04/18/1994 01:55 PM Senate JUD

 SENATOR TAYLOR introduced  CSSSHB 397(FIN)  (TAXING POWER OF SECOND           
 CLASS CITIES) as the next order of business.                                  
                                                                               
 DAVID KAMRATH, staff to Representative Harley Olberg, said AS                 
 29.45.590 presents an operations and economic development problem             
 for second class cities.  That law places a 5 mill limit on the               
 rate of real and personal property taxes that they may levy, and              
 given new and emerging fiscal problems of the state, which result             
 in less municipal assistance and revenue sharing, less state and              
 federal grant monies, and heavy competition for those scarce                  
 dollars, second class cities face revenue shortfalls which threaten           
 their economic stability and hinder development.                              
                                                                               
 Mr. Kamrath explained that HB 397 allows a second class city to               
 levy a property tax of 20 mills (2 percent) without a referendum.             
 However, the City of Whittier, which requested the legislation, is            
 not in favor of raising the millage rate without a referendum, and            
 he requested that the committee amend the bill to put the                     
 referendum requirement back in the bill.                                      
                                                                               
 Number 443                                                                    
                                                                               
 SENATOR TAYLOR moved to reinsert the referendum requirement on page           
 1, line 5.  Hearing no objection, he stated the amendment was                 
 adopted and it would incorporated into a Judiciary SCS.                       
                                                                               
 Number 461                                                                    
                                                                               
 SENATOR TAYLOR asked if Representative Olberg had looked at whether           
 a second class city like Whittier could establish a right to tax              
 the Alaska Railroad on its assets.  MR. KAMRATH answered that that            
 issue was looked at last year and it was ruled that they could not            
 tax the railroad.                                                             
                                                                               
 Number 475                                                                    
                                                                               
 SENATOR LITTLE inquired why these second class cities would not               
 consider reclassifying to a first class city, because that would              
 take away the taxation limits.  MR. KAMRATH answered that to become           
 a first class city there has to be a population of 400 or more, and           
 the population of Whittier is currently 279.                                  
                                                                               
 Number 505                                                                    
                                                                               
 SENATOR TAYLOR asked for the pleasure of the committee.                       
                                                                               
 SENATOR LITTLE moved that SCS CSSSHB 397(JUD) be passed out of                
 committee with individual recommendations.  Hearing no objection,             
 it was so ordered.