HB 305-MUNI. PROP.TAX EXEMPTION: RELIGIOUS ORGS.  8:37:19 AM CHAIR MUNOZ announced that the next order of business would be HOUSE BILL NO. 305, "An Act relating to a mandatory exemption for certain residences owned by a religious organization." 8:37:29 AM REPRESENTATIVE GARDNER, speaking as the sponsor, explained that HB 305 seeks to correct an error made in 2006 and return to a property tax system in which all property taxpayers are treated equally. The legislation removes the property tax exemptions for teachers of private religious and parochial schools that live in church-owned housing. The legislation returns to the pre-2006 language describing a "minister" living in church property that is tax exempt. In 2006, the legislature passed House Bill 334, which broadened the definition of "religious property" by adding a mandatory exemption for the residence of an educator in a private religious or parochial school. Furthermore, House Bill 334 expanded the definition of "minister" to include "those individuals ordained, commissioned, or licensed as a minister according to the standards of the religious organization for its ministers". House Bill 334 also required that the ministers be employed by the religious organization to carry out the ministry of that organization. Representative Gardner specified that the problem with mandatory tax exemption reductions, such as those for senior citizens and veterans, is that they enjoy broad public support, although they are unfunded mandates. However, the 2006 legislation was controversial with the public because it gave special treatment to some individuals, religious educators, and was perceived as unfair to other educators and all other taxpayers. The definition of "minister" in [House Bill 334] was expanded such that it was difficult for municipal tax officials to know who qualifies. In conclusion, Representative Gardner reiterated that the existing law is an unfunded mandate borne by all taxpayers. 8:39:56 AM REPRESENTATIVE LINDSEY HOLMES, Alaska State Legislature, speaking as a co-sponsor of HB 305, explained that HB 305 eliminates the religious teacher housing as well as the 2006 definition of "minister" that allowed [religious] organizations to define "minister." The legislation before the committee today, HB 305, returns the definition of "minister" to what it was prior to 2006 and removes the requirement that the minister be employed by the church as a religious leader. Representative Holmes pointed out that the basis for this discussion can be found in Article 9, Section 4 of the Alaska State Constitution, which identifies "properties that are used exclusively for nonprofit religious purposes as being exempt from taxation, as defined by law". The language "as defined by law" is what the legislature specifies. The proposed legislation doesn't change or undermine the long-standing support for tax exemptions for homes of religious leaders, such as those residences of a bishop, pastor, rabbi, priest, minister, or religious order of a recognized religious organization. The proposed legislation, HB 305, maintains the exemption regarding other religious property tax exemptions, such as exemptions for churches, synagogues, religious educational facilities, and other property that is used exclusively for religious purposes. Representative Holmes related that Legislative Research was only able to locate five properties in Anchorage and five properties in Kenai that specifically used the religious educator exemption. Legislative Research didn't have numbers, but estimated that [the exemptions] amount to about $25,000 a year. Although it isn't a lot of money, the issue is fairness to other taxpayers who are required to "pick up the slack." Furthermore, by making it a mandatory exemption [in House Bill 334], the legislature passed on an unfunded mandate to communities. 8:44:03 AM REPRESENTATIVE GARDNER informed the committee that HB 305 has generated waves of public support since the Anchorage Daily News article. She noted that the committee packet contains about 80 emails in support of HB 305 and the Anchorage Daily News article generated, on last count, about 300 comments of which 98 percent were in support of changing the law as proposed by HB 305. In conclusion, HB 305 rights a wrong enacted in 2006 without interfering with the broad support for tax exemptions for homes of religious officials and it's a measure to restore public trust in the legislative process by eliminating special treatment. 8:46:52 AM DEBBIE OSSIANDER, Member, Anchorage Assembly, Municipality of Anchorage, began by informing the committee that she has been active in local government in Anchorage for about 20 years. She related that in the last three years serving on the Anchorage Assembly she has spent much of her time explaining mill levies and property assessments. Anchorage has attempted to diversify its tax base so it's not so heavily on local property taxpayers but rather is spread throughout the community. Moreover, Anchorage has tried to ensure openness and explain to citizens how their taxes are collected fairly and equitably. The [Anchorage Assembly] has created a process by which residents can appeal their taxes for free and has established a citizen board that talks to those in the community regarding taxes and appeals. Often, [the Anchorage Assembly] has to say no to good and worthwhile efforts in order to avoid harming those in the community who are struggling to pay the taxes they have now. Ms. Ossiander encouraged the committee to be as clear and concise as it can with the language it uses. She related her personal belief that it's appropriate to give tax exemptions to churches and to nonprofits, but it's critical for everyone to be able to understand the language and its meaning. 8:50:26 AM REPRESENTATIVE CISSNA highlighted that the money the municipalities have don't spread as far as desired. She informed the committee that she has qualified for the senior property tax exemption the last four years, but has chosen not to take the exemption. She opined that when one has the ability to pay the tax it's the honorable and responsible thing to do. This legislation fixes what she felt was unfair. 8:52:58 AM CHAIR MUNOZ inquired as to the mill rate in Anchorage. MS. OSSIANDER answered that it depends upon where one lives. Anchorage is divided into districts and residents pay for services depending upon where they live in a district. In further response to Chair Munoz, Ms. Ossiander said she didn't know the mill rate for the area that would be impacted by HB 305 or the financial impact to the municipality. REPRESENTATIVE GARDNER interjected that since the properties [now receiving the exemption] haven't been assessed in many years, there's no way to know exactly. However, the estimate is about $15,000 to Anchorage and $9,000 to Kenai. Although it's a relatively small financial impact, the existence "poisons the well" for everyone and creates a tremendous amount of resentment. 8:54:55 AM CHAIR MUNOZ requested that the state assessor speak to the law as it relates to 501(c)(3) organizations and the status of municipalities granting exemptions to those organizations. She asked if the state law offers the opportunity for exemptions for 501(c)(3) organizations. 8:55:05 AM STEVE VAN SANT, State Assessor, Division Programs, Division of Community and Regional Affairs, clarified that there is a charitable exemption, the criteria for which is that the organization has to be a nonprofit which is typically a 501(c)(3), 501(c)(8), or 501(c)(9). In further response to Chair Munoz, Mr. Van Sant confirmed that typically churches are 501(c)(3) nonprofits. The charitable exemption that is found under AS 29.45.030 is mandatory. 8:56:06 AM CHAIR MUNOZ questioned then whether the organization in question could still receive the exemption under the aforementioned charitable exemption, if this is repealed. MR. VAN SANT stated that teacher housing probably wouldn't qualify for a charitable exemption, which is why it was placed under the religious exemptions statute. 8:57:10 AM REPRESENTATIVE GARDNER informed the committee that SB 183 proposes to provide a property tax exemption for the primary residence of a widow/widower of a person killed in military service. The language used by SB 183 to grant the exemption, "A municipality may by ordinance approved by the voters", seems more reasonable. Representative Gardner said that although she considered doing something similar for the teacher exemption, she felt it didn't get to the "heart of the matter." Furthermore, she said she didn't believe it would have the support of voters in Anchorage. 8:58:13 AM REPRESENTATIVE SADDLER asked if although the sponsor didn't hold a press conference regarding the introduction of HB 305, she referenced it in her newsletter. REPRESENTATIVE GARDNER replied yes. REPRESENTATIVE HOLMES informed the committee that she, too, referenced HB 305 in her newsletter. REPRESENTATIVE SADDLER expressed concern about some of the rhetoric surrounding this legislation, adding that he even found some of it offensive. He opined that it's possible to disagree on issues without being disagreeable and thus he expressed hope that the discussion could be maintained at a high level. He noted that he has concerns and has heard concerns about the property tax exemption from his city council member in Anchorage. REPRESENTATIVE HOLMES offered to share her newsletter. She stressed that it wasn't a tactic or intention of the sponsor to [elicit such rhetoric]. Furthermore, the legislation isn't targeted at any particular entity, rather it's targeted at what is perceived as a largely unpopular measure by the public. The legislation, she related, is not intended to be partisan in any way. There are many in the community that believe their property taxes are increasing while other entities are being given exemptions; because this was a mandatory exemption, the legislation is aimed at that. Representative Holmes agreed with Representative Saddler and said that she didn't want the issue to turn into firestorm; however, she reminded the committee that letters are received from a broad variety of people and they say what they say. REPRESENTATIVE GARDNER told the committee that when she initially embarked on this, she had no idea how many properties and exemptions were being claimed under the statute. As it turned out, all the exemptions were affiliated with one church. She acknowledged that when that information came to light, she realized that it would look as if she was targeting one entity. However, that was not the intention. In fact, she recalled that in 2006 when the original legislation was enacted, it was anticipated that other schools would avail themselves of the exemption. REPRESENTATIVE SADDLER, speaking to the public, expressed the importance of maintaining civility on issues like this. REPRESENTATIVE GARDNER stated her agreement. 9:02:55 AM REPRESENTATIVE DICK related his appreciation for the focus on fairness. He posed a scenario in which [private school] teachers were made to pay more property taxes. In such a situation, he opined that many private school teachers would have to be paid more since they are often paid less than public school teachers. In order for the schools to pay the teachers more, the parents of the students in the private schools would have to pay more. He then told the committee that his grandchildren attend the Christian school in Kenai. The parents of his grandchildren had to pay for school twice because they had to pay property taxes and pay for the cost of the school. He related that his daughter paid $4,500 a year for the education of his grandson, whereas public schools pay $15,000- $20,000 per student. In terms of fairness, he questioned whether parents of students in private school should have to pay property tax for schools their children don't attend and pay for private school. REPRESENTATIVE DICK then related his understanding that the separation of church and state ensures that the state won't dictate how churches operate. However, that separation of church and state has been construed to prohibit any discussion of church in school or at any given state function. Therefore, many have separated themselves from the public system. He opined that if one person's belief system is called religion, it has no place in state-funded operations whereas a belief system referred to as a philosophy can be endorsed. By default, he stressed that the religion of the public schools is secular humanistic atheism because nothing religious can be named in public schools. The aforementioned, he suggested, is why many choose not to send their children to public schools. Representative Dick then related that his granddaughter attended Alaska Christian College where most of the teachers she had weren't paid by the college. Those teachers travel to the Lower 48 in the summer to obtain enough funds to teach at the Alaska Christian College for free. He opined that Alaska Christian College is doing a fantastic service on a shoe string. He further opined that if teachers at Alaska Christian College had to pay property taxes, they would have to solicit more funds to be able to continue to teach at the college. In closing, Representative Dick opined that the issue is one of fairness. 9:07:34 AM REPRESENTATIVE CISSNA opined that HB 305 actually specifies to communities what is in state law and provides boundaries. With regard to unfunded mandates, allowing communities to decide what they will and will not do seems to be appropriate, she further opined. She expressed the need to keep to the law of the state and leave campaigning out of the conversation. 9:09:19 AM REPRESENTATIVE GARDNER stated she knows, for a fact, there are many deeply religious teachers in public schools who represent a wide variety of faiths and who would be offended by the characterization that [the religion of] public schools is [secular humanistic atheism]. Representative Gardner then clarified that she is not hostile to religious schools. In fact, her son attended a Catholic college and she began her academic career in a Catholic school and three years of high school in an Anglican school that was founded by the Orphaned Daughters of the English Clergy. She opined that she had wonderful experiences and education in those schools, but her parents weren't asking other taxpayers to subsidize their choice to place her in a religious school. Representative Gardner emphasized that it is appropriate for people to choose whatever type of education they believe is appropriate for their children and she supports that. However, she said she didn't believe it's appropriate for all the taxpayers in a community to subsidize that parental choice, which is what a mandatory exemption for teaching housing does. 9:11:26 AM KATHIE WASSERMAN, Executive Director, Alaska Municipal League, informed the committee that the Alaska Municipal League (AML) has always opposed mandatory property tax exemptions. As a rule, AML doesn't believe the state, which doesn't have any taxing authority, should mandate what property tax exemptions should be given by the municipalities. When the existing exemption passed in 2006, it seemed to open the door to more [property tax exemptions]. More exemptions place more of a burden on less people. Therefore, AML is in opposition to mandatory property tax exemptions and is in strong support of HB 305. 9:13:00 AM CHAIR MUNOZ announced that public testimony would remain open and HB 305 would be held over.