HB 358-EXEMPTION FROM PROPERTY TAX: TIMBER  REPRESENTATIVE MIKE CHENAULT, bill sponsor, introduced the bill via teleconference. This would give municipalities an additional tool to lower the threat of fire on spruce bark beetle killed forestland by allowing the option to waive property taxes on roads or other property improvements that facilitate the removal of the timber. The Kenai Peninsula Borough has approximately 2.2 million acres of spruce forest and 1.1 million of it is affected by the spruce bark beetle infestation. In an effort to mitigate the fire threat, the Kenai Peninsula Borough tried to enact a property tax waiver program but the plan was blocked because state law doesn't allow for such breaks. This bill makes the necessary changes in state law to allow the Kenai Peninsula Borough or other municipalities in a similar situation to help protect themselves without having to take on additional tax liabilities. The tax breaks aren't mandated rather they are an option. Included in member's packets were copies of the supporting resolution from the Kenai Peninsula Borough and photos of the beetle infestation on the peninsula. SENATOR PHILLIPS asked whether there was any opposition to the bill. REPRESENTATIVE CHENAULT replied he wasn't aware of any opposition. CHAIRMAN TORGERSON asked whether they anticipated that this would affect smaller parcels of land and individual owners. REPRESENTATIVE CHENAULT thought this would give the borough the opportunity to look at each parcel then make a determination about which lands would be included. CHAIRMAN TORGERSON wanted it a matter of record what was being exempted from taxation. He wanted examples of "improvements to real property, including personal property affixed to the improvements…." REPRESENTATIVE CHENAULT replied the improvements would be any roads that were built into parcels to make access to the timber harvest. CHAIRMAN TORGERSON asked whether they would have to apply for the exemption every year. REPRESENTATIVE CHENAULT thought that would be a borough decision. CHAIRMAN TORGERSON asked the state assessor whether the exemption would need to be renewed annually and whether he supported the bill. STEVE VAN SANT, State Assessor, said this was well deserved and he did support the bill. An assembly grants the exemption and they could set it up with any timeframe they wanted. There would be no requirement from the state to set any particular timeframe. CHAIRMAN TORGERSON replied it was written that way but he wanted his opinion whether a timeframe was needed. STEVE VAN SANT said this seems to be an issue where you never know whether the issue will arise again. He rarely supports exemptions, but feels this has merit. It gives municipalities the ability to deal with a dangerous situation. JEFF JAHNKE, Director of the Division of Forestry and State Forester, testified in support of the bill. Although the value of the affected spruce has declined substantially there are still three important reasons why the harvest should continue. 1. It reduces the hazard caused by dead and dying trees 2. It encourages reforestation 3. It continues to recover the value that still remains MARVIN RUSE, Mapping Director of the Spruce Bark Beetle Task Force, testified in support of the bill. The tax incentives might encourage some vacant landowners to become more active in moving the hazard on their land. Two thirds of the Kenai Peninsula is in federal or state ownership so the only opportunity is on private, Native and borough land. They want to encourage the removal of any and all of the hazard. MR. VAN SANT questioned including "or at risk of being infested" because a municipality that was oil rich could use that as an excuse to exempt lands which could cost the state money from oil and gas revenues. He wanted his concern a matter of record. CHAIRMAN TORGERSON said he noticed that as well. The bill ought to do what the testimony says it's supposed to, which is to spur the removal of the infested trees or enhance the probability of reforestation. Unfortunately, the bill is silent on that. He encouraged local governments to take this a step further and develop a plan for removal of the risk otherwise there would be no exemption. MR. VAN SANT said he understood that but unfortunately it doesn't always work that way. TIM NAVARRE from the Kenai Borough Assembly assured members they would act quickly once the bill is passed and would probably work with Mr. Van Sant. There is much work to be done before they pass an ordinance that covers their intent. CHAIRMAN TORGERSON said he appreciates that. He likes intent placed in the bill, but this bill just gives authority for tax relief and doesn't accomplish the goals as expressed in the testimony. He didn't intend to amend the bill; local governments would have to do that on their own. If the state assessor sees it's being abused he expects him to bring the matter back before the Legislature and they would repeal the law. MR. NAVARRE said they would be working diligently to come up with a good ordinance. There was no further testimony. CHAIRMAN TORGERSON asked for the will of the committee. SENATOR PHILLIPS made a motion to move CSHB 358(CRA) and attached fiscal note from committee with individual recommendations. There being no objection, it was so ordered.