HB 134-PROPERTY TRANSFER TAX; MUNI TELECOMM TAX  9:22:18 AM CHAIR MCCORMICK announced that the next order of business would be HOUSE BILL NO. 134, "An Act prohibiting municipalities from levying a tax on the transfer of real property; prohibiting the state from levying a tax on the transfer of real property; and relating to municipal taxation of mobile telecommunications services." 9:22:27 AM REPRESENTATIVE JULIE COULOMBE, Alaska State Legislature, as prime sponsor, introduced HB 134. She stated that the proposed legislation would prohibit state and local governments from imposing real estate transfer taxes, fees, and other assessments on sales, grants, assignments, or transfers of real property. She stated that transfer fees are increasingly being assessed for property transactions in other states. She pointed out the housing problems in the state and argued that in Alaska this tax would add the obstacle of increased costs. Concerning local control versus state control, she argued that housing is not just a local issue, as these struggles affect the entire state. She stated that the tax is not currently imposed, and the proposed legislation is a preventative action. 9:25:50 AM MAGY ELLIOTT, Staff, Representative Julie Coulombe, Alaska State Legislature, on behalf of Representative Coulombe, prime sponsor, presented the sectional analysis of HB 134 [copy included in the committee packet], which read as follows [original punctuation provided]: Section 1: (Page one line 5-7) Conforming to Section 4, amends AS.29.10.200(56) to add the provisions of this bill to the Limitation of Home Rule Powers statute. Section 2: (Page one line 8-9) Conforming to Section 6, amends AS 29.10.200(57) to add the provisions of this bill to the Limitation of Home Rule Powers statute. Section 3: (Starting on page 1, line 10, to page 2, line 2) Conforming language to amend AS.29.45.650(a), to add new subsection (l) of this bill to the statues regarding Borough Sales and Use Tax. Section 4: (Page two lines 3-5) Amends AS.29.45.650, to add new subsection (l) to the Borough Sales and Use Tax statue to provide that a borough may not levy or collect sales tax on the transfer of real property. Section 5: (Page two line 6-11) Conforming to Section 6, amends AS.29.45.700(a) to add new section subsection (h) of this bill to the Power of Levy statute. Section 6: (Page two line 12-14) Amends AS 29.45.700 to Add a new subsection (h) to the Power of Levy Statute, which states that a city may not levy or collect a sales or use tax on the transfer or real property. Section 7: (Page two line 15-17) Adds a new section to Article 3, No tax on real property transfers, which stipulates that the state may not levy or collect on sales or use tax on the transfer of real property. Section 8: (Page two line 16-19) Repealer section related to municipal taxation of mobile telecommunications. 9:28:32 AM REPRESENTATIVE MCKAY expressed the understanding that the definition of real property is bigger than just a residential home. He requested a comment on the definition of "real property." REPRESENTATIVE COULOMBE stated that the intention of the proposed legislation would be for residential housing. REPRESENTATIVE MCKAY expressed concern that the legislation designates the term "real property," and this could have an expansive definition. 9:30:11 AM ERROL CHAMPION, Managing Broker, Coldwell Banker Race Realty; Chair, Industry Issues Committee, Alaska Association of Realtors, provided invited testimony on HB 134. He addressed Representative McKay's concern and stated that, in terms of real property transactions, around less than 10 percent of this volume is commercial property. He stated that an exact definition cannot be given, as something sold as commercial could be developed into residential property. He expressed the concern that 35 states have already moved forward with leveeing transfer fees, and this would be added to the cost of real property. In response to a follow-up question, he reiterated that there is no way to determine the difference between commercial and residential property. 9:32:27 AM REPRESENTATIVE MCCABE questioned the transfer fee cost in other states. MR. CHAMPION added that the ten percent stated was the estimated ratio of the commercial property to residential property. Answering the question, he stated that the highest transfer fee he is aware of is in Washington State. He explained that the fees vary, and some states have a county transfer fee, a state transfer fee, and a municipal transfer fee, while other places have a flat rate transfer fee. He stated that realtors who support this bill argue against any costs which would increase the cost of acquiring a home. 9:33:35 AM REPRESENTATIVE COULOMBE expounded that Washington State and Colorado have the highest transfer fee rates. She stated that fees varied from 0.1 per $100,000 all the way to 3.5 per $100,000, per level of government, as some states have three levels of government which charge the tax. She added that if all three impose a tax, the tax could be raised to 10 percent. She continued that the way transfer fees are structured, it is hard to determine a rate across the board. MR. CHAMPION, in response to a follow-up question, stated that most sellers will recognize they have to pay this; therefore, the tax is added to the asking price of the home. He expressed the understanding that [governments like] transfers because it is a one-time charge collected by the escrow office, with the seller paying at closing. 9:35:53 AM MR. CHAMPION explained this has been an issue in the Lower 48, and it is being monitored by the Alaska Realtors Association. He stated that only recently the City and Borough of Juneau passed a disclosure concerning this; however, compliance was poor, and a second ordinance with a fee was adopted. The ordinance was afterwards reversed, but it presented the idea to those in the industry that the inclination "to go after the sell of real property" is there. He reiterated that 35 states have this tax, while 12 other states do not require disclosure. He expressed the opinion that without disclosure, there cannot be a transfer fee. He expressed the preference that the state remain a nondisclosed state. He argued that this is a privacy issue, which is referenced in the state's constitution. 9:38:37 AM REPRESENTATIVE HIMSCHOOT questioned if the bill would address whether Alaska remains a nondisclosure state. REPRESENTATIVE COULOMBE responded in the negative, as it would not address this part; the proposed legislation would only address the transfer tax. She added that this would be the community's choice. REPRESENTATIVE HIMSCHOOT questioned why the proposed bill skips addressing a state tax and directly addresses the municipal level. REPRESENTATIVE COULOMBE responded that it would address the borough, state, and municipality levels. She offered to point out the sections in the bill which do this. REPRESENTATIVE HIMSCHOOT stated that she would support taking everything out of the proposed legislation which deals with municipalities and leaving only the provisions which address the state. She reiterated that she is a proponent of local control. 9:41:27 AM CHAIR MCCORMICK announced that HB 134 was held over.