Legislature(2001 - 2002)

03/21/2002 09:13 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     CS FOR SENATE BILL NO. 4(FIN)                                                                                              
     "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."                                                                                          
                                                                                                                                
                                                                                                                                
This was  the fourth  hearing for  this bill in  the Senate  Finance                                                            
Committee. [Note:  The bill was previously reported  from Committee;                                                            
on 3/27/01 and returned on 3/01/02.]                                                                                            
                                                                                                                                
Senator  Therriault, the  sponsor of  the bill,  explained that  the                                                            
committee  substitute for CS  SB 4 (FIN)  specifies a maximum  local                                                            
residential  property tax  exemption of $15,000,  and disallows  the                                                            
partial  year  property  tax exemptions  approved  in  the  original                                                            
Finance Committee bill.  He stated that municipalities have reported                                                            
the partial  year property tax provision  cumbersome to administer.                                                             
                                                                                                                                
Senator  Therriault  also  noted the  addition  of a  new  provision                                                            
allowing  local  governments  the  ability  to  provide individuals                                                             
participating  in local  volunteer organizations  such as  volunteer                                                            
fire  departments and  Emergency  Medical  Services up  to a  $5,000                                                            
assessed  value property  tax exemption. He  mentioned that  several                                                            
communities are  having difficulty recruiting sufficient  numbers of                                                            
volunteer fire fighters,  and the hope is this exemption would serve                                                            
as an incentive  to entice more individuals to volunteer.  He stated                                                            
this provision  would only result in an approximate  $11,000 loss of                                                            
property  tax revenue  to the Fairbanks/North  Star  Borough if  all                                                            
volunteer fire fighters took advantage of the exemption.                                                                        
                                                                                                                                
Senator Green  inquired if the volunteer exemption  would affect the                                                            
State's Foundation Funding Formula to communities.                                                                              
                                                                                                                                
Senator Therriault  responded the  Foundation Formula is  applicable                                                            
to the total taxable  value of property in a borough,  and would not                                                            
be impacted by the exemptions.                                                                                                  
                                                                                                                                
                                                                                                                                
SFC 02 # 39, Side A 10:57 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Senator  Green commented  there is  a possibility  that communities                                                             
might want  to add other individuals  to the exemption specified  in                                                            
Section 2.                                                                                                                      
                                                                                                                                
Co-Chair   Kelly   reported   municipalities   have   been   seeking                                                            
inexpensive   methods   to   increase   volunteer    fire   fighters                                                            
compensation.   He  commented  the  demand  for  further   training,                                                            
liability  issues  and  responsibility  that  volunteers  experience                                                            
would continue to increase.                                                                                                     
                                                                                                                                
Senator Green  asserted there are other sectors of  individuals that                                                            
municipalities might want considered for an incentive exemption.                                                                
                                                                                                                                
Senator Therriault qualified  that Section 2 specifically identifies                                                            
who is eligible for the exemption.                                                                                              
                                                                                                                                
DANA  OLSON testified  via  teleconference  from Mat-Su  to ask  the                                                            
State  to  consider  instituting  a  joint  administration   process                                                            
whereby different agencies could access other agency records.                                                                   
                                                                                                                                
Co-Chair  Kelly acknowledged  Ms.  Olson's concern;  however,  noted                                                            
this bill does not address that issue.                                                                                          
                                                                                                                                
Senator  Ward inquired  how this bill  would affect  a private  fire                                                            
service area that has been formed for taxation services.                                                                        
                                                                                                                                
Senator Therriault  responded  the property  tax levy for this  bill                                                            
would not affect that area.                                                                                                     
                                                                                                                                
Senator Ward  asked if residents  of that  area who volunteer  would                                                            
qualify for the Section 2 exemption.                                                                                            
                                                                                                                                
Senator  Therriault stated  that local  governments  would have  the                                                            
authority to craft the volunteer exemptions.                                                                                    
                                                                                                                                
Senator  Therriault noted  a new fiscal  note would  be required  to                                                            
address the changes in the proposed committee substitute.                                                                       
                                                                                                                                
AT EASE 11:04 AM / 11:06                                                                                                        
                                                                                                                                
Senator Green  inquired how  a community would  replace the  loss of                                                            
income incurred if both Section 1 and Section 2 were enacted.                                                                   
                                                                                                                                
Senator Therriault  commented a community  could choose not  to make                                                            
up the lost revenue or  could replace it by levying or raising other                                                            
taxes or fees.                                                                                                                  
                                                                                                                                
Senator  Green  remarked   that  communities  could   also  ask  the                                                            
Legislature for more revenue sharing funds.                                                                                     
                                                                                                                                
Senator Therriault concurred.                                                                                                   
                                                                                                                                
Senator Green  asked if this bill would benefit certain  communities                                                            
more than others.                                                                                                               
                                                                                                                                
Senator  Therriault  responded  he  was  not aware  that  it  would;                                                            
however, communities  with a residential real property  exemption in                                                            
place would not  lose as much revenue as a community  that does not,                                                            
but chooses to enact the exemptions specified in this bill.                                                                     
                                                                                                                                
Senator  Green  inquired how  a  community  would qualify  for  more                                                            
funding from the State.                                                                                                         
                                                                                                                                
Senator Therriault  reiterated that any community  could enact local                                                            
taxes or fees to fill the void.                                                                                                 
                                                                                                                                
Senator  Green  opined this  would  then  be more  like  a shift  in                                                            
funding sources within the community.                                                                                           
                                                                                                                                
Senator Therriault concurred,  and exampled it could be a shift from                                                            
residential homeowners to other properties in a borough.                                                                        
                                                                                                                                
Amendment  #5: (Note: Referred  to as Amendment  #1) This  amendment                                                            
would  incorporate   the  non-applicability   of  the  new   greater                                                            
exemption levels to communities  with a per-capita debt in excess of                                                            
$15,000 into the title of the bill.                                                                                             
                                                                                                                                
AT EASE: 11:20 AM / 11:23 AM                                                                                                    
                                                                                                                                
Co-Chair Donley moved for adoption of Amendment #1.                                                                             
                                                                                                                                
There being no objections, the Amendment was ADOPTED.                                                                           
                                                                                                                                
Senator Wilken  offered a  motion to report  CS SB 4 from  Committee                                                            
with accompanying fiscal note.                                                                                                  
                                                                                                                                
There  being  no objections,  CS  SB  4 (2dFIN)  was  REPORTED  from                                                            
Committee  with  a new  zero  fiscal  note from  the  Department  of                                                            
Revenue, dated 4/03/02.                                                                                                         

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