CS FOR SENATE BILL NO. 112(CRA) "An Act imposing a tax on residents of regional educational attendance areas and relating to permanent fund dividend applications; and providing for an effective date." 12:12:48 PM This was the second hearing for this bill in the Senate Finance Committee. Senator Bunde moved to adopt Version 24-LS0505\X as the working document. Co-Chair Green objected for explanation. Senator Bund, the bill's sponsor, explained that the changes in the Version "X" committee substitute would include the addition of Legislation Intent language in Section 1, page one, beginning on line seven, that would allow the Legislature to utilize the revenue resulting from the tax imposed by the bill to fund regional educational attendance areas (REAA). Language in Sec. 2(c), page one, lines 13 and 14, would levy a $50 fee per request for information; language in Sec. 4(a)(1) and Sec. 4(a)(2), page two, lines 12 through 18, would specify that the REAA tax would be levied on individuals over the age of twelve but under the age of 65 who reside in a REAA as of January 1 of the tax year or an employee of an REAA during a tax year. A person who resides in an REAA and also works for the REAA would only be required to pay the tax once. Senator Bunde stated that language in Sec. 4(c)(1) through Sec. 4(c)(3), page two, lines 25 through 31, would define who would be exempt from the fee. Senator Bunde continued that language in Sec.4(a), page three, line two, specifies that the tax must be paid prior to April 1 of the calendar year in which it is imposed. Language in Sec. 4(c)(1), page three, line 23 specifies exemptions for those who might have already paid the tax. In addition, the bill defines the terms "family", "regional Attendance area", and "tax". Conceptual Amendment #1: This amendment deletes the phrase "at any time" from language in Sec. 4(a)(2)(B), page two, lines 17 and 18. In addition, the following language is inserted following "tax year" in Sec. 4(a)(2)(B) on page two, line 18. for 10 consecutive days or a normal pay period, whichever is less, or for more that 20 cumulative working days. Senator Bunde moved to adopt Amendment #1. Senator Bunde explained that this amendment defines what the term employed means in relationship to this bill. Senator Hoffman objected for further explanation. He apologized for his and Senator Olson's absence during the initial explanation on this bill, as they had been called to a meeting with Governor Frank Murkowski. This is an important bill to both himself and Senator Olson. Senator Bunde explained that this language was being offered upon the recommendation of Legislative Legal and Research Services, as it would further clarify who would be considered as being employed by an REAA. Specifically, it would apply to someone who held a temporary job with an REAA but who might reside out of State. Co-Chair Green removed her objection to the adoption of Version "X". Senator Hoffman asked that further discussion of the bill occur, as this "major policy decision" would have "major impact" on both his and Senator Olson's regions. Senator Bunde restated his earlier explanation of the bill as well as the Conceptual Amendment being offered. 12:20:35 PM Senator Hoffman asked whether any consideration had been given to military personnel who, because they live on military bases, "are exempt from taxation". "They are not paying for their education either." Senator Bunde stated that military personnel who live near a community that imposes a sales tax would pay such taxes. "Their payment in lieu of taxes, of course, passes through to the local school district there." Nonetheless he did not consider that a local contribution. The State is prohibited from taxing federal property. "No is the short answer." Senator Hoffman noted that he has used that "exact reason" in regards to Western Alaska "in which "well over 95-percent of land is federal and the State of Alaska receives payment in lieu of those taxes for all of those federal lands that are non-taxed". He appreciated the fact that Senator Bunde recognized that fact and has used that "same argument" in regards to this bill. "Under this legislation, those people would be paying this tax plus the tax that is being charged on those properties in lieu of taxes." 12:22:22 PM Senator Bunde countered "that it swings both ways" as military personnel who live near a military base in an urban Alaska area, pay to support their local schools as well as the payment in lieu of taxes money that passes through to the school district. He "rejected any claim" that the latter should be recognized as a local contribution for "it is simply federal money that passes through". Senator Hoffman argued therefore that were the land private property rather than federal property, the land would be subject to taxation; however, "by virtue that it isn't, that prohibits those areas from even the possibility of being considered…" Co-Chair Green recognized this as "a function of military service". Many military personnel who live in local communities do support local programs. Senator Hoffman clarified that his argument is specific to federal lands such as the Yukon Kuskokwim Delta National Wildlife Refuge, which "are federal parks that are not available for taxation". 12:23:55 PM Senator Bunde stated that "the argument is … a little disingenuous" as a borough must be formed in order to impose taxes. There has no interest shown in that regard. Thus, even if those lands were private, it is uncertain whether a tax base would be provided for the area's schools. Co-Chair Green stated that the amendment would be readdressed during the April 20th Committee meeting. [NOTE: No action on the motion to adopt a committee substitute or the amendment transpired during this hearing. Refer to the April 20, 2005 hearing in this regard.] The bill was HELD in Committee.