SENATE BILL NO. 4 "An Act relating to a mandatory exemption from municipal property taxes for certain residences and to an optional exemption from municipal taxes for residential property; and providing for an effective date." Senator Therriault indicated that as they discussed before, SB 4 was an attempt to satisfy the desire of the state to provide some property tax relief to property owners. The bill proposed that they expand the current statutory allowance to make a portion of personal residential property exempt from taxation. He pointed out that the current statutory language allowed the local government to do that up to $10,000 and they asked to expand that to $50,000, but due to concerns expressed by Senator Torgerson they backed it down to $40,000. He added that they held the service areas in municipalities out of the calculation, because they would be the one entity at the local level that had no other way to make up potential lost revenue. He noted that in the Fairbanks North Star Borough the mayor had formed a revenue tax force to look at alternative ways of raising revenue other than using the mill rate. He did not believe that there would be any interest in giving a tax break on the residential property and increasing the overall mill rate for everyone else. He indicated that they would be looking at a mix of sales tax or users fees or reductions in government spending. He indicated that when they left off last time Senator Donley expressed concern with regards to the fiscal note. He believed that they had addressed those concerns to a large part with the committee substitute (CS). He said that Senator Green had a question with regards to the potential impact on the foundation formula and they received a clarification that the foundation formula equivalent is computed on the true and full value of the government; therefore, there would be no impact from SB 4 on the foundation and the way the mill rate was calculated. Co-Chair Kelly indicated that there was a proposed CS, Version P, which had not been adopted as a work draft. Senator Wilken made a motion to adopt the proposed CS, Version P, as a work draft. Co-Chair Kelly asked if there was any objection. Co-Chair Donley objected. He supported the Community and Regional Affairs (CRA) CS for the same reasons that the CRA Committee adopted it. He noted that the CRA CS does not include the change to existing law regarding residential exemption and he believed that it was a separate issue. He said that there was significant taxation in some of the communities, especially the North Slope Borough and the new CS, Version P, would just be "throwing gasoline on an already burning fire". Co-Chair Kelly referred to Senator Donley's amendment, which would essentially take care of his concerns. He pointed out that Senator Leman brought up a possible compromise, before the meeting, between Senator Donley's amendment and the new CS, Version P. He said that he would like to adopt the CS, Version P, and then adopt the amendment or possibly take up Senator Leman's recommendation. Co-Chair Donley indicated that he was not familiar with Senator Leman's recommendation. Senator Leman called his recommendation the "anti-back sliding amendment," intended to keep the limits that were currently in place in those municipalities as the cap. He explained that it would keep them at their current maximum and the change in the law would not increase the taxes on oil and gas property; therefore, providing partial exemption. Senator Therriault indicated that it would be somewhat helpful. He pointed out that they did have some service areas that were currently over the 18 mills. He noted that the City of North Pole has two refineries within its' boundaries very close to the 18 mills. He clarified that if it were up to Senator Leman, everyone would be frozen at his or her current mill rate. He said that it would not be his personal preference. Co-Chair Donley wondered if Senator Leman had that language drafted. Senator Leman indicated that he offered that language as a conceptual amendment. AT EASE 9:20 AM/ 9:27 AM Co-Chair Kelly announced that SB 4 would be HELD in Committee. Senator Hoffman believed that it was a complicated issue and expressed appreciation for the extra time to look over the bill. [Heard and Held]