Legislature(2005 - 2006)BELTZ 211
03/10/2006 01:30 PM COMMUNITY & REGIONAL AFFAIRS
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* first hearing in first committee of referral
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SB 193-DEFERRAL OF MUNICIPAL PROPERTY TAXES CHAIR STEDMAN announced SB 193 to be up for consideration. He reminded members that the committee previously heard the presentation on version F committee substitute (CS). He highlighted the following: AS 29.45.030(b) doesn't provide tax assessors clear direction to exempt properties owned by non- profit religious organizations that are used to house educators in private or parochial schools; individual educators living in their own homes do not benefit; privately owned residences are not applicable; version F only clarifies existing statutes regarding the tax exempt status of properties owned by non- profit religious organizations; version F is appropriate under the original bill because it deals with the same statutory section. He advised that he would take public testimony even though the committee had previously heard the bill. SENATOR THOMAS WAGONER asked for a brief at-ease. 2:13:55 PM SHANE HORAN, Assessor for the Kenai Peninsula Borough, stated that version F CS for SB 193 would establish an unfunded mandate that could cause the borough to lose between $20 and $30 thousand in revenue. The potential loss would be greater if the various service areas were considered. He expressed the view that the language is broad and might not exclude coaches, for example, who are oftentimes looked upon as educators. He further questioned whether volunteer teachers, substitute teachers, part-time or seasonal teachers might be included. He said he assumed that Sunday school teachers would be excluded. He asked the committee to keep in mind that most educators in private, religious or parochial schools are compensated for their services. Finally, he said, this would be an additional program that would require administering and monitoring. SENATOR THOMAS WAGONER said this is permissive so it isn't an unfunded mandate. CHAIR STEDMAN clarified that just one section of the bill is discretionary and that is the original section that allows certain citizens to apply to a municipality for property tax deferral. The other section is new and it cleans up language dealing with non-profit religious organizations. 2:16:48 PM CLYDE BAXLEY, Anchorage resident, stated opposition to version F committee substitute (CS) for SB 193 describing it as a huge tax giveaway to the Anchorage Baptist Temple. He urged the committee to return to the original bill as sponsored by Senators Bunde, Dyson and Ellis because the CS opens the floodgates to lawsuits for discrimination against public schoolteachers in favor of private schoolteachers. MR. BAXLEY asserted that the legislation would violate Article 1, Section 15 of the Alaska State Constitution because it's a special bill for special people. It also violates Article 2 Section 9 and Article 1, Section 1. This is a special act and it only favors teachers working for religious organizations. Taxpayers around the state are looking for ways to reduce their property taxes and this bill does the opposite, he said. Furthermore the proposed definition of "minister" is designed to expand the list of titles conferred on members of a church organization for the purpose of qualifying properties for a tax exemption. No state criterion governs how a church titles its members so title decisions are left to the principle church leader. That, he said, is a flimsy basis for determining whether or not a church property qualifies for tax-exempt status. He suggested that if the committee really wants to quiet the complaints from taxpayers then it should amend the statute to make it clear that no church shall be entitled to more than one tax-exempt residence that is occupied by one church leader. Doing so would satisfy the Alaska State Constitution and put to rest the squabbles that have plagued Anchorage for last three years. MR. BAXLEY urged the committee to return to the original version of SB 193. CHAIR STEDMAN reiterated that the CS clarified existing statute and it fits under the original version of the bill title. 2:22:45 PM AL SUNQUIST, Anchorage, spoke in opposition to version F CS for SB 193. He said that he's aware that many church properties are in violation of existing laws according to the tax assessor and he supports efforts to crack down on what he refers to as "black collar crimes." He stated that the issue before the committee represents an entanglement of church and state and should be resisted. 2:24:42 PM ART GRISWOLD, Delta Junction, testified in opposition to version F CS for SB 193. He acknowledged that the area did not have a property tax yet, but that it was a possibility. He noted that the state doesn't currently fund tax exemptions for senior citizens or disabled veterans in the organized boroughs and this bill represents an additional exemption. He reported that in his area there are three major church farms with huge homes that will be completely exempt from taxes if the area is forced into a borough. He said he would like to see legislation that clarifies that religious organizations receive tax exemption on just one building where services are held. CHAIR STEDMAN asked that the record reflect that Delta Junction does not pay property tax. 2:27:01 PM MARTY McGEE, Assessor for the Municipality of Anchorage, provided the following facts: Anchorage Baptist Temple currently owns 24 pieces of property; 20 of the properties are residences of some kind; 10 of the residences are currently tax exempt; 6 of the residences will soon move to taxable status leaving just 4 residences in exempt status. If this bill moves forward in its current form it would represent about $80,000 of tax revenue that would be exempted from income. He emphasized that whenever a property is moved to exempt status, it's the remaining taxpayers who have to make up the lost revenue. With that in mind, he said, the Municipality of Anchorage does not support version F CS for SB 193. 2:28:46 PM SENATOR WAGONER asked if there are other parochial schools in Anchorage. MR. McGEE replied there are about 10 parochial schools, but only Anchorage Baptist Temple has an exempt status issue with regard to housing for teachers. "No other teachers of any kind, in Anchorage, have any exempt status on homes," he said. SENATOR WAGONER asked if the other parochial schools own any homes. MR. McGEE replied he couldn't answer directly. The Catholic Church owns a number of homes in Anchorage and he thought all were residences of ministers or church officials. He didn't believe that any of those individuals are educators, but his investigation of all religious exempt property is ongoing. 2:30:33 PM STEVE VAN SANT, State Assessor, Division of Community Advocacy, Department of Commerce, Community & Economic Development (DCCED), said he would like to make several clarifications. First the bill really doesn't clarify anything because the Alaska Supreme Court has said that educator's homes are not exempt under statute. As currently written the bill would expand the statutes to include residences of educators, but the meaning of that particular term is somewhat unclear, he said. He advised that he has been polling assessors across the state to get an idea of what this unfunded mandate might cost other taxpayers and he believes it would be about $200,000 statewide. 2:32:10 PM SENATOR GARY STEVENS referenced the section on tax deferral for primary residences on page 2, line 24 and asked whether a surviving spouse would immediately be responsible for paying the deferred property taxes. MR. VAN SANT responded it's his understanding that under the existing language the surviving spouse wouldn't have to pay the deferred taxes. Subparagraph (C) on line 24 speaks to combined- income. If one spouse were to pass away the survivor would then fall under subparagraph (C) on line 16, which relates to income that is less than three times the federal poverty level. 2:33:42 PM SENATOR ELLIS participated via teleconference from Anchorage. He said he would like to hear Mr. Ritchie with the Alaska Municipal League (AML) comment on version F committee substitute. 2:34:16 PM KEVIN RITCHIE, Executive Director for the Alaska Municipal League (AML), thanked the committee and Senator Ellis in particular for asking for an additional hearing to provide opportunity for the assessors to report on the impacts. As a policy, he said, AML is against anything that would take revenue away from communities. He noted that the committee heard from assessors around the state today and he couldn't add to that. 2:35:02 PM CHAIR STEDMAN asked for a motion. SENATOR ELLIS stated that the testimony has been completely one- sided in opposition to version F and he has heard no justification in favor of the most recent change. He reported that he had spoken to Tam Cook about the rules governing his participation via teleconference and that she advised that he is allowed full participation with the exception that he is not allowed to vote on a motion to move a bill from committee. SENATOR ELLIS moved to return to the original version of SB 193. At-ease from 2:35:40 PM to 2:36:05 PM. CHAIR STEDMAN acknowledged that he hadn't run into this situation before and asked Senator Ellis if his staff could present any verifying information from Tam Cook. SENATOR ELLIS replied he spoke with Ms. Cook very recently and she advised that he is allowed to participate, to make motions, and to vote telephonically. He is allowed to object to a motion to move a bill from committee, but he is not allowed to vote on moving the bill. 2:37:19 PM CHAIR STEDMAN asked Senator Ellis to repeat his motion. SENATOR ELLIS motioned for the committee to return from the CS to the original version of SB 193. CHAIR STEDMAN objected and asked for a roll call vote. SENATOR ELLIS reiterated that justification is lacking in the public record and the testimony in opposition has been overwhelming. Senator Bunde had a great idea, he said, and he and Senator Dyson signed on as co-sponsors. Public testimony is on my side of the argument, he concluded. The motion to return to the original version of SB 193 failed with Senator Kookesh and Senator Ellis voting yea and Senator Gary Stevens, Senator Wagoner and Chair Stedman voting nay. CHAIR STEDMAN called an at-ease from 2:38:41 PM to 2:39:15 PM. 2:39:28 PM MERYL THOMPSON, Wasilla, testified that in its original form the bill was good, but that he is totally against version F CS for SB 193. This is an attempt to give the Anchorage Baptist Temple a tax break and it's a slippery slope and a can of worms that you're opening up. He could find no support for the bill other than a Baptist Temple official and some of the committee members. He said he would imagine that if this received a proper public hearing you would hear overwhelming opposition because it simply isn't right or fair. 2:41:20 PM MARIE DARLIN, Capital City Task Force for AARP, announced that AARP did not support Section 1 of version F CS for SB 193, but it did support the original version. The issue of property tax deferral needs to be addressed and AARP appreciates Senator Bunde's leadership in this area. 2:44:08 PM SENATOR WAGONER commented that this is the second or third hearing on the bill so he didn't agree that there hadn't been proper public hearings. He acknowledged that the testimony had been negative and he was surprised that people who supported the amendment hadn't come forward to testify. He noted that the next committee of referral is the Finance Committee and Senator Bunde could deal with it there. 2:45:07 PM SENATOR KOOKESH clarified that no action was taken on the bill at the last meeting because people testifying from the LIOs and from off net didn't have a copy of the CS. There had been no public hearing on the new CS, but there was plenty of testimony on the original version. CHAIR STEDMAN agreed with Senator Kookesh's statement, but that the hearing today was thorough and under no time constraint. He asked for a motion. 2:45:40 PM SENATOR GARY STEVENS motioned to report version F CS for SB 193 and attached fiscal note(s) from committee with individual recommendations. SENATOR KOOKESH objected. SENATOR ELLIS voiced objection and advised that he had tried to keep an open mind and had been looking forward to someone stepping forward to justify the current changes. That didn't happen, which made him uncomfortable moving the bill forward. He announced that he would remove his name as a co-sponsor if the bill continued in its current form. CHAIR STEDMAN said he appreciated his position. SENATOR ELLIS said he would restate his previous comment that if this had been the intent of the majority members on the committee then it would have been more respectful and proper for the CRA Committee to introduce a committee bill rather than taking Senator Bunde's bill. 2:47:14 PM SENATOR WAGONER acknowledged that it would be a burden to Anchorage taxpayers to make additional properties tax exempt, but he takes a different view because the parochial schools save municipalities and cities in terms of educational expenditures. At last estimate Kenai had between 600 and 800 parochial students and that is a tremendous burden lifted from the taxpayer, he said. CHAIR STEDMAN restated the point that the changes in the CS fit under the same section of the statutes. CHAIR STEDMAN asked the clerk to call the roll. CSSB 193(CRA), version F, moved from committee with Senators Wagoner, Gary Stevens, and Chair Stedman voting yea and Senator Kookesh voting nay.