Legislature(2001 - 2002)

03/22/2001 09:11 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 4                                                                                                               
"An Act relating  to a mandatory exemption  from municipal  property                                                            
taxes  for certain  residences  and to  an optional  exemption  from                                                            
municipal  taxes  for residential  property;  and providing  for  an                                                            
effective date."                                                                                                                
                                                                                                                                
                                                                                                                                
Senator Therriault  indicated  that as they  discussed before,  SB 4                                                            
was an attempt  to satisfy the desire  of the state to provide  some                                                            
property  tax relief  to property  owners.  The  bill proposed  that                                                            
they expand  the current  statutory allowance  to make a portion  of                                                            
personal residential property  exempt from taxation.  He pointed out                                                            
that the current statutory  language allowed the local government to                                                            
do that up to $10,000 and  they asked to expand that to $50,000, but                                                            
due to concerns  expressed by Senator Torgerson they  backed it down                                                            
to  $40,000.    He  added  that  they  held  the  service  areas  in                                                            
municipalities  out of the  calculation, because  they would  be the                                                            
one entity  at the  local level  that had  no other  way to make  up                                                            
potential lost  revenue.  He noted that in the Fairbanks  North Star                                                            
Borough  the  mayor  had formed  a  revenue  tax  force to  look  at                                                            
alternative ways of raising  revenue other than using the mill rate.                                                            
He did not believe that  there would be any interest in giving a tax                                                            
break on the  residential property  and increasing the overall  mill                                                            
rate for everyone else.   He indicated that they would be looking at                                                            
a  mix of  sales  tax or  users  fees or  reductions  in  government                                                            
spending.   He indicated that when  they left off last time  Senator                                                            
Donley  expressed  concern with  regards  to the  fiscal  note.   He                                                            
believed  that they  had addressed  those concerns  to a large  part                                                            
with the committee substitute  (CS).  He said that Senator Green had                                                            
a question  with regards to the potential  impact on the  foundation                                                            
formula  and  they received  a  clarification  that  the  foundation                                                            
formula equivalent  is computed  on the true  and full value  of the                                                            
government;  therefore, there  would be no  impact from SB 4  on the                                                            
foundation and the way the mill rate was calculated.                                                                            
                                                                                                                                
Co-Chair Kelly  indicated that there  was a proposed CS,  Version P,                                                            
which had not been adopted as a work draft.                                                                                     
                                                                                                                                
Senator Wilken  made a motion to adopt  the proposed CS,  Version P,                                                            
as a work draft.                                                                                                                
                                                                                                                                
Co-Chair Kelly asked if there was any objection.                                                                                
                                                                                                                                
Co-Chair Donley  objected.  He supported the Community  and Regional                                                            
Affairs  (CRA)  CS for  the  same  reasons that  the  CRA  Committee                                                            
adopted it.   He noted that the CRA  CS does not include  the change                                                            
to existing  law  regarding residential  exemption  and he  believed                                                            
that it was  a separate issue.  He  said that there was significant                                                             
taxation  in some  of the communities,  especially  the North  Slope                                                            
Borough and the new CS,  Version P, would just be "throwing gasoline                                                            
on an already burning fire".                                                                                                    
                                                                                                                                
Co-Chair Kelly  referred to Senator Donley's amendment,  which would                                                            
essentially take care of  his concerns.  He pointed out that Senator                                                            
Leman brought up a possible  compromise, before the meeting, between                                                            
Senator Donley's amendment  and the new CS, Version P.  He said that                                                            
he  would like  to  adopt the  CS, Version  P,  and then  adopt  the                                                            
amendment or possibly take up Senator Leman's recommendation.                                                                   
                                                                                                                                
Co-Chair  Donley indicated  that he  was not  familiar with  Senator                                                            
Leman's recommendation.                                                                                                         
                                                                                                                                
Senator  Leman  called his  recommendation  the  "anti-back  sliding                                                            
amendment,"  intended  to keep  the limits  that  were currently  in                                                            
place in  those municipalities  as the  cap.   He explained  that it                                                            
would keep them  at their current maximum and the  change in the law                                                            
would not  increase the taxes  on oil and  gas property;  therefore,                                                            
providing partial exemption.                                                                                                    
                                                                                                                                
Senator Therriault indicated  that it would be somewhat helpful.  He                                                            
pointed  out  that  they  did have  some  service  areas  that  were                                                            
currently over  the 18 mills.  He noted that the City  of North Pole                                                            
has two  refineries  within its'  boundaries  very close  to the  18                                                            
mills.  He clarified  that if it were up to Senator  Leman, everyone                                                            
would be frozen  at his or her current  mill rate.  He said  that it                                                            
would not be his personal preference.                                                                                           
                                                                                                                                
Co-Chair  Donley  wondered   if Senator   Leman  had  that  language                                                            
drafted.                                                                                                                        
                                                                                                                                
Senator  Leman  indicated   that  he  offered  that  language  as  a                                                            
conceptual amendment.                                                                                                           
                                                                                                                                
AT EASE 9:20 AM/ 9:27 AM                                                                                                        
                                                                                                                                
Co-Chair Kelly announced that SB 4 would be HELD in Committee.                                                                  
                                                                                                                                
Senator  Hoffman  believed  that  it was  a  complicated  issue  and                                                            
expressed appreciation for the extra time to look over the bill.                                                                
                                                                                                                                
[Heard and Held]                                                                                                                
                                                                                                                                
                                                                                                                                

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