SENATE COMMUNITY & REGIONAL AFFAIRS March 22, 1994 9:01 a.m. MEMBERS PRESENT Senator Randy Phillips, Chairman Senator Loren Leman Senator Al Adams Senator Fred Zharoff MEMBERS ABSENT Senator Robin Taylor, Vice Chairman COMMITTEE CALENDAR CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 397(FIN) "An Act relating to the power to levy property taxes in second class cities." SB 62 (PUBLIC SCHOOL FOUNDATION PROGRAM) was scheduled, but not heard this date. PREVIOUS SENATE COMMITTEE ACTION HB 397 - No previous action to record. SB 62 - See Community & Regional Affairs minutes dated 2/18/93, 4/1/93, 4/6/93 (a.m. & p.m. minutes), 4/16/93, 2/3/94, 2/10/94, 3/22/94, 3/24/94. WITNESS REGISTER Representative Harley Olberg State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Prime Sponsor of HB 397 ACTION NARRATIVE TAPE 94-23, SIDE A Number 001 The Senate Community & Regional Affairs Committee was called to order by Chairman Randy Phillips at 9:01 a.m. He then brought CSSSHB 397(FIN) (TAXING POWER OF SECOND CLASS CITIES) before the committee. Number 005 REPRESENTATIVE HARLEY OlBERG, prime sponsor of HB 397, explained that he was contacted by the City of Whittier concerning a problem that they feel is inhibiting their economic development prospects, as well as that of other second class cities. Representative Olberg said the current statute places a 5 mill limit on the rate of real and personal property taxes second class cities may levy. Given new and emerging fiscal policies of the state which result in less municipal assistance and revenue sharing, less state and federal grant money and heavy competition for these scarce dollars, second class cities, who have traditionally relied on these sources to make up their budgets, face revenue shortfalls which threaten their economic stability and hinder development. Representative Olberg said CSSSHB 397(FIN) allows a second class city to levy a property tax of 20 mills (2%) without a referendum. If the state wishes to impose greater financial responsibility on second class cities, it must remove the legal shackles currently in place, and the legislation is an important step the Legislature can take in this regard, he stated. Number 065 SENATOR ADAMS asked if the Department of Community & Regional Affairs has a position on the legislation. REPRESENTATIVE OLBERG responded that the department has not expressed an opinion on the bill. Number 073 SENATOR LEMAN commented that the legislation not only raises the limit that a second class city can levy, but it also takes away the requirement of doing this by referendum. He asked if there was a particular reason that the second class cities don't want to do this by referendum. REPRESENTATIVE OLBERG answered that the cost of an election is certainly a factor, as well as the size of second class city and their access to their elected representatives. He said he doesn't believe that a referendum is necessary in a community that size. He added that there is still a referendum provision left in statute which provides that when a second class city incorporates, it can establish a tax cap as a part of the incorporation process. Number 125 There being no other witnesses wishing to testify on HB 397, SENATOR RANDY PHILLIPS asked for the pleasure of the committee. SENATOR LEMAN moved that CSSSHB 397(FIN) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. There being no further business to come before the committee, the meeting was adjourned at 9:09 a.m.