04/16/2002 08:08 AM House CRA
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ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
April 16, 2002
8:08 a.m.
MEMBERS PRESENT
Representative Kevin Meyer, Co-Chair
Representative Andrew Halcro
Representative Drew Scalzi
Representative Lisa Murkowski
Representative Beth Kerttula
MEMBERS ABSENT
Representative Carl Morgan, Co-Chair
Representative Gretchen Guess
COMMITTEE CALENDAR
HOUSE BILL NO. 6
"An Act relating to optional exemptions from municipal property
taxes on residential property."
- MOVED CSHB 6(CRA) OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 6
SHORT TITLE:MUNICIPAL PROPERTY TAX EXEMPTIONS
SPONSOR(S): REPRESENTATIVE(S)DAVIES
Jrn-Date Jrn-Page Action
01/08/01 0025 (H) PREFILE RELEASED 12/29/00
01/08/01 0025 (H) READ THE FIRST TIME -
REFERRALS
01/08/01 0025 (H) CRA, FIN
01/16/02 1990 (H) COSPONSOR(S): SCALZI
04/16/02 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
HELEN DONER, EMS Chief
Anchor Point Volunteer Fire Department
PO Box 367
Anchor Point, Alaska 99556
POSITION STATEMENT: Testified in support of HB 6.
RON WILHOIT, Administrator
Anchor Point Volunteer Fire Department
PO Box 995
Anchor Point, Alaska 99556
POSITION STATEMENT: Testified in support of HB 6.
MARI TURTAINEN, EMT3
Anchor Point Volunteer Fire Department
40894 Old Sterling Hwy
Anchor Point, Alaska 99556
POSITION STATEMENT: Testified in support of HB 6.
DAVID TYLER
North Star Volunteer Fire Department
2358 Bradway Road
North Pole, Alaska 99705
POSITION STATEMENT: Testified in support of HB 6.
ERIC MOHRMANN
Chena-Goldstream Fire & Rescue
PO Box 80487
Fairbanks, Alaska 99708
POSITION STATEMENT: Testified in support of HB 6.
DAN DICKINSON, Director
Tax Division
Department of Revenue
550 W 7th, Number 500
Anchorage, Alaska 99501
POSITION STATEMENT: Discussed the fiscal note to HB 6.
KEVIN RITCHIE, Executive Director
Alaska Municipal League
217 Second Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 6.
ACTION NARRATIVE
TAPE 02-23, SIDE A
Number 0001
CO-CHAIR KEVIN MEYER called the House Community and Regional
Affairs Standing Committee meeting to order at 8:08 a.m.
Representatives Meyer, Scalzi, Murkowski, and Kerttula were
present at the call to order. Representative Halcro arrived as
the meeting was in progress.
HB 6-MUNICIPAL PROPERTY TAX EXEMPTIONS
CO-CHAIR MEYER announced that the only order of business before
the committee would be HOUSE BILL NO. 6, "An Act relating to
optional exemptions from municipal property taxes on residential
property."
Number 0101
REPRESENTATIVE JOHN DAVIES, Alaska State Legislature, testified
as the sponsor of HB 6, which is an update of the 1973 municipal
property tax exemption. In these times of possibly changing
revenue structures, the increase of the local [property tax]
exemption would allow some additional flexibility for the
municipalities to adjust between different revenue sources, he
explained. This legislation adds a new option for
municipalities to add another $10,000 for those who are
volunteer fire fighters, emergency medical technicians, or
similar type personnel. This option is a way to recognize the
volunteer efforts that many make to their community.
Representative Davies highlighted the fact that this is all
optional at the local level. In response to Co-Chair Meyer,
Representative Davies acknowledged that SB 4 is quite similar to
HB 6. In further response to Co-Chair Meyer, Representative
Davies informed the committee that he has an amendment relating
to service areas, which would make HB 6
similar to that in SB 4. However, he preferred to move HB 6.
The companion bill is fundamentally different in two regards.
Senate Bill 4 includes an exemption for the North Slope and the
exemptions aren't as high as those in HB 6. Representative
Davies remarked that adjusting the statute from $10,000 to
$40,000 would be appropriate in regard to inflation alone.
Number 0481
CO-CHAIR MEYER turned to the fiscal note analysis and related
that with HB 6 there is the potential for $1,650,000 less coming
to the state because of the oil and gas property taxation. He
asked if that is of concern.
REPRESENTATIVE DAVIES replied yes, but pointed out that it's an
absolute maximum. Furthermore, the fiscal note assumes that
every municipality that can enact this option will, which is not
the case now. Additionally, the fiscal note assumes that
everyone will use this to increase their rate in order to
maximize their return from oil and gas property. With regard to
the later assumption, Representative Davies said that he didn't
intend that nor did he expect that either. Therefore, he said
he believes that number should be regarded as a very high
maximum.
Number 0589
REPRESENTATIVE MURKOWSKI inquired as to how such volunteers
would be identified in order to avoid abuse.
REPRESENTATIVE DAVIES said that he was unclear how that
identification would be established. However, he was
comfortable in allowing the municipality to determine that. He
noted that in discussions with fire chiefs, the fire chiefs have
indicated that identifying legitimate volunteers shouldn't be a
problem. Representative Davies related his assumption that
since this is optional, the municipalities will have an interest
in ensuring that it's a legitimate deduction.
Number 0707
REPRESENTATIVE SCALZI related his belief that HB 6 is a great
bill that allows a local option.
CO-CHAIR MEYER agreed that HB 6 is a good bill.
REPRESENTATIVE DAVIES remarked that SB 4 was moving quickly in
the Senate, but [it has slowed]. Therefore, he appreciated the
committee hearing HB 6.
Number 0839
HELEN DONER, EMS Chief, Anchor Point Volunteer Fire Department,
testified via teleconference in support of HB 6. This
legislation would positively impact approximately 36 [volunteers
in her area]. She, too, questioned how eligibility would be
proven.
REPRESENTATIVE DAVIES reiterated that the municipality would
determine the eligibility qualifications.
MS. DONER inquired as to whether HB 6 would cover the drivers
[of emergency services vehicles].
REPRESENTATIVE DAVIES answered that he intended it to be as
inclusive as possible. He related his presumption that the
current language is broad enough to allow the local municipality
to include drivers.
Number 1036
RON WILHOIT, Administrator, Anchor Point Volunteer Fire
Department, testified via teleconference in support of HB 6. He
noted that much of his job is in regard to recruitment and
retention. He informed the committee of the extensive training
and education required for these emergency positions. For
example, an EMT1 requires 150 hours of in-class time. All the
time, training, and cost to reach the excellent level makes it
difficult to keep and retain firefighters and medics.
Therefore, HB 6 would make it easier for people to be
volunteers.
Number 1213
MARI TURTAINEN, EMT3, Anchor Point Volunteer Fire Department,
testified via teleconference. Ms. Turtainen commented on the
turnover of these emergency volunteers nationwide. Ms.
Turtainen testified in support of HB 6 in hopes that it would
retain these volunteers.
Number 1302
DAVID TYLER, North Star Volunteer Fire Department, testified via
teleconference. Mr. Tyler informed the committee that the
accountants like for the fire department to track the amount of
in-kind services that are donated. Last year well over 25,000
hours of volunteer time was donated, which amounts to well over
$300,000 when using a $12 an hour rate. He emphasized that
these volunteers are totally uncompensated. Mr. Tyler informed
the committee that there are basically two types of volunteers.
There are those young individuals who don't own homes and are
looking for careers in the fire service; these are the more
transient individuals. There are also volunteers that are
homeowners who live in the district; these are the volunteers
that are difficult to retain and would be helped by HB 6. Mr.
Tyler stated his strong support for HB 6.
MR. TYLER recalled a question of accountability [in regard to
identifying these volunteers]. Mr. Tyler envisioned the
scenario to be one in which the borough would contact [the fire
department] annually. Following a pre-determined standard of
time required to volunteer, the [fire department] would furnish
the borough with a list of the active volunteers.
Number 1506
ERIC MOHRMANN, Chena-Goldstream Fire & Rescue, testified via
teleconference. Mr. Mohrmann echoed earlier comments regarding
the extensive hours of [in-kind] service from these volunteers.
Mr. Mohrmann informed the committee that it takes about three-
and-a-half to four years for a person to achieve EMT3 status as
a lead medic, which is required for the ambulance to [respond].
It takes even more time to bring these volunteers to the level
of providing leadership on emergency scenes. Mr. Mohrmann
remarked on the tremendous bargain the community is receiving
from these volunteers. Mr. Mohrmann related his support of HB
6.
Number 1666
DAN DICKINSON, Director, Tax Division, Department of Revenue,
testified via teleconference. Mr. Dickinson explained that in
review of the volunteer exemption, it seemed to be a fairly
targeted benefit that doesn't appear to impact the fiscal note.
The fiscal note is focused on the change of the exemption from
$10,000 to $40,000. Furthermore, the fiscal note [illustrates]
the maximum effect, and is based on the assumption that the four
communities with oil and gas property will adopt this higher
level exemption and make up any [shortfalls] in revenue with an
increase in their mill rates. However, this may not be the
case. Mr. Dickinson explained that when the mill rate is raised
for an oil and gas taxpayer, that taxpayer pays more money to
the locality, and it's simply deducted from the 20 mills to the
state and thus the payment to the state is lowered. Therefore,
when a municipality raises its rate, there is a shift in to whom
the oil and gas taxpayer makes the check.
REPRESENTATIVE KERTTULA asked if another assumption is that the
state doesn't raise its rate.
MR. DICKINSON answered that if the state raised its rate
overall, then there would be more revenue. However, that is
independent of HB 6.
Number 1931
KEVIN RITCHIE, Executive Director, Alaska Municipal League
(AML), testified in support of HB 6. Mr. Ritchie informed the
committee that [HB 6] is a provision that AML specifically
supports, although it took much discussion. In essence, HB 6 is
a housekeeping measure in that the $10,000 residential property
tax exemption in 1973 is about equal to the proposed $40,000
exemption in HB 6. Mr. Ritchie acknowledged that the impact to
the state would come from those communities with a lot of oil
and gas property. However, property taxes are really a major
tax in Alaska. He pointed out that the total municipal property
taxes levied last year amounted to $711 million. Therefore,
it's possible that some communities will view HB 6 as part of a
package to provide local tax relief in exchange for some other
mix of revenue. Mr. Ritchie, speaking as a former volunteer,
noted that volunteers are closely monitored.
Number 2055
CO-CHAIR MEYER asked if HB 6 or any other local level exemptions
would encourage the local government to want to implement a
sales tax. Or, would the local government become more dependent
upon the state for revenue sharing, he asked. Co-Chair Meyer
asked if HB 6 would create some problems for the local
government.
MR. RITCHIE answered that he didn't believe so. The worst case
scenario would be if the local community raised its property
taxes in order to offset the exemption proposed in HB 6. He
pointed out that the rate would be on the oil and gas industry
as well as all businesses and commercial properties. However,
Mr. Ritchie related that he believes that is the most unlikely
scenario. He pointed out that a few years ago Fairbanks
discussed using this exemption as part of a package in order to
make the sales tax more acceptable, which he believes may be the
case with HB 6. It seems that the public would more likely
support tax relief in that property taxes are already fairly
substantial.
REPRESENTATIVE DAVIES reminded everyone that this is optional.
Number 2164
REPRESENTATIVE MURKOWSKI turned to SB 4, which includes a
provision that allows not more than two exemptions on property
that has two or more individuals who are eligible for an
exemption on the property. Representative Murkowski posed a
situation in which there was a family with three to four members
who are volunteer firefighters. She asked if the intent of HB 6
is to allow each of those volunteers to have an exemption on
that property. Or, she asked, would the sponsor be receptive to
the provision of SB 4.
REPRESENTATIVE DAVIES responded that he intended for there to be
only one exemption per property.
REPRESENTATIVE MURKOWSKI remarked that [the language] isn't
clear that the exemption is limited to one property. She read
HB 6 to say that the exemption traveled with the volunteer.
REPRESENTATIVE DAVIES commented that to the extent the language
is ambiguous, it should be clarified.
CO-CHAIR MEYER, upon determining that there were no other
witnesses, closed public testimony.
Number 2303
REPRESENTATIVE SCALZI moved that the committee adopt the
following amendment, Amendment 1:
Page 1, line 6, following "election.":
Insert "An exclusion or exemption authorized by
this subsection may not be applied with respect to
taxes levied in a service area to fund the special
services."
REPRESENTATIVE HALCRO objected for discussion purposes.
REPRESENTATIVE SCALZI read the amendment for the record.
REPRESENTATIVE HALCRO withdrew his objection.
Therefore, Amendment 1 was adopted.
Number 2358
REPRESENTATIVE SCALZI moved that the committee adopt the
following amendment, Amendment 2:
Page 1, line 11,
Delete "$10,000"
Insert "$20,000"
REPRESENTATIVE MURKOWSKI objected.
REPRESENTATIVE SCALZI highlighted the fact that this is all
optional. Furthermore, at 10 mills the property exemption
amounts to about $100. Although he felt that a $20,000
exemption is low, it's a more fair estimate.
REPRESENTATIVE MURKOWSKI related her understanding that the
sponsor intends for the exemption to only apply to the primary
residence, and therefore there wouldn't be a cumulative
exemption. She removed her objection.
Therefore, Amendment 2 was adopted.
REPRESENTATIVE DAVIES, in response to Co-Chair Meyer, explained
that an effective date isn't necessary. The legislation would
become effective 90 days after passage. He characterized SB 4
as micro managing the situation.
Number 2573
CO-CHAIR MEYER pointed out that the committee packet contains a
letter from the Chena-Goldstream Fire & Rescue opposing HB 6.
However, the testimony today reflected their support.
REPRESENTATIVE DAVIES said that he believes the letter in the
committee packet was submitted prior to the exemption for the
service areas. The adoption of Amendment 1 would eliminate
[Chena-Goldstream Fire & Rescue's] concern, he said.
Number 2647
REPRESENTATIVE MURKOWSKI moved to report HB 6 as amended out of
committee with individual recommendations and the accompanying
zero fiscal note.
REPRESENTATIVE DAVIES acknowledged that the fiscal note should
really be indeterminate. He noted that the Department of
Revenue has advised that there will be a corrected fiscal note
by the time the legislation is the House Finance Standing
Committee.
There being no objection, CSHB 6(CRA) was reported from the
House Community and Regional Affairs Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:49 a.m.
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