HB 40-MUNICIPAL TAX EXEMPTION: FARM STRUCTURES  3:51:03 PM CHAIR MICCICHE announced HB 40 to be up for consideration [CSHB 40(CRA) was before the committee]. 3:51:06 PM REPRESENTATIVE HUGHES, sponsor of HB 40, Alaska State Legislature, Juneau, Alaska, said this measure is a farm food storage building tax exemption. HB 40 points to the fact that agriculture remains important to Alaska and its purpose is to strengthen a small but important section of Alaska's economy. She said Greg Wolf with the World Trade Center commented in the Economic Development Committee last week about how Alaska compares economically to other states. He said two factors cause us to lag: agriculture and manufacturing. REPRESENTATIVE HUGHES said back in the 1950s more than 50 percent of the food consumed by Alaskans was from Alaska and now it's less than 5 percent. HB 40 would allow, not mandate, local municipalities to exempt specific food storage and production buildings for those who derive at least 10 percent of their income from farming activities. She hoped that reducing the tax on certain buildings would encourage food storage and production without diminishing a significant tax percentage for the municipalities, which would help farmers. But it will also increase access to locally grown food for Alaskans for a longer period of time. She said bringing food up on a barge can take seven to nine days and when food is grown locally it can be on the shelf within a day or two. 3:54:09 PM REPRESENTATIVE HUGHES said she has a lot of farmers in her district and they were turning under crops and dumping produce because it didn't make financial sense to store it because of the tax they pay on the buildings. She sought input from municipalities around the state who had good ideas which were incorporated into the bill. The 10 percent income requirement was to prevent someone who is just doing gardening as a hobby from getting the credit. Initially, she considered a building that would have 50 percent farming use and decided that would be too hard on the local municipalities. They would have to get out a measuring tape to figure out if it's 50 percent, but it would also apply to a lot more buildings and the fiscal impact would be harder on those local municipalities. So, they tightened it up in that the structure must be used exclusively for farming, which must include the food storage, processing or growing and not storing a sail boat. 3:56:15 PM REPRESENTATIVE HUGHES said Bethel has no tax and it wouldn't apply in the Delta area that is unorganized, but it could apply to a few greenhouses in Juneau. 3:57:17 PM GINGER BLAISDELL, staff to Representative Hughes, sponsor of HB 40, Alaska State Legislature, Juneau, Alaska, added the Fairbanks assessor said the tax would be non-eventful. The Kenai and Homer assessors said their farming activity is done in hoop houses made of large PVC arched pipe with plastic over it, but because they are not architecturally attached to the ground they aren't considered a building structure. Kodiak also used hoop houses; the only place that gave her a specific number for a possible tax exemption was the MatSu Borough and he was trying to count how many houses would be 50 percent food storage or production and came up with over $3 million in tax. Once they changed it to be exclusively for food storage or production, he felt that that figure would be significantly reduced, but he would have to look at some of the buildings again. REPRESENTATIVE HUGHES said Kenai came up with a figure of $45,000. MS. BLAISDELL added the whole borough, including Homer and Soldotna, would be a total of $75,000. CHAIR MICCICHE said he thought it was a good bill and asked for questions. 3:59:10 PM SENATOR BISHOP agreed with Senator Micciche. 4:00:05 PM CHAIR MICCICHE said he thought just one part of the bill that talked about home kitchens might be awkward. MS. BLAISDELL said she talked to a couple of assessors who had individuals who might be picking their own raspberries and selling them at a farmers market, and because their kitchen is part of a household structure and not solely for the purpose of a farming activity, it would not qualify for an exemption. REPRESENTATIVE HUGHES said she could remove the word "likely" to make language clearer. CHAIR MICCICHE said he thought that would be the only thing that might concern assessors. 4:01:52 PM SENATOR EGAN asked if this language applied to the committee substitute (CS). REPRESENTATIVE HUGHES answered yes. 4:02:26 PM CHAIR MICCICHE clarified that the CS doesn't mention kitchens at all, so she would be free to remove the word "likely". REPRESENTATIVE HUGHES answered yes. 4:02:48 PM STEVE VAN SANT, State Assessor, Department of Commerce, Community and Economic Development (DCCED), Anchorage, Alaska, said he was available to answer questions on HB 40. CHAIR MICCICHE said he would leave public testimony open and bring the bill up next Thursday.