03/22/1994 09:01 AM Senate CRA

              SENATE COMMUNITY & REGIONAL AFFAIRS                              
                         March 22, 1994                                        
                           9:01 a.m.                                           
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
 Senator Randy Phillips, Chairman                                              
 Senator Loren Leman                                                           
 Senator Al Adams                                                              
 Senator Fred Zharoff                                                          
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator Robin Taylor, Vice Chairman                                           
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 397(FIN)                         
 "An Act relating to the power to levy property taxes in second                
 class cities."                                                                
                                                                               
 SB 62 (PUBLIC SCHOOL FOUNDATION PROGRAM) was scheduled, but not               
 heard this date.                                                              
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 HB 397 - No previous action to record.                                        
                                                                               
 SB  62 - See Community & Regional Affairs minutes                             
          dated 2/18/93, 4/1/93, 4/6/93 (a.m. & p.m.                           
          minutes), 4/16/93, 2/3/94, 2/10/94, 3/22/94,                         
          3/24/94.                                                             
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Representative Harley Olberg                                                  
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Prime Sponsor of HB 397                                
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
 TAPE 94-23, SIDE A                                                            
 Number 001                                                                    
 The Senate Community & Regional Affairs Committee was called to               
 order by Chairman Randy Phillips at 9:01 a.m.  He then brought                
  CSSSHB 397(FIN)  (TAXING POWER OF SECOND CLASS CITIES) before the            
 committee.                                                                    
 Number 005                                                                    
                                                                               
 REPRESENTATIVE HARLEY OlBERG, prime sponsor of HB 397, explained              
 that he was contacted by the City of Whittier concerning a problem            
 that they feel is inhibiting their economic development prospects,            
 as well as that of other second class cities.                                 
                                                                               
 Representative Olberg said the current statute places a 5 mill                
 limit on the rate of real and personal property taxes second class            
 cities may levy.  Given new and emerging fiscal policies of the               
 state which result in less municipal assistance and revenue                   
 sharing, less state and federal grant money and heavy competition             
 for these scarce dollars, second class cities, who have                       
 traditionally relied on these sources to make up their budgets,               
 face revenue shortfalls which threaten their economic stability and           
 hinder development.                                                           
                                                                               
 Representative Olberg said CSSSHB 397(FIN) allows a second class              
 city to levy a property tax of 20 mills (2%) without a referendum.            
 If the state wishes to impose greater financial responsibility on             
 second class cities, it must remove the legal shackles currently in           
 place, and the legislation is an important step the Legislature can           
 take in this regard, he stated.                                               
                                                                               
 Number 065                                                                    
                                                                               
 SENATOR ADAMS asked if the Department of Community & Regional                 
 Affairs has a position on the legislation.  REPRESENTATIVE OLBERG             
 responded that the department has not expressed an opinion on the             
 bill.                                                                         
                                                                               
 Number 073                                                                    
                                                                               
 SENATOR LEMAN commented that the legislation not only raises the              
 limit that a second class city can levy, but it also takes away the           
 requirement of doing this by referendum.  He asked if there was a             
 particular reason that the second class cities don't want to do               
 this by referendum.  REPRESENTATIVE OLBERG answered that the cost             
 of an election is certainly a factor, as well as the size of second           
 class city and their access to their elected representatives.  He             
 said he doesn't believe that a referendum is necessary in a                   
 community that size.  He added that there is still a referendum               
 provision left in statute which provides that when a second class             
 city incorporates, it can establish a tax cap as a part of the                
 incorporation process.                                                        
                                                                               
 Number 125                                                                    
                                                                               
 There being no other witnesses wishing to testify on HB 397,                  
 SENATOR RANDY PHILLIPS asked for the pleasure of the committee.               
                                                                               
 SENATOR LEMAN moved that CSSSHB 397(FIN) be passed out of committee           
 with individual recommendations.  Hearing no objection, it was so             
 ordered.                                                                      
                                                                               
 There being no further business to come before the committee, the             
 meeting was adjourned at 9:09 a.m.