Legislature(2005 - 2006)CAPITOL 124
04/20/2006 09:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB265 | |
| HB429 | |
| HB299 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 265 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 299 | TELECONFERENCED | |
| += | HB 429 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 20, 2006
9:03 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
SENATE BILL NO. 265
"An Act increasing the total amount of bonds and notes that the
Alaska Municipal Bond Bank Authority may have outstanding; and
providing for an effective date."
- MOVED SB 265 OUT OF COMMITTEE
HOUSE BILL NO. 429
"An Act reestablishing the Department of Community and Regional
Affairs; relating to the Department of Commerce, Community, and
Economic Development and to the membership of various boards and
commissions; and providing for an effective date."
- MOVED HB 429 OUT OF COMMITTEE
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."
- MOVED CSHB 299(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 265
SHORT TITLE: BONDS OF BOND BANK AUTHORITY
SPONSOR(s): SENATOR(s) STEDMAN
02/03/06 (S) READ THE FIRST TIME - REFERRALS
02/03/06 (S) CRA, FIN
02/15/06 (S) CRA AT 1:30 PM BELTZ 211
02/15/06 (S) Heard & Held
02/15/06 (S) MINUTE(CRA)
02/22/06 (S) CRA AT 1:30 PM BELTZ 211
02/22/06 (S) Moved SB 265 Out of Committee
02/22/06 (S) MINUTE(CRA)
02/23/06 (S) CRA RPT 3DP
02/23/06 (S) DP: STEDMAN, WAGONER, STEVENS G
03/08/06 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/08/06 (S) Moved SB 265 Out of Committee
03/08/06 (S) MINUTE(FIN)
03/09/06 (S) FIN RPT 4DP 1NR
03/09/06 (S) DP: WILKEN, GREEN, HOFFMAN, STEDMAN
03/09/06 (S) NR: BUNDE
03/22/06 (S) TRANSMITTED TO (H)
03/22/06 (S) VERSION: SB 265
03/24/06 (H) READ THE FIRST TIME - REFERRALS
03/24/06 (H) CRA, FIN
04/13/06 (H) CRA AT 9:00 AM CAPITOL 124
04/13/06 (H) -- Meeting Canceled --
04/20/06 (H) CRA AT 9:00 AM CAPITOL 124
BILL: HB 429
SHORT TITLE: RESTORE DCRA AND DCED
SPONSOR(s): REPRESENTATIVE(s) CROFT
02/06/06 (H) READ THE FIRST TIME - REFERRALS
02/06/06 (H) CRA, L&C, FIN
03/21/06 (H) CRA AT 8:00 AM CAPITOL 124
03/21/06 (H) Heard & Held
03/21/06 (H) MINUTE(CRA)
04/20/06 (H) CRA AT 9:00 AM CAPITOL 124
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
04/04/06 (H) Heard & Held; Assigned to Subcommittee
04/04/06 (H) MINUTE(CRA)
04/20/06 (H) CRA AT 9:00 AM CAPITOL 124
WITNESS REGISTER
KIM CARNOT, Staff
to Senator Bert Stedman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 265 of behalf of Senator
Stedman, sponsor.
THOMAS BOUTIN, Deputy Commissioner
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding SB 265.
SHANE HORAN, Assessor
Kenai Peninsula Borough
Soldotna, Alaska
POSITION STATEMENT: Testified in opposition to HB 299.
STEVE VAN SANT, State Assessor
Division of Community Advocacy
Department of Commerce, Community, & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding HB 299.
CHARISSE MILLETT, Staff
to Representative Vic Kohring
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 299 on behalf of
Representative Kohring, sponsor.
VICKI HAMILTON, City Clerk
City of Craig
Craig, Alaska
POSITION STATEMENT: During hearing of HB 299, testified that
the City of Craig would prefer to maintain the current $150,000
property tax exemption and reinstate the payments from the state
that help supplement the [revenues lost] due to this exemption.
KEVIN RITCHIE, Executive Director
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 299, expressed the
need for municipalities to have the ability to review Version Y.
ACTION NARRATIVE
CO-CHAIR KURT OLSON called the House Community and Regional
Affairs Standing Committee meeting to order at 9:03:28 AM.
Representatives Salmon, Thomas, Olson, Kott, Cissna, LeDoux, and
Neuman were present at the call to order. Representative Eric
Croft was also in attendance.
SB 265-BONDS OF BOND BANK AUTHORITY
CO-CHAIR OLSON announced that the first order of business would
be SENATE BILL NO. 265, "An Act increasing the total amount of
bonds and notes that the Alaska Municipal Bond Bank Authority
may have outstanding; and providing for an effective date."
KIM CARNOT, Staff to Senator Bert Stedman, Alaska State
Legislature, explained that SB 265 seeks to increase the bond
authority of the Alaska Municipal Bond Bank (Bond Bank) from its
current statutory cap of $500 million to $750 million. The Bond
Bank's authority was last increased in 2003 from $300 million to
$500 million. She further explained that the Alaska Municipal
Bond Bank helps municipalities by lowering the borrowing costs
for the participants. The aforementioned is accomplished by
pooling bond issues, creating economies of scale, and leveraging
the borrowing power and credit worthiness of the state. Since
its inception in 1975, it has helped Alaska communities secure
over $800 million in financing for public works projects.
During that same time, the Bond Bank has returned $26.9 million
in excess earnings to the state. This year, the Bond Bank will
return a $652,000 dividend to the citizens of Alaska. She
informed the committee that last year the Bond Bank issued $123
million in bonds to Alaska communities and through that process
saved those communities $16.7 million in issuance and interest
costs. For example, Bond Bank funds have been used for school
construction, harbor improvements, hospitals, and road
construction in various communities in the state. Ms. Carnot
concluded by relating that the Bond Bank has approximately $80
million in pending applications and only $50 million in
borrowing capacity. Therefore, without the proposed increase
"we" will not be able to take advantage of the program.
9:06:07 AM
REPRESENTATIVE NEUMAN turned attention to the analysis on the
fiscal note and asked whether the funds from the Bond Bank come
from the general fund.
9:06:40 AM
THOMAS BOUTIN, Deputy Commissioner, Department of Revenue,
replied no, the funds come from bond proceeds and bond earnings.
He pointed out that the Alaska Municipal Bond Bank has one
employee who is also the state debt manager. Most of the costs,
he specified, of the Bond Bank are issuance costs, bond counsel,
financial advisor, occasion trustee, and printing costs.
9:07:08 AM
CO-CHAIR THOMAS moved to report SB 265 out of committee with
individual recommendations and the accompanying fiscal notes.
Hearing no objections, SB 265 moved from the House Community and
Regional Affairs Standing Committee.
9:08:01 AM
HB 429-RESTORE DCRA AND DCED
CO-CHAIR OLSON announced that the next order of business would
be HOUSE BILL NO. 429, "An Act reestablishing the Department of
Community and Regional Affairs; relating to the Department of
Commerce, Community, and Economic Development and to the
membership of various boards and commissions; and providing for
an effective date."
CO-CHAIR THOMAS moved to report HB 429 from committee with
individual recommendations and the accompanying fiscal notes.
Hearing no objections, HB 429 moved from the House Community and
Regional Affairs Standing Committee.
9:08:35 AM
HB 299-MUNICIPAL PROPERTY TAX EXEMPTION
CO-CHAIR OLSON announced that the final 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."
REPRESENTATIVE KOTT moved to adopt the committee substitute (CS)
to HB 299, labeled 24-LS0823\Y, Cook, 3/31/06, as a work draft.
Hearing no objections, Version Y was before the committee.
9:09:38 AM
SHANE HORAN, Assessor, Kenai Peninsula Borough, said he has not
seen the new language and would like the committee to get back
to him.
STEVE VAN SANT, State Assessor, Division of Community Advocacy,
Department of Commerce, Community, & Economic Development, said
he is available for questions.
REPRESENTATIVE KOTT, speaking as the chair of the subcommittee
that put forth Version Y, explained that Version Y increases the
tax exemption for senior citizens to $250,000, grandfathered in
those who currently receive the exemption, and instituted a
needs-based system for [new entrants to the system].
CHARISSE MILLETT, Staff to Representative Vic Kohring, Alaska
State Legislature, speaking on behalf of the sponsor, specified
that under Version Y the exemption was increased to $250,000 for
widowers and disabled veterans, those who currently receive the
exemption are grandfathered into the system, and from 2007
forward there is a needs-based provision. She pointed out that
there are two levels of needs-based requirements such that there
are requirements for the $150,000 exemption level and the
$250,000 exemption level. The exemption mirrors the senior care
exemption language and thus those who meet the requirements for
senior care will receive the $250,000 exemption. Those with
double the income for the senior care exemption will receive
$150,000 exemption.
9:12:13 AM
REPRESENTATIVE CISSNA related her understanding that the changes
[encompassed in Version Y] are based on AS 47.45.320(a)(3),
which is the senior care program. She recalled questions with
regard to those who qualify for the program now and what would
happen to those who don't qualify under the needs-based system.
She also recalled questions regarding who manages the program
and the costs of the program.
9:13:35 AM
MS. MILLETT explained that those who would be grandfathered in
would be those who have applied for and are already receiving
the exemption. In further response to Representative Cissna,
Ms. Millett clarified that those who are receiving the $150,000
exemption today will continue receiving the exemption, but after
2007 those turning 65 years of age would have to meet a needs-
based requirement.
9:14:48 AM
MR. VAN SANT related his understanding that the exemption would
be handled on the local level and will require the local
assessor's office to review a senior's Internal Revenue Service
(IRS) tax returns in order to determine if he/she meets the
income eligibility qualifications. He pointed out that the
changes refer to an individual's income as opposed to household
income, which is of concern. He recalled that when this program
first began in the 1970s, there was a household income criteria.
He related his further understanding that those individuals
currently receiving the exemption will continue to receive the
$150,000 exemption. However, he questioned what would happen if
an individual in the aforementioned situation sells his/her
property and moves to another location. He then related his
understanding that those disabled veterans [receiving the
current exemption] would automatically receive the $250,000
exemption.
9:17:19 AM
MR. VAN SANT, in response to Representative Cissna, explained
that the senior exemption is for seniors 65 years or older. In
the 1980s, the widows/widowers and disabled veterans were added
to the exemption. The current statute specifies that if a
widow/widower of a participant is 60 years old, he/she could
continue to receive the exemption. The same thought process was
utilized for disabled veterans. However, the language for the
seniors was adopted, which is problematic. Mr. Van Sant pointed
out that most of the recent disabled veterans are much younger
than 65 and under current law, the widow/widower would not
receive the exemption until he/she reached age 60. He also
pointed out that statute specifies that once the widow/widower
remarries, the exemption ends. Therefore, in most cases the
widow/widower of a disabled veteran will never be able to take
advantage of the exemption due to his/her young age.
9:19:34 AM
MS. MILLETT clarified that the current widow/widower requirement
wasn't changed in the legislation, although the amount was
increased.
9:20:12 AM
MR. VAN SANT, in response to Representative LeDoux, directed the
committee's attention to AS 47.45.320(a)(3) and the following
income requirements: $20,913 for a single person, $28,053 for
two people.
REPRESENTATIVE SALMON related his understanding that this
exemption only applies to one property.
MS. MILLETT confirmed that the exemption only applies to the
primary residence.
9:21:10 AM
VICKI HAMILTON, City Clerk, City of Craig, mentioned that the
City of Craig is the only community on Prince of Wales Island
that collects property tax. Therefore, an increase in the
property tax exemption would impact the local economy. Ms.
Hamilton related that the City of Craig would prefer to maintain
the current $150,000 property tax exemption and reinstate the
payments from the state that help supplement the [revenues lost]
due to this exemption.
KEVIN RITCHIE, Executive Director, Alaska Municipal League, said
he just read Version Y, which he characterized as "scary"
because of the lack of knowledge with regard to the impacts. He
highlighted that whenever an exemption is changed, someone else
benefits or pays at the local level. He referred to the
aforementioned as [cost] shifting. Furthermore, around the
state there is discussion about changing senior benefits.
Without involving municipalities, a fire storm could be created.
Mr. Ritchie expressed the need to study this proposal and all of
the [potential] impacts to provide to the communities for
response. He mentioned his hope that there would be a
substantial hearing process. "The reason it will go locally is
because municipalities still, of course, have the authority to
maintain the program at a higher level and so that issue will
get moved down the line a bit if this bill were to pass out
right now," he said. Mr. Ritchie highlighted that property
taxes are an issue for many people, young and old, and a good
revenue sharing program would have the biggest impact on taxes
and it helps everybody.
9:25:07 AM
REPRESENTATIVE LEDOUX asked if in the long run this proposal
will result in more money going to municipalities because it
phases out the senior exemption that isn't based on need.
MR. RITCHIE related his understanding that those who currently
receive the exemption will continue to receive it, the exemption
for disabled veterans will increase to $250,000, and those
turning 65 after the passage of HB 299 would receive the
exemption based on his/her income. Mr. Ritchie again urged the
committee to provide municipalities time to review this
proposal.
9:26:39 AM
CO-CHAIR THOMAS posed a situation in which those reaching age 65
who are retired face property tax increases of 15 percent and
can't make ends meet. He mentioned the desire to have these
individuals live in their home rather than in an assisted care
facility. He expressed the need to show a little sympathy.
9:29:06 AM
REPRESENTATIVE CISSNA inquired as to the percentage of the
municipalities that have property tax.
MR. RITCHIE answered that it's around 35 communities, which is
most of the people of the state. He noted that there are small
Bush communities that don't have a property tax base. In
further response to Representative Cissna, Mr. Ritchie said that
most every large community has a property tax. He estimated
that probably 90 percent of the state's citizens are subject to
a property tax.
MR. VAN SANT specified that 12 out of 16 boroughs levy a
property tax. The four boroughs that do not are the Northwest
Arctic Borough, the Denali Borough, the Lake and Peninsula
Borough, and the Aleutians East Borough. Furthermore, 13 of the
cities in unorganized boroughs also levy a property tax.
However, the largest second class city, Bethel, doesn't levy a
property tax. He noted his agreement with Mr. Ritchie that
about 90 percent of the population of the state is subject to a
property tax.
9:31:19 AM
REPRESENTATIVE LEDOUX noted her agreement that there ought to be
sympathy for elder individuals and disabled veterans, but this
would be an unfunded mandate.
MR. HORAN requested that communities be given time to digest
this legislation. He opined that the main concern for the Kenai
Peninsula Borough is in regard to the mandatory exemptions and
the unfunded mandate. He then reminded the committee that the
Kenai Peninsula Borough has an unlimited exemption for senior
citizens and disabled veterans. This month, the mayor proposed
capping the exemption at $200,000, and also offered the hardship
exemption such that the senior or disabled veteran would pay no
more than 2 percent of his/her gross household income for
property taxes. However, that failed introduction and at the
next meeting there were proposed scenarios such that the first
$150,000 would be based on one's eligibility for the permanent
fund and Kenai's exemption over that $150,000 would be based on
two years residency and an absence of no more than 90 days. He
mentioned that Kenai has a growing senior citizen and disabled
veteran population. He concluded by again requesting time for
the municipalities to review HB 299.
CO-CHAIR THOMAS asked if those in Kenai who [qualify for the
exemption] and own a home outside of the state are allowed to
receive Kenai's exemption.
9:34:37 AM
MR. HORAN replied yes, adding that the individual must live [in
the Kenai home] for at least 183 days and that home must be the
individual's primary residence and permanent place of abode.
REPRESENTATIVE SALMON indicated the need to increase the
household income thresholds as specified in AS 47.45.320(a)(3)
in order to keep up with [the current standard of living].
MR. HORAN confirmed that the Kenai Peninsula Borough is the only
municipality in the state with a property tax exemption beyond
the $150,000 state-mandated exemption.
9:36:28 AM
REPRESENTATIVE CISSNA informed the committee that she has an
amendment addressing her concerns. She inquired as to the will
of the committee today in order to determine whether she should
move the amendment today.
9:37:35 AM
CO-CHAIR OLSON related that originally the intent was to move
the legislation from committee, but it would be a disservice to
the communities to not allow them time to review it. Therefore,
he announced that HB 299 would be held until next week.
9:37:59 AM
REPRESENTATIVE CISSNA reminded the committee that she has been
visiting communities and reviewing local economies, which has
uncovered the importance of senior and veteran populations to
communities. All of the communities with which she has spoken
are struggling to survive and at the same time, the state is
trying to determine whether the removal of revenue sharing is
permanent or temporary. If it's permanent, the legislature has
to help communities determine how they can survive. She
highlighted that for many communities property tax is the only
way in which it can obtain funds.
9:39:49 AM
REPRESENTATIVE CISSNA expressed the need for the committee to
review the Alaska Municipal League's stance on HB 299. She then
emphasized the need to ensure that as many communities as
possible are allowed to remain healthy.
9:40:26 AM
The committee took a brief at-ease.
9:40:46 AM
CO-CHAIR OLSON informed the committee that if it intends on
moving HB 299, it will have to do so today because the committee
can't hear House Bills next week. Therefore, he indicated that
the legislation could be tweaked in the next committee of
referral, the House State Affairs Standing Committee.
REPRESENTATIVE CISSNA opined that each committee has a
responsibility and HB 299 fits in this committee. "We're
striking at the very basic infrastructure of communities across
the state and I think it would be a great disservice to move
this," she further opined.
CO-CHAIR OLSON recalled that Representative Cissna was a member
of the subcommittee on HB 299.
REPRESENTATIVE CISSNA said, "I never knew of a meeting."
9:42:13 AM
REPRESENTATIVE CISSNA moved Amendment 1, labeled 24-LS0823\Y.1,
Cook, 4/19/06, which read:
Page 1, lines 6 - 13:
Delete all material.
Insert "permanent place of abode by a (1)
resident 65 years of age or older; (2) disabled
veteran; or (3) resident at least 60 years old who is
the widow or widower of a person who qualified for an
exemption under (1) or (2) of this subsection, is
exempt from taxation on the first $200,000 [$150,000]
of the assessed value of the real property. A
municipality may, in case of hardship, provide for
exemption beyond the first $200,000 [$150,000] of
assessed value in accordance with"
Page 2, lines 7 - 27:
Delete all material.
Insert "AS 44.62.560 - 44.62.570."
Page 3, line 9:
Delete "(a)"
Page 3, lines 11 - 14:
Delete all material.
CO-CHAIR THOMAS objected.
9:42:45 AM
REPRESENTATIVE CISSNA explained that Amendment 1 would return
the property tax exemption program to its present configuration,
but increase the exemption to $200,000, which is what some
municipalities are thinking of doing. Amendment 1 would
maintain the provisions for disabled veterans and widows and
widowers, but it wouldn't link it to the senior citizen model.
9:43:54 AM
REPRESENTATIVE LEDOUX surmised then that the only difference
between Amendment 1 and Version Y is that Amendment 1 would
implement a $200,000 exemption rather than a $250,000 exemption
and would eliminate the needs-based criteria. She questioned
whether eliminating the needs-based criteria would be worse for
municipalities.
REPRESENTATIVE CISSNA said that as long as it is linked to the
current model such that the participants have to submit their
tax returns, the number of workers are increased in each
municipality. As Mr. Van Sant testified, at this point there is
no knowledge as to the costs, she noted. She said that there
are other details that have not been fleshed out and someone
will need to figure that out.
9:45:10 AM
A roll call vote was taken. Representatives Cissna and Salmon
voted in favor of Amendment 1. Representatives Kott, LeDoux,
Neuman, Olson, and Thomas voted against it. Therefore,
Amendment 1 failed to be adopted by a vote of 2-5.
9:46:03 AM
CO-CHAIR THOMAS moved to report CSHB 299, Version 24-LS0823\Y,
Cook, 3/31/06, out of committee with individual recommendations
and the accompanying fiscal notes.
REPRESENTATIVE CISSNA objected.
A roll call vote was taken. Representatives Salmon, Kott,
LeDoux, Neuman, Olson, and Thomas voted in favor of reporting
CSHB 299, Version 24-LS0823\Y, Cook, 3/31/06, out of committee.
Representative Cissna voted against it. Therefore, CSHB
299(CRA) was reported out of the House Community and Regional
Affairs Standing Committee by a vote of 6-1.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:47 a.m.
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