Legislature(2001 - 2002)

04/18/2002 10:39 AM RLS

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             SB   4-MUNICIPAL PROPERTY TAX EXEMPTION                                                                        
                                                                                                                                
SENATOR  THERRIAULT  moved to  adopt  Version  K of  SB  4 as  the                                                              
working  document  of the  committee.  There being  no  objection,                                                              
Version K was adopted.                                                                                                          
                                                                                                                                
SENATOR THERRIAULT  then explained the  change made in  Version K.                                                              
He  said that  Senator  Donley suggested  language  in the  Senate                                                              
Finance  Committee  that  would  limit  the  availability  of  the                                                              
additional  property tax  exemption in  those municipalities  with                                                              
excessive per capita bonded indebtedness.  When the provision that                                                              
allows  additional  property  tax   exemption  for  EMS  and  fire                                                              
volunteers  was  added  to  the  bill,  Senator  Donley  expressed                                                              
concern  that  the   provision  could  be  a   mechanism  used  by                                                              
municipalities  to do an  end run so  he wanted the  same limiting                                                              
language placed  in that section,  which appears on page  2, lines                                                              
14-16.                                                                                                                          
                                                                                                                                
CHAIRMAN PHILLIPS announced that Senator Ellis was present.                                                                     
                                                                                                                                
SENATOR ELLIS asked for a synopsis  of the legislation and whether                                                              
it is good for senior citizens and bad for municipalities.                                                                      
                                                                                                                                
SENATOR THERRIAULT  said it will have  no impact at all  on senior                                                              
citizens. Right  now anyone with  residential property can  take a                                                              
$10,000  property  tax exemption.  Section  1 would  allow,  after                                                              
approval  by  the  local  voters,  increasing  that  exemption  to                                                              
$15,000.  Section   2  would  allow  the  assembly   to  grant  an                                                              
additional $5,000  property tax  exemption for  a person who  is a                                                              
volunteer fire fighter  or EMS provider. He noted  multiplying the                                                              
$5,000 by the standard millage rate amounts to $100 to $200.                                                                    
                                                                                                                                
SENATOR  ELLIS  asked  if  the  bill   will  have  any  impact  on                                                              
commercial property.                                                                                                            
                                                                                                                                
SENATOR THERRIAULT said it could  if a local government decided to                                                              
grant  a property  tax  exemption and  then  increase the  overall                                                              
millage rate  to recoup any loss.  However, the potential  loss of                                                              
revenue from the exemption for EMS  providers is relatively small.                                                              
The North  Star Borough estimated  the cost at about  $25,000. The                                                              
reason he  wanted the overall exemption  increase to go  to a vote                                                              
was so  that business owners  could make their  case as to  why it                                                              
should or shouldn't be done.                                                                                                    
                                                                                                                                
SENATOR ELLIS  asked if  the Municipality  of Anchorage  (MOA) has                                                              
taken a position on the bill.                                                                                                   
                                                                                                                                
SENATOR THERRIAULT  replied that right  now the MOA does  not take                                                              
advantage of the current $10,000 exemption.                                                                                     
                                                                                                                                
CHAIRMAN PHILLIPS recognized the presence of Senator Cowdery.                                                                   
                                                                                                                                
SENATOR HALFORD asked how the exemptions  can stack on top of each                                                              
other.                                                                                                                          
                                                                                                                                
SENATOR THERRIAULT  explained that a municipality can  grant up to                                                              
a $15,000 exemption per resident.                                                                                               
                                                                                                                                
SENATOR HALFORD remarked:                                                                                                       
                                                                                                                                
     Okay,  so  that's  the  $15,000 or  20  percent  of  the                                                                   
     assessed  value, whichever  is  less. Then  you add  the                                                                   
     emergency medical service -  fire fighting service - and                                                                   
     this shows that you can have  two individuals compounded                                                                   
     so if  you have a couple, both  of whom are part  of the                                                                   
     volunteer  fire fighting  department, which  is in  many                                                                   
     cases the  case, you go from  $15,000 to $25,000  so the                                                                   
     size of the  exemption is really $25,000 at  the top end                                                                   
     - from 10 to 25 thousand. The  second question I have is                                                                   
     how this affects  the formulas where the  combined total                                                                   
     property  assessed valuation  triggers a requirement  in                                                                   
     education -  the 4 percent -  or any other segment  of a                                                                   
     state-funding   component.    Does   this   take   those                                                                   
     properties off the calculation  or do those values still                                                                   
     remain  part  of the  calculation,  which  requires  the                                                                   
     local effort?                                                                                                              
                                                                                                                                
SENATOR  THERRIAULT   answered  that   those  mechanisms   operate                                                              
independent  of anything  in the  bill.  The bill  applies to  the                                                              
amount of  property tax that can  be assessed on the  property and                                                              
those formulas  operate on  the total  assessment of the  property                                                              
value.                                                                                                                          
                                                                                                                                
SENATOR  HALFORD asked  if the  total assessed  property value  is                                                              
changed by what you exempt from the taxation on that assessment.                                                                
                                                                                                                                
SENATOR THERRIAULT said it is not.                                                                                              
                                                                                                                                
SENATOR HALFORD asked who this will apply to.                                                                                   
                                                                                                                                
SENATOR THERRIAULT said  it will apply all across  the state. Some                                                              
municipalities  do  not  take advantage  of  the  current  $10,000                                                              
exemption and  whether they  will take advantage  of this  bill is                                                              
unknown.  However, it  will not be  available  to the North  Slope                                                              
Borough because of its overall bonded indebtedness.                                                                             
                                                                                                                                
SENATOR HALFORD asked about Valdez.                                                                                             
                                                                                                                                
SENATOR THERRIAULT said it would be available to Valdez.                                                                        
                                                                                                                                
SENATOR HALFORD asked  if the Mat-Su and Kenai  Boroughs apply the                                                              
$10,000 exemption.                                                                                                              
                                                                                                                                
MS.  WILDA  RODMAN,   staff  to  Senator  Therriault,   said  that                                                              
currently the  North Slope Borough  has a total per  capita bonded                                                              
indebtedness of  $15,000 so  it is the  only borough that  will be                                                              
affected by that clause. Regarding  the Kenai and Mat-Su Boroughs,                                                              
she said  that Bristol  Bay, Valdez,  Kenai, the  North Slope  and                                                              
North Star Boroughs use the existing $10,000 exemption.                                                                         
                                                                                                                                
SENATOR  THERRIAULT added  that some  of  the municipalities  that                                                              
have chosen  not to  grant the general  residential exemption  may                                                              
take advantage of Section 2, which  applies to volunteers, if they                                                              
are having difficulty attracting volunteers.                                                                                    
                                                                                                                                
There  being no  further questions,  SENATOR  THERRIAULT moved  to                                                              
calendar  CSSB  4(RLS)  at  the  Chairman's  discretion  with  its                                                              
accompanying fiscal note that shows  a potential loss of $200,000.                                                              
He explained the fiscal note assumes  that all municipalities will                                                              
grant the exemptions and increase  the overall millage rate on oil                                                              
and gas properties, lowering the state's take.                                                                                  
                                                                                                                                
SENATOR HALFORD  asked if the Finance Committee  version estimated                                                              
a loss of $714,000.                                                                                                             
                                                                                                                                
SENATOR THERRIAULT  said that  fiscal note  applied when  the bill                                                              
allowed  the  residential  property  tax  exemption to  go  up  to                                                              
$30,000.  It has  been  decreased  to $5,000  so  the fiscal  note                                                              
decreased substantially.                                                                                                        
                                                                                                                                
CHAIRMAN PHILLIPS asked how much  it would cost if all communities                                                              
opted into this program.                                                                                                        
                                                                                                                                
MS. RODMAN said she did not know.                                                                                               
                                                                                                                                
SENATOR THERRIAULT said  he does not know the cost  of the current                                                              
program to the state treasury.                                                                                                  
                                                                                                                                
CHAIRMAN  PHILLIPS said he  would like  to get  an answer  to that                                                              
question.                                                                                                                       
                                                                                                                                
CHAIRMAN  PHILLIPS announced  that hearing  no objections,  CSSB 4                                                              
(RLS) would be calendared.                                                                                                      

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