Legislature(2001 - 2002)

04/08/2002 01:40 PM Senate CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                              
           HB 358-EXEMPTION FROM PROPERTY TAX: TIMBER                                                                       
                                                                                                                                
 REPRESENTATIVE MIKE  CHENAULT, bill sponsor, introduced  the bill                                                              
via teleconference.  This would give municipalities  an additional                                                              
tool to  lower the  threat of  fire on  spruce bark beetle  killed                                                              
forestland  by allowing  the  option to  waive  property taxes  on                                                              
roads or other  property improvements that facilitate  the removal                                                              
of the timber.                                                                                                                  
                                                                                                                                
The Kenai  Peninsula Borough has  approximately 2.2  million acres                                                              
of spruce forest  and 1.1 million of it is affected  by the spruce                                                              
bark  beetle  infestation.  In  an effort  to  mitigate  the  fire                                                              
threat, the Kenai Peninsula Borough  tried to enact a property tax                                                              
waiver program but the plan was blocked  because state law doesn't                                                              
allow for  such breaks. This bill  makes the necessary  changes in                                                              
state  law  to   allow  the  Kenai  Peninsula   Borough  or  other                                                              
municipalities in  a similar situation to help  protect themselves                                                              
without  having to  take on  additional tax  liabilities. The  tax                                                              
breaks aren't mandated rather they are an option.                                                                               
                                                                                                                                
Included  in  member's  packets  were  copies  of  the  supporting                                                              
resolution  from the  Kenai Peninsula  Borough and  photos of  the                                                              
beetle infestation on the peninsula.                                                                                            
                                                                                                                                
SENATOR PHILLIPS  asked whether  there was  any opposition  to the                                                              
bill.                                                                                                                           
                                                                                                                                
REPRESENTATIVE   CHENAULT   replied  he   wasn't   aware  of   any                                                              
opposition.                                                                                                                     
                                                                                                                                
CHAIRMAN TORGERSON asked whether  they anticipated that this would                                                              
affect smaller parcels of land and individual owners.                                                                           
                                                                                                                                
REPRESENTATIVE CHENAULT  thought this  would give the  borough the                                                              
opportunity  to look  at  each parcel  then  make a  determination                                                              
about which lands would be included.                                                                                            
                                                                                                                                
CHAIRMAN TORGERSON  wanted it  a matter of  record what  was being                                                              
exempted  from taxation.  He wanted examples  of "improvements  to                                                              
real  property,   including  personal  property  affixed   to  the                                                              
improvements…."                                                                                                                 
                                                                                                                                
REPRESENTATIVE  CHENAULT  replied the  improvements  would be  any                                                              
roads that  were built into parcels  to make access to  the timber                                                              
harvest.                                                                                                                        
                                                                                                                                
CHAIRMAN TORGERSON asked whether  they would have to apply for the                                                              
exemption every year.                                                                                                           
                                                                                                                                
REPRESENTATIVE CHENAULT thought that  would be a borough decision.                                                              
                                                                                                                                
CHAIRMAN TORGERSON asked the state  assessor whether the exemption                                                              
would need  to be renewed  annually and  whether he supported  the                                                              
bill.                                                                                                                           
                                                                                                                                
STEVE VAN  SANT, State Assessor,  said this was well  deserved and                                                              
he did  support the  bill. An  assembly grants  the exemption  and                                                              
they could set  it up with any timeframe they  wanted. There would                                                              
be no requirement from the state  to set any particular timeframe.                                                              
                                                                                                                                
CHAIRMAN TORGERSON replied  it was written that way  but he wanted                                                              
his opinion whether a timeframe was needed.                                                                                     
                                                                                                                                
STEVE VAN  SANT said  this seems  to be an  issue where  you never                                                              
know  whether  the issue  will  arise  again. He  rarely  supports                                                              
exemptions, but feels this has merit.  It gives municipalities the                                                              
ability to deal with a dangerous situation.                                                                                     
                                                                                                                                
JEFF  JAHNKE,  Director of  the  Division  of Forestry  and  State                                                              
Forester, testified in support of  the bill. Although the value of                                                              
the affected  spruce has  declined substantially  there are  still                                                              
three important reasons why the harvest should continue.                                                                        
                                                                                                                                
   1. It reduces the hazard caused by dead and dying trees                                                                      
   2. It encourages reforestation                                                                                               
   3. It continues to recover the value that still remains                                                                      
                                                                                                                                
MARVIN  RUSE, Mapping  Director  of the  Spruce  Bark Beetle  Task                                                              
Force, testified in support of the  bill. The tax incentives might                                                              
encourage some vacant  landowners to become more  active in moving                                                              
the hazard on their land. Two thirds  of the Kenai Peninsula is in                                                              
federal or state ownership so the  only opportunity is on private,                                                              
Native and  borough land.  They want to  encourage the  removal of                                                              
any and all of the hazard.                                                                                                      
                                                                                                                                
MR. VAN SANT  questioned including "or at risk  of being infested"                                                              
because a  municipality that  was oil  rich could  use that  as an                                                              
excuse to exempt  lands which could cost the state  money from oil                                                              
and gas revenues. He wanted his concern a matter of record.                                                                     
                                                                                                                                
CHAIRMAN TORGERSON  said he noticed  that as well. The  bill ought                                                              
to do what the  testimony says it's supposed to,  which is to spur                                                              
the removal  of the infested trees  or enhance the  probability of                                                              
reforestation.  Unfortunately,  the bill  is  silent  on that.  He                                                              
encouraged  local governments  to  take this  a  step further  and                                                              
develop a  plan for removal of  the risk otherwise there  would be                                                              
no exemption.                                                                                                                   
                                                                                                                                
MR. VAN SANT said he understood that  but unfortunately it doesn't                                                              
always work that way.                                                                                                           
                                                                                                                                
TIM NAVARRE from  the Kenai Borough Assembly assured  members they                                                              
would act quickly once the bill is  passed and would probably work                                                              
with Mr. Van Sant. There is much  work to be done before they pass                                                              
an ordinance that covers their intent.                                                                                          
                                                                                                                                
CHAIRMAN  TORGERSON  said he  appreciates  that.  He likes  intent                                                              
placed in  the bill, but  this bill just  gives authority  for tax                                                              
relief  and  doesn't accomplish  the  goals  as expressed  in  the                                                              
testimony. He didn't  intend to amend the bill;  local governments                                                              
would have  to do that  on their own.  If the state  assessor sees                                                              
it's being abused  he expects him to bring the  matter back before                                                              
the Legislature and they would repeal the law.                                                                                  
                                                                                                                                
MR. NAVARRE said they would be working  diligently to come up with                                                              
a good ordinance.                                                                                                               
                                                                                                                                
There was no further testimony.                                                                                                 
                                                                                                                                
CHAIRMAN TORGERSON asked for the will of the committee.                                                                         
                                                                                                                                
SENATOR PHILLIPS made a motion to move CSHB 358(CRA) and attached                                                               
fiscal note from committee with individual recommendations.                                                                     
There being no objection, it was so ordered.                                                                                    

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