Legislature(2001 - 2002)
03/21/2002 09:13 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.