied it could be. The language gives the
local government the ability to decide whether it wants to have
an offset for bed tax, alcohol tax, general sales tax or whether
it wants to stack the taxes.
SENATOR THOMAS WAGONER said he still hadn't had the opportunity
to discuss this with people in his district, but tax stacking is
common in the Kenai Peninsula Borough.
2:18:18 PM
SENATOR THERRIAULT replied in that borough a policy call was
made to stack taxes. In other boroughs the local policy call is
to offset the taxes. That's the way it should be; local
government should be able to make that decision. The
interpretation that has been advanced is that there is no
option.
SENATOR WAGONER said his district has detractors as well and
that's why he wants to check with the local attorney. He doesn't
want to ambush his community.
SENATOR THERRIAULT said he understands the desire to look at
local impact, but the wording on page 1, line 8 indicates this
is up to the discretion of the local government.
CHAIR GARY STEVENS said it is a matter of local control and
although he is a bit concerned about sales tax and how that
works he is more comfortable now than at the first hearing.
He asked Senator Stedman if had any questions.
SENATOR STEDMAN replied he was comfortable.
SENATOR WAGONER agreed that the Legislature has the power to do
what the sponsor asks.
2:22:59 PM
CHAIR GARY STEVENS noted Senator Ellis had joined the meeting
and gave him a synopsis of the discussion.
2:23:29 PM
SENATOR WAGONER noted the bill had a finance referral and said
he had no problem moving the bill.
CHAIR GARY STEVENS asked Senator Ellis if he had any questions.
SENATOR ELLIS said he was well versed on the issue and had no
questions.
CHAIR GARY STEVENS noted Mr. Van Sant indicated he had a
question.
2:24:25 PM
STEVE VAN SANT, Assessor, said he assumes that this would apply
to cities as well as boroughs and he was curious whether that
was the intent.
CHAIR GARY STEVENS said a city couldn't tax outside its
boundaries so he wasn't sure how a city could stack taxes.
MR. VAN SANT said he thought about it again and withdrew his
question.
SENATOR WAGONER said there wouldn't be a problem with this bill.
MR. VAN SANT said he agrees.
CHAIR GARY STEVENS asked if the sponsor wanted to comment.
SENATOR THERRIAULT said he didn't think it would be a problem
for a city.
RENEE BROKER, Fairbanks North Star Borough Attorney, said she
agrees it was appropriate for Mr. Van Sant to withdraw his
question. It wouldn't be an issue for a city.
CHAIR GARY STEVENS asked if a city is limited in the amount of
sales tax it could charge.
MS. BROKER said she wasn't aware of a statutory limit.
MR. VAN SANT clarified his question by explaining that there
used to be a 6 percent limit, but it was removed a few years
ago.
CHAIR GARY STEVENS asked for a motion.
SENATOR WAGONER motioned to report SB 161 and attached fiscal
notes from committee with individual recommendations. There
being no objection, it was so ordered.
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