HB 211:  MUNICIPAL INVENTORY TAX EXEMPTIONS: EXPORTS                         
                                                                               
  Number 494                                                                   
                                                                               
  REPRESENTATIVE CYNTHIA TOOHEY, PRIME SPONSOR OF HB 211,                      
  testified by reading her sponsor statement into the record.                  
  (Copies of this sponsor statement may be found in the House                  
  Community and Regional Affairs Committee Room, Capitol Room                  
  110, and after the adjournment of the second session of the                  
  18th Alaska State Legislature, in the Legislative Reference                  
  Library.)                                                                    
                                                                               
  Number 520                                                                   
                                                                               
  SCOTT HAWKINS, PRESIDENT, ANCHORAGE ECONOMIC DEVELOPMENT                     
  CORPORATION, testified in support of HB 211 saying, "The                     
  Anchorage Economic Development Corporation has been                          
  marketing aggressively in recent years to attract                            
  warehousing distribution business to Anchorage to capitalize                 
  on the air cargo activity that came in in recent years.  We                  
  are making some headway.  We are getting reasonably close                    
  with some major entities in terms of working with them to                    
  establish international warehousing centers in Anchorage.                    
  Major manufacturers of high value products such as computer                  
  equipment, semiconductors, that type of thing."                              
                                                                               
  MR. HAWKINS continued, "This industry has tremendous long                    
  term potential for Anchorage. Now that we have the FedEx                     
  (Federal Express) and UPS (United Parcel Service) hubs, we                   
  believe this type of thing would be the next job-creating                    
  type of activity associated with our geographic location and                 
  logistics potential.  But I would point out that this bill                   
  (HB 211) is not limited to air cargo, it is not limited to                   
  high value manufacturing goods.  It is not limited to                        
  Anchorage.  It is also a bill that would help communities                    
  with other goals, such as coastal communities wanting to                     
  build cold storage."                                                         
                                                                               
  MR. HAWKINS added, "For those communities that have seafood                  
  storage already, as it sits right now there's actually a                     
  reverse incentive in the law because current law does not                    
  allow inventories held for export to be treated any                          
  differently than any other type of inventory.  This                          
  encourages businesses such as seafood companies to get their                 
  inventory out of the state early, before January first,                      
  before the tax men come around and count it.  So it actually                 
  exacerbates the already existing seasonality of some                         
  industries..."                                                               
                                                                               
  Number 551                                                                   
                                                                               
  Chairman Olberg asked, "Only the municipality can charge an                  
  inventory tax at this point in time, is that correct?"                       
                                                                               
  MR. HAWKINS replied, "My understanding is that only the                      
  municipalities do at this point in time..."                                  
                                                                               
  CHAIRMAN OLBERG said, "That tax is charged according to the                  
  inventory as it exists on a particular day basically, isn't                  
  it?"                                                                         
                                                                               
  MR. HAWKINS replied in the affirmative.                                      
                                                                               
  CHAIRMAN OLBERG commented, "The Municipality of Anchorage is                 
  in favor of this proposal based on the letter we have                        
  received."                                                                   
                                                                               
  REPRESENTATIVE DAVIES asked about some original language in                  
  AS 29.45 regarding school districts.                                         
                                                                               
  REPRESENTATIVE TOOHEY explained, "I understand last year                     
  when the bill went through that, that specific language was                  
  put in there because there was a person of persuasion that                   
  felt that the school districts should not be exempt."                        
                                                                               
  MR. HAWKINS added, "A bill went through actually in 1989.                    
  It hit the floor of the Senate in the last day or two of                     
  session.  Somebody had a feeling in their heart that school                  
  districts should always be able to levy taxes on any                         
  inventory whether it is held for export or otherwise and it                  
  was pulled off the floor and forcibly amended and we had to                  
  live with it until now.  That is what we are going back and                  
  trying to clean up."                                                         
                                                                               
  Number 577                                                                   
                                                                               
  REPRESENTATIVE DAVIES asked, "Am I correct, a municipality                   
  that was a school district, if we passed this, would have                    
  the option to either tax or to totally or partially exempt                   
  exports from taxes?"                                                         
                                                                               
  REPRESENTATIVE TOOHEY concurred.                                             
                                                                               
  REPRESENTATIVE WILLIS asked why the "repeal by the voters"                   
  language currently in statute "shouldn't be continued."                      
                                                                               
  MR. HAWKINS said, "I believe it was just viewed as                           
  superfluous...the feeling was that any ordinance is subject                  
  to repeal by the voters and the language really was                          
  redundant and unnecessary."                                                  
                                                                               
  Number 595                                                                   
                                                                               
  REPRESENTATIVE SANDERS MOVED to PASS HB 211 out of committee                 
  with individual recommendations.                                             
                                                                               
  REPRESENTATIVE BUNDE OBJECTED then WITHDREW his OBJECTION,                   
  and THE MOTION CARRIED.                                                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  CHAIRMAN OLBERG adjourned the meeting at 3:20.