Legislature(1999 - 2000)

02/09/2000 01:35 PM Senate CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
    SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE                                                                               
                   February 9, 2000                                                                                             
                      1:35 p.m.                                                                                                 
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Senator Tim Kelly, Chair                                                                                                        
Senator Jerry Mackie, Vice Chair                                                                                                
Senator Jerry Ward                                                                                                              
Senator Randy Phillips                                                                                                          
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
All Members Present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
SENATE BILL NO. 213                                                                                                             
"An Act relating to transportation of members of the Alaska                                                                     
National Guard, the Alaska Naval Militia, and the Alaska State                                                                  
Defense Force by the Alaska marine highway system and the Alaska                                                                
Railroad; and relating to the Alaska State Defense Force."                                                                      
                                                                                                                                
     - MOVED SB 213 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 242                                                                                                             
"An Act authorizing appropriation of the proceeds obtained by the                                                               
state from levy and collection of its ad valorem tax on oil and gas                                                             
exploration, production, and pipeline property to implement state                                                               
revenue sharing for the safe communities program; and providing for                                                             
an effective date."                                                                                                             
                                                                                                                                
     - MOVED SB 242 OUT OF COMMITTEE                                                                                            
                                                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
                                                                                                                                
SB 213 - No previous Senate action.                                                                                             
                                                                                                                                
SB 242 - No previous Senate action.                                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
Ben Grenn                                                                                                                       
Committee Aide to Senator Tim Kelly                                                                                             
Alaska State Capitol                                                                                                            
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  Presented SB 213.                                                                                          
                                                                                                                                
BG Phil Oates                                                                                                                   
Adjutant General/Commissioner                                                                                                   
Department of Military & Veterans Affairs                                                                                       
P.O. Box 5800                                                                                                                   
Ft. Richardson, AK 99505                                                                                                        
National Guard Armory                                                                                                           
POSITION STATEMENT: Supports SB 213.                                                                                            
                                                                                                                                
Wendy Lindskoog                                                                                                                 
Director of External Affairs                                                                                                    
Alaska Railroad Corporation                                                                                                     
P.O. Box 10-7500                                                                                                                
Anchorage, AK 99510                                                                                                             
POSITION STATEMENT:  Supports SB 213.                                                                                           
                                                                                                                                
Captain Norm Edwards                                                                                                            
3132 Channel Dr.                                                                                                                
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  Supports SB 213 but prosposed an amendment.                                                                
                                                                                                                                
Kevin Ritchie                                                                                                                   
Alaska Municipal League                                                                                                         
Conference of Mayors                                                                                                            
2172 2nd. Street                                                                                                                
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  No position on SB 242 at this time.                                                                        
                                                                                                                                
Senator Dave Donley                                                                                                             
Alaska State Capitol                                                                                                            
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  Sponsor of SB 242.                                                                                         
                                                                                                                                
BG Tom Westall                                                                                                                  
Commander, Alaska State Defense Force                                                                                           
49th Civil Support Brigade                                                                                                      
P.O. Box 5800                                                                                                                   
Ft. Richardson, AK 99505                                                                                                        
POSITION STATEMENT:  Supports SB 213.                                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 00-, SIDE A                                                                                                                
Number 001                                                                                                                      
                                                                                                                                
CHAIRMAN TIM KELLY called the Senate Community & Regional Affairs                                                               
Committee meeting to order at 1:35 p.m.  Present were Senators                                                                  
Ward, Mackie, Phillips, Hoffman, and Tim Kelly, Chair.  The first                                                               
order of business to come before the committee was SB 213.                                                                      
                                                                                                                                
        SB 213-TRANSPORTATION OF MEMBERS OF AK NATL GUAR                                                                        
                                                                                                                                
Number 020                                                                                                                      
                                                                                                                                
MR. BEN GRENN, committee aide to Senator Tim Kelly, sponsor of SB
213, stated SB 213 will permit active members of the Alaska                                                                     
National Guard, the Alaska Naval Militia and the Alaska State                                                                   
Defense Force, when space is available, free transportation on the                                                              
Alaska Marine Highway and the Alaska Railroad.  This free status                                                                
will be limited to traveling to and from drill, training, or other                                                              
official militia activities.                                                                                                    
                                                                                                                                
The purpose of SB 213 is to provide a vehicle to get members of our                                                             
volunteer defense forces to and from military training.  In the                                                                 
present climate of downsizing and defense budget cuts, funding for                                                              
transportation of members is constricted.                                                                                       
                                                                                                                                
As the owner and operator of the passenger railroad and marine                                                                  
highway system, the State of Alaska is in the position to offer                                                                 
transportation for these military personnel who are participating                                                               
in training to defend our state and freedoms.                                                                                   
                                                                                                                                
SB 213 would mandate the railroad and ferry system to provide free                                                              
transportation, on a space available basis, for the members of the                                                              
above referenced state defense organizations who are en route to or                                                             
from drill, training, or other official militia activities.                                                                     
                                                                                                                                
The bill makes a name change from "Alaska State Militia" to "Alaska                                                             
State Defense Force" in several places in the statute.                                                                          
                                                                                                                                
SB 213 is a simple, straightforward document to assist our                                                                      
volunteer and citizen soldiers to get to their training.                                                                        
                                                                                                                                
GENERAL TOM WESTALL, Commander 49th Civil Support Brigade, stated                                                               
that he provided the committee with a briefing sheet.  In 1983 the                                                              
Department of Defense (DOD) asked the Adjutant Generals of several                                                              
states to look at the defense forces to see if they could be                                                                    
brought into the total force structure.  The military has been                                                                  
downsizing and the probability of federalizing the National Guard                                                               
has been very likely.  The State Defense Force would be a "stay                                                                 
behind" force and provide military formation for the Governor in                                                                
the event of the federalization of the National Guard.                                                                          
                                                                                                                                
The defense force provides a force multiplier for the various State                                                             
agencies during times of disasters and other emergencies.  In the                                                               
services, only declared disasters are recorded, but the force                                                                   
participates more than that.  60 soldiers were furnished for Y2K                                                                
search and rescue activities and for public service with the                                                                    
military police.                                                                                                                
                                                                                                                                
Currently the force is structured as a cadre unit.  They have                                                                   
brigade headquarters at Ft. Richardson at the armory, a fourth                                                                  
battalion in Anchorage, a second battalion in the Mat-Su valley, a                                                              
first battalion in Juneau, and a third battalion in Fairbanks.  The                                                             
force also has an aviation detachment and medical detachment with                                                               
certified State doctors and registered nurses to take care of all                                                               
medical needs.                                                                                                                  
                                                                                                                                
United States Code Title 32, says that each state can have a                                                                    
National Guard and State Defense Force.  The force is also covered                                                              
by National Guard regulations.  AS 26 is the statute the force                                                                  
operates under in the State.  That statute shows the force as a                                                                 
militia; that is part of the language that needs to be changed to                                                               
"State Defense Force."                                                                                                          
                                                                                                                                
Number 121                                                                                                                      
                                                                                                                                
CHAIRMAN KELLY asked if the language had already been changed and                                                               
the legislation is just conforming the language in the statute, or                                                              
whether SB 213 makes the official change.                                                                                       
                                                                                                                                
GENERAL WESTALL stated that SB 213 makes the official change.                                                                   
                                                                                                                                
SENATOR MACKIE asked if the name change was unanimously agreed upon                                                             
amongst all military units in the State or whether there was any                                                                
opposition to changing the language.                                                                                            
                                                                                                                                
GENERAL WESTALL said the "State Defense Force" is a federal term                                                                
that Alaska has adopted.  Some states prefer "State Guard."  Alaska                                                             
avoided that term to make a clear distinction between the Alaska                                                                
National Guard and the State Defense Force so it is clear on which                                                              
unit people are addressing.  The characterizations of Defense Force                                                             
are more appealing than a militia group.  They also have their own                                                              
regulations on commissioning, enlisting, personnel action,                                                                      
training, and logistics; so it is a well regulated force.                                                                       
                                                                                                                                
Number 150                                                                                                                      
                                                                                                                                
SENATOR MACKIE asked if the Alaska State Defense Force falls under                                                              
the command of the State's top military officials.                                                                              
                                                                                                                                
GENERAL WESTALL stated the Governor is the Commander in Chief of                                                                
all military forces within the State of Alaska.  General Oates is                                                               
the senior military officer for the State.                                                                                      
                                                                                                                                
CHAIRMAN KELLY asked if there are any full-time employees for the                                                               
State Defense Force.                                                                                                            
                                                                                                                                
GENERAL WESTALL said not at this time.  The Attorney General                                                                    
decided the provisions to pay the Alaska Defense Force were not                                                                 
clear.  SB 213 would be helpful for the Alaska Defense Force,                                                                   
because the units in Juneau have no economic way to come to                                                                     
Anchorage to train.  It would be good for morale and cross-training                                                             
to let them train with a full brigade.                                                                                          
                                                                                                                                
Number 185                                                                                                                      
                                                                                                                                
ADJUTANT GENERAL PHILLIP OATES, Commissioner, Department of                                                                     
Military & Veterans Affairs, stated the Alaska State Defense Force                                                              
is a magnificent organization of volunteers.  These people are not                                                              
paid to train, they train on their own because they are Alaskan                                                                 
patriots.  The only time these individuals are paid is when they                                                                
are called for active state duty.  SB 213 helps these groups come                                                               
together for training and it lets the group know the State                                                                      
appreciates their service.                                                                                                      
                                                                                                                                
SB 213 will help the National Guard, because members are in 76                                                                  
different locations around the State.  SB 213 provides                                                                          
transportation on a space available basis, so the impact will be                                                                
minimal.  It will help the force become ready in case an emergency                                                              
arises.  SB 213 has his full support.                                                                                           
                                                                                                                                
Number 209                                                                                                                      
                                                                                                                                
CHAIRMAN KELLY asked if they can be transported by National Guard                                                               
aircraft.                                                                                                                       
                                                                                                                                
GENERAL OATES said yes, most of the travel is done with the Force's                                                             
own resources.  The only time they pay for travel on State                                                                      
resources is for annual training.  This will provide targets of                                                                 
opportunity when it is not essential to train.  Once a year, the                                                                
National Guard has funding to transport for annual training.                                                                    
                                                                                                                                
CHAIRMAN KELLY asked if the State Defense Force members need two                                                                
weeks of active duty a year.                                                                                                    
                                                                                                                                
GENERAL OATES replied no, they do not.  They have a training cycle,                                                             
but it is not a mandated cycle like the National Guard.  They go to                                                             
the field for exercise; it is a different structure because they                                                                
are volunteers.  General Oates introduced Major Mancino and Major                                                               
Young.                                                                                                                          
                                                                                                                                
Number 238                                                                                                                      
                                                                                                                                
MS. WENDY LINDSKOOG, Director of External Affairs for the Alaska                                                                
Railroad Corporation, stated that the Alaska Railroad supports SB
213, which provides free transportation for the military on a space                                                             
available basis.  This bill provides another way for the Alaska                                                                 
Railroad to support the State's armed forces.                                                                                   
                                                                                                                                
MS. LINDSKOOG cited AS 42.40 and gave some history on the Alaska                                                                
Railroad Corporation.  She said that there would be no financial                                                                
impact to the railroad, if the space available basis policy is not                                                              
violated.  Military members would not take the place of revenue                                                                 
paying customers.  Military travelers have the potential of being                                                               
bumped on different segments of travel with the railroad.  Ms.                                                                  
Lindskoog also gave the committee some background information on                                                                
the Alaska Railroads rates and different routes.                                                                                
                                                                                                                                
CAPTAIN NORM EDWARDS, Operations Manager of the Alaska Marine                                                                   
Highway System (AMHS), stated the AMHS supports SB 213.  Since                                                                  
revenues are always a concern for the AMHS, one concern is that                                                                 
current travel being paid for by federal funds will now be lost to                                                              
the State of Alaska.  Another concern is that free travel not occur                                                             
on the highest revenue generating runs.  Lastly, AMHS is concerned                                                              
that the new task does not become a burden for the operations of                                                                
AMHS.  AMHS hopes SB 213 will allow operations that are                                                                         
complimentary to what AMHS already performs.  The plans to                                                                      
implement the bill will include: defining space available; union                                                                
contracts go to first come, first serve basis; and providing                                                                    
travel between Alaska ports only.                                                                                               
                                                                                                                                
AMHS would like to add language to section 2 of SB 213 that reads                                                               
"between Alaska ports only" immediately after "AMHS."  AMHS wanted                                                              
to make everyone aware of those issues, but they do support SB 213                                                              
along with the Alaska State Defense Force.                                                                                      
                                                                                                                                
CHAIRMAN KELLY said he feels confident the AMHS and the Alaska                                                                  
Railroad will work out the concerns mentioned.  Chairman Kelly                                                                  
asked General Westall if he could think of a reason someone would                                                               
need to go to Seattle.                                                                                                          
                                                                                                                                
GENERAL WESTALL said no.  Most of the use will be intermittent and                                                              
not on a regular basis.  Occasionally the AMHS would be used to                                                                 
travel to Haines.                                                                                                               
                                                                                                                                
SENATOR MACKIE asked if there would be any training outside the                                                                 
State of Alaska.                                                                                                                
                                                                                                                                
GENERAL WESTALL said no, there would be no training outside the                                                                 
State.                                                                                                                          
                                                                                                                                
CHAIRMAN KELLY said the intent is to operate between Alaska ports                                                               
only, instead of making a committee substitute for SB 213.                                                                      
                                                                                                                                
CAPTAIN EDWARDS stated he understands the intent, and that is how                                                               
it will be interpreted.                                                                                                         
                                                                                                                                
SENATOR MACKIE moved SB 213 out of committee with individual                                                                    
recommendations.  There being no objection, the motion carried.                                                                 
                                                                                                                                
         SB 242-PIPELINE PROP TAX USED FOR REV. SHRING                                                                          
                                                                                                                                
SENATOR DAVE DONLEY, sponsor of SB 242, explained communities                                                                   
statewide are faced with the possibility that the pending property                                                              
tax limitation initiative may pass this year.  The initiative will                                                              
have drastic effects on what local governments can collect as                                                                   
property taxes and it will reduce the current 30 mill limit to 10                                                               
mill the State imposes on communities.  SB 242 addresses the impact                                                             
of the initiative and it would go into effect if the initiative                                                                 
passes.                                                                                                                         
                                                                                                                                
The initiative limits what local governments can collect for                                                                    
property taxes; it has no impact on the existing State oil & gas                                                                
property tax.  The State has a 20 mill cap and a provision allowing                                                             
it to only collect the difference between 20 mills and what local                                                               
governments collect.  Currently, of $240 million in oil & gas                                                                   
property taxes collected statewide, the State only gets $23 million                                                             
because the local communities are capturing that money.                                                                         
                                                                                                                                
If the initiative passes, the ability of communities to capture                                                                 
that money would decrease and the State's share would increase.  A                                                              
provision in the initiative allows communities to continue to                                                                   
retire existed bonded debt.  Communities can exceed the 10 mill cap                                                             
for existing debt, but they can't incur additional debt until the                                                               
mill rate is below 10 mills or less.                                                                                            
                                                                                                                                
Next year, the State will receive an extra $5-8 million because the                                                             
local communities' debt will begin to retire so the State's share                                                               
will increase.  The State may receive $130 million each year in the                                                             
far future.                                                                                                                     
                                                                                                                                
SB 242 dedicates the money the State will receive from oil & gas                                                                
property tax to the existing municipal assistance formula.  SB 242                                                              
will utilize the new revenue the State is receiving to help                                                                     
communities that would be hard hit by the initiative.  This is a                                                                
step to mitigate the impacts.                                                                                                   
                                                                                                                                
Number 407                                                                                                                      
                                                                                                                                
CHAIRMAN KELLY asked about the legality of the contingent effective                                                             
date and whether Senator Donley requested a legal opinion about the                                                             
language.                                                                                                                       
                                                                                                                                
SENATOR DONLEY said the drafters did not express concern about it.                                                              
He will request a specific opinion from the drafter on the                                                                      
language.                                                                                                                       
                                                                                                                                
SENATOR MACKIE asked why it will take an initiative.                                                                            
                                                                                                                                
SENATOR DONLEY stated the affect of the initiative, if it passes,                                                               
is that it will generate additional revenue for the State.  If it                                                               
doesn't pass, the status quo remains, and the local communities                                                                 
will continue to collect the revenue from oil & gas property.  SB
242 is not going to hurt existing communities.  If they are hurt by                                                             
the initiative, it will help mitigate the effects by taking the                                                                 
additional money the State would get if the initiative passes and                                                               
give it to the communities.                                                                                                     
                                                                                                                                
SENATOR MACKIE asked if SB 242 will try to mitigate an unintended                                                               
consequence.                                                                                                                    
                                                                                                                                
SENATOR DONLEY stated that it may be an intended consequence if the                                                             
backers of the initiative think the city should not have that                                                                   
money.  The initiative will hit some cities harder than others.  SB
242 is not a full fix to that problem.                                                                                          
                                                                                                                                
SENATOR MACKIE asked what kind of affect it will have on the North                                                              
Slope Borough (NSB), Valdez or some other communities.                                                                          
                                                                                                                                
SENATOR DONLEY said those communities will be hit hardest by the 10                                                             
mill cap because they are at the 20 mill level and they will no                                                                 
longer be able to capture the value of all property, including oil                                                              
& gas.  Because the NSB has such a high level of bonded debt, the                                                               
immediate impacts will be delayed until it starts to pay off the                                                                
debt, then the impact will be very significant.  The communities                                                                
that will be hit hardest by the initiative are the ones that don't                                                              
have bonded debt and are exempt.  The ones that have bonded debt                                                                
along the pipeline corridor are eventually going to be hit the                                                                  
hardest.                                                                                                                        
                                                                                                                                
                                                                                                                                
Number 445                                                                                                                      
                                                                                                                                
SENATOR MACKIE asked if the money goes back to where it was                                                                     
collected or whether it will be distributed throughout the                                                                      
municipalities.                                                                                                                 
                                                                                                                                
SENATOR DONLEY stated the revenue from the oil & gas property tax                                                               
is designated to fund the current municipal formula.  It goes out                                                               
to communities statewide under that formula.                                                                                    
                                                                                                                                
SENATOR PHILLIPS asked why the State doesn't just let them have                                                                 
what is requested in the initiative.                                                                                            
                                                                                                                                
SENATOR DONLEY said the initiative doesn't address the existing oil                                                             
& gas property tax.  The State doesn't get that money now because                                                               
local communities are getting it.  This is a way to partially                                                                   
mitigate the impacts without creating new local taxes.                                                                          
                                                                                                                                
SENATOR HOFFMAN said SB 242 should be held off to see if the                                                                    
initiative passes and, if the voters implement the tax cap, then                                                                
the options should be weighed.                                                                                                  
                                                                                                                                
Number 475                                                                                                                      
                                                                                                                                
SENATOR DONLEY said that is a point to consider.  The State should                                                              
also see what the affects of inaction are.  The State will get                                                                  
additional revenue if the initiative passes, but there would be no                                                              
plan to mitigate the effects on communities.                                                                                    
                                                                                                                                
SENATOR MACKIE asked if this is another way to cut $8 million out                                                               
of municipal assistance because they have a new revenue source.                                                                 
                                                                                                                                
SENATOR PHILLIPS suggested passing a 10 mill limit and taking the                                                               
initiative off the ballot so the legislature could write something                                                              
that is workable.                                                                                                               
                                                                                                                                
SENATOR DONLEY said SB 242 will not go into effect unless the                                                                   
initiative passes.  It would have no impact on any community if it                                                              
doesn't pass.  It is a way of mitigating the effects if it does                                                                 
pass with money the State wouldn't normally get.                                                                                
                                                                                                                                
CHAIRMAN KELLY said if the initiative doesn't pass, it is back to                                                               
the status quo.  If the initiative passes and SB 242 passes, then                                                               
the additional money that is coming from the pipeline communities                                                               
would go into a statewide pool to be redistributed through revenue                                                              
sharing statewide.                                                                                                              
                                                                                                                                
SENATOR MACKIE asked if that will require a constitutional                                                                      
amendment.                                                                                                                      
                                                                                                                                
SENATOR DONLEY stated it is just like issues that suggested to the                                                              
legislature that this issue should be the source of funding.                                                                    
                                                                                                                                
Number 500                                                                                                                      
                                                                                                                                
MR. KEVIN RITCHIE, Alaska Municipal League (AML) and Conference of                                                              
Mayors, stated the tax cap and revenue sharing are key issues for                                                               
the State.  AML has not taken a position on SB 242, it is working                                                               
with the State assessor and the municipalities to try and gauge the                                                             
issues.                                                                                                                         
                                                                                                                                
If the tax cap passes, the Municipality of Anchorage will lose $73                                                              
million in revenue out of the current $230 million in tax revenue.                                                              
If the initiative does pass, it will add $125 million to the                                                                    
State's fiscal gap.  Those funds need to be found somewhere else                                                                
for schools, public safety and other services provided by                                                                       
municipalities.  When the public understands about the tax cap, the                                                             
initiative will not pass.                                                                                                       
                                                                                                                                
CHAIRMAN KELLY asked Mr. Ritchie if he has seen polling data about                                                              
the initiative passing.                                                                                                         
                                                                                                                                
MR. RITCHIE replied yes.  The polls from Anchorage showed 50                                                                    
percent opposed, 41 percent in favor, and 9 percent uncommitted on                                                              
the initiative.  A large group of people that it would impact have                                                              
children and it will hurt education.  The pressure would be strong                                                              
for the State to re-examine all tax exemptions.  The public                                                                     
understands that property taxes fund schools, police, and other                                                                 
services.                                                                                                                       
                                                                                                                                
SENATOR PHILLIPS asked who the Municipality was polling.  Senator                                                               
Phillips talked about an initiative in the State of Washington.  He                                                             
stated that the State should just pass legislation limiting the cap                                                             
at 10 mills, and work with it from there.                                                                                       
                                                                                                                                
Number 549                                                                                                                      
                                                                                                                                
MR. RITCHIE said the municipalities understand that it is a threat                                                              
to a revenue source and they will take very serious steps.  AML is                                                              
working with different groups who don't like the initiative.  One                                                               
concern is to make everyone aware of the impacts of the initiative.                                                             
                                                                                                                                
CHAIRMAN KELLY asked if Mr. Ritchie heard about a potential lawsuit                                                             
questioning the constitutionality of the initiative.                                                                            
                                                                                                                                
MR. RITCHIE said putting it on the ballot and the constitutionality                                                             
of the initiative are two separate issues.  It is possible that                                                                 
lawsuits will be filed if the initiative passes.                                                                                
                                                                                                                                
CHAIRMAN KELLY asked about lawsuits being filed prior to the                                                                    
initiative going on the ballot.                                                                                                 
                                                                                                                                
MR. RITCHIE replied he is not aware of any.                                                                                     
                                                                                                                                
Number 574                                                                                                                      
                                                                                                                                
SENATOR MACKIE asked what the impacts from the initiative are going                                                             
to be on the municipalities.                                                                                                    
                                                                                                                                
MR. RITCHIE stated that Anchorage expects to lose $73 million                                                                   
immediately; the impacts of that are going to be huge.  The total                                                               
bonded debt of municipalities for the entire state amounts to  $1.4                                                             
billion.  The public doesn't realize part of the problem is the                                                                 
assessment cap.                                                                                                                 
                                                                                                                                
TAPE 00-01, SIDE B                                                                                                              
                                                                                                                                
MR. RITCHIE discussed the impacts to Sitka.  No matter how much the                                                             
value of the property increases, the property tax increase is                                                                   
restricted to two percent.  Property value is set at the true                                                                   
market value when the property is sold.  This creates a significant                                                             
disincentive for buying, selling, or building new homes.                                                                        
                                                                                                                                
SENATOR MACKIE asked if there is a constitutional question about                                                                
that.                                                                                                                           
                                                                                                                                
MR. RITCHIE said it is a Proposition 13, just like California's.                                                                
It is not in violation of the U.S. Constitution.                                                                                
                                                                                                                                
Number 570                                                                                                                      
                                                                                                                                
SENATOR MACKIE asked if AML was worried about people coming out of                                                              
the woodwork to vote because they will be paying less in property                                                               
taxes.                                                                                                                          
                                                                                                                                
MR. RITCHIE said the public understands what local governments                                                                  
produce.  Parallels can be drawn, and the public can see if it                                                                  
loses that funding, it loses libraries, teachers, and police.                                                                   
                                                                                                                                
SENATOR PHILLIPS cited statistics from his district from an annual                                                              
questionnaire.                                                                                                                  
                                                                                                                                
MR. RITCHIE said AML will work hard to explain the impacts to the                                                               
public.  Mr. Ritchie referred to a survey taken by Senator Pearce.                                                              
                                                                                                                                
Number 522                                                                                                                      
                                                                                                                                
SENATOR MACKIE explained if people think they will pay less in                                                                  
property taxes, they will vote for the initiative.                                                                              
                                                                                                                                
CHAIRMAN KELLY asked, with a 10 mill cap, what community will lose                                                              
revenue that will be shared in different districts.                                                                             
                                                                                                                                
SENATOR DONLEY said different communities lose different amounts                                                                
depending on the number of years estimated and depending on the                                                                 
existing debt accumulated by communities.  It will be                                                                           
disproportionate in the beginning.  Eventually the communities with                                                             
oil & gas properties will lose access to wealth they currently                                                                  
have: NSB, Fairbanks, and Valdez.  SB 242 will not hurt those                                                                   
communities if the initiative doesn't pass, it will help them if it                                                             
does pass because it gives back revenue that they will lose.                                                                    
                                                                                                                                
Number 498                                                                                                                      
                                                                                                                                
SENATOR MACKIE asked if downsizing municipalities is an option.                                                                 
                                                                                                                                
MR. RITCHIE said currently AML doesn't have a position on that.                                                                 
                                                                                                                                
CHAIRMAN KELLY asked if it is too early for NSB, Fairbanks, and                                                                 
Valdez to oppose the bill.                                                                                                      
                                                                                                                                
SENATOR DONLEY stated the bill doesn't hurt those communities, it                                                               
will return money to them they would lose if nothing happens.                                                                   
                                                                                                                                
SENATOR MACKIE asked how the bill returns a portion of the money                                                                
back to those communities.                                                                                                      
                                                                                                                                
Number 482                                                                                                                      
                                                                                                                                
SENATOR DONLEY said this is money the State doesn't have and                                                                    
wouldn't get unless the initiative passes.  If the initiative                                                                   
passes, the extra money that would have gone to the communities                                                                 
will go to the State.  It seems reasonable to send the money back                                                               
to the communities.                                                                                                             
                                                                                                                                
SENATOR HOFFMAN said if the public sees the money returning to the                                                              
communities, it will be more likely to vote for a tax cap.                                                                      
                                                                                                                                
SENATOR MACKIE moved SB 242 out of committee with individual                                                                    
recommendations.  There being no objection, the motion carried.                                                                 
                                                                                                                                
CHAIRMAN KELLY adjourned the meeting at 2:49 p.m.#                                                                              

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