04/04/2006 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB299 | |
| HB390 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 299 | TELECONFERENCED | |
| *+ | HB 390 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 4, 2006
8:04 a.m.
MEMBERS PRESENT
Representative Kurt Olson, Co-Chair
Representative Bill Thomas, Co-Chair
Representative Pete Kott
Representative Gabrielle LeDoux
Representative Mark Neuman
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 299
"An Act relating to and increasing the municipal property tax
exemption on residences of certain seniors and others; and
providing for an effective date."
- HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE
HOUSE BILL NO. 390
"An Act limiting the amount that a municipality may charge for
an appeal of a residential real property tax assessment to the
municipality's board of equalization."
- MOVED CSHB 390(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 299
SHORT TITLE: MUNICIPAL PROPERTY TAX EXEMPTION
SPONSOR(s): REPRESENTATIVE(s) KOHRING
05/04/05 (H) READ THE FIRST TIME - REFERRALS
05/04/05 (H) CRA, STA
03/23/06 (H) CRA AT 8:00 AM CAPITOL 124
03/23/06 (H) -- Meeting Canceled --
04/04/06 (H) CRA AT 8:00 AM CAPITOL 124
BILL: HB 390
SHORT TITLE: PROPERTY ASSESSMENT APPEAL FEE
SPONSOR(s): REPRESENTATIVE(s) STOLTZE
01/25/06 (H) READ THE FIRST TIME - REFERRALS
01/25/06 (H) CRA, FIN
04/04/06 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE VIC KOHRING
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HB 299.
SHANE HORAN, Assessor
Kenai Peninsula Borough
Kenai, Alaska
POSITION STATEMENT: During hearing of HB 299, related
opposition to increasing the unfunded mandate and during the
hearing of HB 309 testified that the $10 fee proposed wouldn't
be a sufficient deterrent to frivolous appeals and may consume
more resources than necessary.
JOHN KOSCH
Homer Senior Citizens Board
Homer, Alaska
POSITION STATEMENT: Related strong support for HB 299.
HENRY ESTES
(No address provided)
POSITION STATEMENT: During hearing of HB 299, expressed concern
that there are no checks and balances on those who are
increasing property taxes.
FRED BROWN
(No address provided)
POSITION STATEMENT: During hearing of HB 299, expressed concern
with regard to the increases in assessments [in the Mat-Su
Borough].
KATHIE WASSERMAN
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Expressed concerns with HB 299 and
testified that HB 390 impinges on local control.
REPRESENTATIVE BILL STOLTZE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HB 390.
STEVE VAN SANT, State Assessor
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 390, answered
questions.
DENNIS FINEGAN
Ketchikan, Alaska
POSITION STATEMENT: During hearing of HB 390, explained
Ketchikan's appeal fee.
ACTION NARRATIVE
CO-CHAIR BILL THOMAS called the House Community and Regional
Affairs Standing Committee meeting to order at 8:04:32 AM.
Representatives Thomas, Olson, Kott, LeDoux, and Neuman were
present at the call to order. Representatives Cissna and Salmon
arrived as the meeting was in progress.
HB 299-MUNICIPAL PROPERTY TAX EXEMPTION
8:04:52 AM
CO-CHAIR THOMAS announced that the first order of business would
be HOUSE BILL NO. 299, "An Act relating to and increasing the
municipal property tax exemption on residences of certain
seniors and others; and providing for an effective date."
8:05:06 AM
REPRESENTATIVE VIC KOHRING, Alaska State Legislature, sponsor,
explained that HB 299 simply raises the property tax exemption
from $150,000 to $250,000 for homeowners who are age 65 and
older, disabled veterans, widows or widowers, or those who were
disabled while serving in the Territorial Guard. The program
was created in 1971 and the current exemption was established in
1986. He explained that he wanted to increase the exemption
because inflation and the rapidly rising property values have
[lessened the value of the current $150,000 exemption].
Moreover, many low income seniors have been placed in a
financial situation such that they have to choose between paying
for their property tax or their medicine. The legislation, he
related, has quite a bit of support. Representative Kohring
concluded by opining that this legislation is the right thing
and the moral thing to do.
8:08:00 AM
REPRESENTATIVE LEDOUX inquired as to the economic impact this
proposal would have in various communities across the state.
REPRESENTATIVE KOHRING opined that it would be relatively
neutral because the same amount of money would remain in each
community. He acknowledged that the municipalities would
receive less for their programs while individuals in this
category would retain more of their own money that would
theoretically be spent in the community.
REPRESENTATIVE KOHRING, in further response to Representative
LeDoux, suggested that municipalities shouldn't automatically
assume that they should tax more to makeup for shortfalls but
rather they should determine how to be more efficient.
8:09:41 AM
REPRESENTATIVE NEUMAN said that he has heard mention of a needs-
based amendment to this legislation, which he said he would
support because there is only so much money to go around.
REPRESENTATIVE KOHRING said that he is amenable to a needs-based
provision to HB 299. However, he expressed the need to be
cautious when drawing the line because he didn't want to exempt
too many folks who depend and rely upon the exemption. In
further response to Representative Neuman, Representative
Kohring recalled that a few years ago Governor Murkowski
established the senior care program for which the exemption is
$10,000 per individual.
REPRESENTATIVE NEUMAN opined that $10,000 is very low, and
therefore he suggested at least doubling that amount.
REPRESENTATIVE KOHRING said that he would entertain an amendment
for such a change, if it's the will of the committee.
8:13:35 AM
REPRESENTATIVE CISSNA expressed concern that there have been a
number of policy changes on seniors recently and those have had
significant impacts. Furthermore, in many small communities
there is an influx of retired folks who build lovely homes and
enjoy the benefit of the senior tax exemption. She suggested
that there are inequities.
REPRESENTATIVE KOHRING indicated that a needs-based provision
could address that concern. He then related his philosophical
view "that whether an individual is well to do or not, it's
really their money that we talking about .... So, really if
we're giving them an exemption we're not saying that we're
subsidizing you ... we're just allowing you to keep your own
hard-earned money."
REPRESENTATIVE CISSNA pointed out that often the influx of
retirees expect certain services that may not have been in the
area before.
8:16:42 AM
REPRESENTATIVE LEDOUX asked if any communities have a local
exemption.
REPRESENTATIVE KOHRING answered that Kenai has a local
exemption.
REPRESENTATIVE LEDOUX related her belief that when the political
will exists for something, it seems that sometimes it's easier
to accomplish things at the local level. Therefore, she
questioned why the proposed exemption couldn't be implemented at
the local level.
REPRESENTATIVE KOHRING commented that he isn't confident that
local municipalities would retain the senior exemption if it was
left to be a local option, especially in the face of the lack of
funding available for the current exemption.
8:18:32 AM
CO-CHAIR OLSON informed the committee that Kenai has an
ordinance on its ballot to reduce the exemption to $250,000. He
then asked if the sponsor had considered funding the program
rather than placing another unfunded mandate on the boroughs.
REPRESENTATIVE KOHRING opined that it's one of the few unfunded
mandates that he believes is appropriate because it basically
reduces taxes and makes it easier for [seniors] to live. With
regard to applying a funding source to this, Representative
Kohring said he hadn't reviewed such.
8:20:00 AM
SHANE HORAN, Assessor, Kenai Peninsula Borough, related
opposition to increasing this unfunded mandate. He further
related that the potentially exempted assessed value for the
2006 assessment year for the Kenai Peninsula Borough would
approximate $4 million in revenue. The exemption and those
participating in the program are growing about 7-13 percent per
year in the Kenai Peninsula Borough. He noted that the Kenai
Peninsula Borough Assembly is considering capping the current
unlimited exemption at $250,000 and invoking the hardship
program such that those taxes that exceed 2 percent of one's
gross household income would be exempt, which is specified in AS
29.45.030.
8:22:16 AM
JOHN KOSCH, Homer Senior Citizens Board, related strong support
for HB 299 and noted that he will submit a resolution to that
effect. He then pointed out that the seniors in the state have
paid many taxes over the years and this exemption provides a
small break to them in a time when their income has decreased.
8:23:26 AM
HENRY ESTES related that the Mat-Su Borough has raised
[property] taxes so much. The aforementioned is unfair because
there are no checks and balances on those increasing the
property taxes.
8:24:08 AM
FRED BROWN expressed concern with regard to the increases in his
assessments. He said that although he appreciates the
exemptions, the property values have been increased so much that
seniors receive less of the benefit. At the current rate of
increases, Mr. Brown opined that he will have to sell his home
in the next few years.
8:25:37 AM
KATHIE WASSERMAN, Alaska Municipal League, said she agreed with
Representative Kohring regarding seniors and the desire to help
them, especially at the local level. However, HB 299 would cost
an additional $14 million to communities and would result in
local communities paying out up to $56 million for this proposed
exemption [on top of the existing exemption]. A needs-based
provision, particularly with local control, is the way to go,
she said. She suggested that if the mandate were funded it
would remedy the problem. Ms. Wasserman closed by pointing out
that this is all about taxing authority and the local
municipalities have the local taxing authority.
8:27:18 AM
REPRESENTATIVE LEDOUX asked if Ms. Wasserman knew how much it
would cost community-to-community.
MS. WASSERMAN said that the [amount spent on the existing
exemption] is specified in the Alaska tax table and she
suggested that [this proposal would amount to] perhaps an
additional one-third of that.
8:28:43 AM
CO-CHAIR THOMAS, upon determining no one else wished to testify,
closed public testimony.
8:28:53 AM
REPRESENTATIVE NEUMAN expressed his desire for an amendment
[that would base the exemption] on need.
8:29:16 AM
REPRESENTATIVE CISSNA suggested that the program also be funded
by the state, especially since many tools have been taken away
from the local municipalities.
8:30:57 AM
REPRESENTATIVE NEUMAN commented that the two suggestions are
separate issues.
8:31:13 AM
REPRESENTATIVE KOHRING said that basing the exemption on need is
good, but he suggested that the line be drawn higher in order to
include as many seniors as possible. He also suggested that
those who currently receive the exemption should be
grandfathered in regardless of need.
REPRESENTATIVE NEUMAN agreed that the higher the limit the
better, but he maintained that there has to be a limit.
8:33:10 AM
REPRESENTATIVE KOTT acknowledged that the municipalities
throughout the state are hurting. He then said that he is torn
over HB 299 because globally the greatest wealth in the U.S. is
held by those 55 and over. Those hurting the most are the young
couples with children. Representative Kott said that if this is
a significant issue for the state, he would rather the state
address it. Furthermore, if this proposal is pursued, it should
be pursued based on need. He mentioned that he does like the
disabled veteran provision in the legislation. Furthermore,
there is the possibility that an increase in the taxation
exemption status may cause rise for an increase in property
taxes for everyone else because the money must come from
somewhere.
8:37:46 AM
CO-CHAIR THOMAS agreed with Representative Kott regarding the
notion that increasing exemption places the burden on others,
such as young couples with children. He then mentioned that
those who own a house outside of Alaska shouldn't qualify for
any exemption at all. He also mentioned that the program could
be phased out within the next five to six years. Co-Chair
Thomas suggested placing HB 299 in a subcommittee.
8:39:24 AM
REPRESENTATIVE KOHRING informed the committee that the senior
care program exemption is $20,913 per individual and $28,053 for
a household of two. The committee, he suggested, could base the
program on the aforementioned standards as opposed to sending
the legislation to a subcommittee.
8:40:06 AM
REPRESENTATIVE NEUMAN related the need to determine whether
those receiving the current exemption will be eliminated from
the program with the increased exemption based on need or will
the needs-based portion be on the additional $100,000 and allow
the existing exemption to remain.
8:40:57 AM
REPRESENTATIVE KOTT pointed out that the statute is written such
that there is already a needs-based provision in that an
applicant with a hardship can petition the municipality to go
beyond the $150,000. Therefore, he expressed the need to start
from scratch with this proposal. He noted his agreement with an
earlier comment that those who own two homes shouldn't receive
the exemption, especially if the home is outside the state. He
then questioned whether those who travel outside of the state
for three months out of the year should receive the exemption.
The aforementioned could be used as a needs-based threshold, he
said.
8:42:39 AM
CO-CHAIR THOMAS announced that HB 299 would be placed in a
subcommittee comprised of Representatives Kott, Neuman, and
Cissna.
HB 390-PROPERTY ASSESSMENT APPEAL FEE
8:43:24 AM
CO-CHAIR THOMAS announced that the final order of business would
be HOUSE BILL NO. 390, "An Act limiting the amount that a
municipality may charge for an appeal of a residential real
property tax assessment to the municipality's board of
equalization."
8:43:45 AM
REPRESENTATIVE BILL STOLTZE, Alaska State Legislature, sponsor,
explained that HB 390 limits the amount a municipality can
charge for a board of equalization appeal. He reminded the
committee that this was a proposed amendment to the real estate
appraisers legislation last year. He characterized this
legislation as a due process issue and related that he would
prefer that there be no fee. Representative Stoltze noted that
only a few communities have appeal fees.
8:46:06 AM
REPRESENTATIVE KOTT asked if the state charges individual
property owners an assessment fee for appealing his/her taxes.
8:46:20 AM
STEVE VAN SANT, State Assessor, Department of Commerce,
Community, & Economic Development (DCCED), specified that
Anchorage, Kenai, and Ketchikan charge an assessment fee for
appealing property taxes. With regard to whether the state
charges such a fee, Mr. Van Sant explained that the state
doesn't have a board of equalization, except for the state
assessment and review board. The state assessment and review
board hears appeals of oil and gas properties for which there is
no charge. Mr. Van Sant said that the fees charged by the
aforementioned communities are based on a sliding scale. In
Ketchikan, the first appeal is free while $30-$100 is charged
for multiples thereafter. In Anchorage, the fee is $30 for
property assessed up to $100,000, $100 for property assessed
between $100,000-$500,000, and it increases from there. He
related his understanding that Kenai has a similar fee scale.
Furthermore, in all cases, if a change is made by the board of
equalization, the fee is refunded.
8:47:49 AM
DENNIS FINEGAN related that Ketchikan was the first jurisdiction
in Alaska to implement an appeals fee. He expressed the need to
be sure that no one loses his/her appeal rights, which is why
Ketchikan's ordinance was crafted to allow one parcel to be
appealed without the $25 fee. Mr. Finegan opined that the
appeal fee has provided credibility to the appeal process and
has saved about three employee months in the appeal process.
The fee that is collected is insignificant, he said. Mr.
Finegan explained that the first step in the appeals process is
review of the property and reviews not to the taxpayer's
satisfaction can be appealed. He opined that if the legislation
utilized language to the effect of "a fee of not more than $10
for the first appeal" would allow Ketchikan to not charge for
the first appeal and continue to utilize the $25 fee for later
appeals. The aforementioned would stem situations in which
individuals with multiple properties appeal all of their
properties, although they only have an issue with one property.
8:52:06 AM
REPRESENTATIVE LEDOUX inquired as to whether those communities
with the appeal fee have a waiver for those who can't afford it.
MR. VAN SANT said that he wasn't sure and deferred to others on
line.
8:53:01 AM
CO-CHAIR THOMAS asked if any communities have a professional
board of equalization.
MR. VAN SANT specified that Anchorage, Fairbanks, Mat-Su, and
Kenai have appointed boards that consist mainly of individuals
who are familiar with property values along with city council
members and assembly members.
8:53:51 AM
SHANE HORAN, Assessor, Kenai Peninsula Borough, related that
Kenai instituted an appeal filing fee in 2005 that mirrors that
of Anchorage. According to Kenai's code, if the appeal results
in a reduction from the original assessed value or if the appeal
is withdrawn before evidence is due to the board of
equalization, the filing fee is refunded. In fact, the appeal
fee may be waived based on an individual's annual income. He
opined that the filing fee has reduced the number of frivolous
appeals and has helped the [assessor's] office become more
efficient and effective with the appraisers in the field in
order to ensure equity in all assessments. He reminded the
committee that the burden of proving that the assessment is
unequal, improper, excessive, or undervalued lies with the
property owner. The fee provides the property owner more
responsibility and ownership in the appeal process itself. Mr.
Horan related his belief that because the fee is reimbursed to
anyone winning the appeal or withdrawn due to the hardship
waiver, reasonable accommodations have been made such that due
process is afforded to those wishing to appeal. He informed the
committee that Kenai, through ordinance, offers the opportunity
for anyone receiving an assessment notice an informal meeting
with the appraiser or assessor regarding his/her assessment.
The aforementioned has been successful in resolving numerous
appeals. In conclusion, Mr. Horan opined that the $10 fee
proposed in HB 390 wouldn't be a sufficient deterrent to those
frivolous appeals and may consume more resources than necessary.
8:57:11 AM
REPRESENTATIVE NEUMAN commented that he takes exception to the
notion that there are frivolous appeals because those who work
in government are responsible to [the citizens in the area] in
which they work. Furthermore, he questioned whether the work
load increases commensurate to the sliding scale fee amounts.
8:58:01 AM
REPRESENTATIVE KOTT inquired as to the number of appeals that
Kenai receives annually. He further inquired as to how many of
those the property owner wins on appeal.
MR. HORAN answered that in the past the Kenai Peninsula Borough
has had from 400-500 appeals, of which approximately 50-70 have
moved on to the board of equalization. Of those before the
board, approximately 50 percent attend the board hearing. He
estimated that a small fraction of that 50 percent win the
appeal.
9:00:02 AM
CO-CHAIR THOMAS related his understanding that HB 390 only
applies to residential property owners.
REPRESENTATIVE STOLTZE replied yes.
9:00:21 AM
KATHIE WASSERMAN, Alaska Municipal League, opined that HB 390
impinges on local control. She commented that she finds it
ironic that it's acceptable for Kenai to fund over and above the
senior citizens tax exemption, but that it's not acceptable for
it to charge a bit more for property tax appeals. Kenai, like
all other communities, needs to find ways to continue to operate
its government. Ms. Wasserman related that prior to the
implementation of the fee in Anchorage there were an estimated
2,000-3,000 [appeals] a year, which has decreased to 600-700
since the implementation of the fee. If appealing one's
property tax is important to the property owner, she surmised
that he/she would find the funds to pay for it. She highlighted
that the local governments can fairly set the fees.
9:01:53 AM
MR. VAN SANT related that Marty McGee, Anchorage Assessor, had
e-mailed him with the following information. Anchorage, prior
to the institution of the fee, had approximately 2,500 appeals
per year of which 1,300 were addressed administratively and less
than 2 percent of the appeals were changed. The cost per appeal
was about $725, including the assessor's time and the board's
costs. Mr. Van Sant further related that with the commercial
property appeals sometimes the municipality will have to hire
experts, which increases the cost of appeals. Mr. Van Sant
clarified that he wasn't advocating one way or another on this
matter.
9:03:08 AM
CO-CHAIR THOMAS closed public testimony.
9:03:20 AM
REPRESENTATIVE KOTT characterized HB 390 as a worthy idea.
However, he said that he doesn't like to enter into issues of
local control, but he also didn't want to prohibit/prevent those
who want to appeal. He further said he didn't believe it to be
the purview of this committee to determine whether $10 is the
correct amount for the appeal fee.
9:04:48 AM
CO-CHAIR OLSON inquired as to whether the sponsor would accept a
friendly amendment exempting political subdivisions with
populations of 30,000 or less.
REPRESENTATIVE STOLTZE indicated that he would accept such an
amendment.
CO-CHAIR THOMAS expressed concern with regard to accelerated
rates and senior citizens who may not come forward.
9:06:41 AM
REPRESENTATIVE LEDOUX suggested that a $1,000 fee would probably
be related to commercial property because she didn't believe
there would be many properties in Alaska that are assessed at
the $2 million level.
CO-CHAIR THOMAS said that Anchorage might have $2 million homes.
He noted that Fairbanks had its first home that was assessed at
over $1 million last year.
REPRESENTATIVE CISSNA opined that in Anchorage if the appeals
process is made too easy, there are enough homes to slow
municipal government. She related that she views it as a local
issue that should be left at the local level.
9:08:40 AM
REPRESENTATIVE STOLTZE informed the committee that he introduced
HB 390 because many believe that the process is rigged. He
indicated agreement with Representative Kott that residential
homeowners should be treated with the same standards as large
corporate taxpayers on their oil production property for which
there isn't an appeal fee. He emphasized that the burden is on
the property owner and it's a fairly tough case to win. He then
noted his disappointment that the city of Anchorage didn't
provide it's own testimony today.
9:11:58 AM
CO-CHAIR OLSON moved Amendment 1, which would exempt political
subdivisions with populations under 30,000. There being no
objection, Amendment 1 was adopted.
9:12:26 AM
CO-CHAIR OLSON moved to report HB 390, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes.
REPRESENTATIVE CISSNA objected.
A roll call vote was taken. Representatives LeDoux, Salmon,
Kott, Olson, and Thomas voted in favor of reporting HB 390, as
amended, from committee. Representative Cissna voted against
it. Therefore, CSHB 390(CRA) was reported out of the House
Community and Regional Affairs Standing Committee by a vote of
5-1.
9:13:07 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:13 a.m.
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