SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE March 11, 1998 1:45 p.m. MEMBERS PRESENT Senator Jerry Mackie, Chairman Senator Gary Wilken , Vice Chairman Senator Dave Donley Senator Randy Phillips MEMBERS ABSENT Senator Lyman Hoffman COMMITTEE CALENDAR SENATE BILL NO. 325 "An Act relating to an optional municipal tax exemption for real property occupied as the primary residence and permanent place of abode by a resident who is the owner and is disabled." PREVIOUS SENATE COMMITTEE ACTION SB 325 - No previous action to record. WITNESS REGISTER Senator Sean Parnell State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Prime Sponsor of SB 325 Ms. Kim Metcalfe-Helmar, Special Assistant Department of Community & Regional Affairs P.O. Box 112100 Juneau, AK 99811-2100 POSITION STATEMENT: Department supports SB 325 Ms. Bertha Shimoe-Strong P.O. Box 141552 Anchorage, AK 99514 POSITION STATEMENT: Testified in support of SB 325 ACTION NARRATIVE TAPE 98-7, SIDE A Number 001 SB 325 - PROPERTY TAX EXEMPTION FOR DISABLED CHAIRMAN MACKIE called the Senate Community & Regional Affairs Committee meeting to order at 1:45 p.m., and noted the presence of Senators Wilken, Phillips and Mackie. CHAIRMAN MACKIE introduced SB 325 as the only of business. SENATOR SEAN PARNELL, prime sponsor of SB 325, explained the legislation was requested by a constituent who is 100 percent permanently disabled. The gentleman is unable to work, living on a fixed income, while his property taxes continue to increase. This constituent queried his office as to why a person who experiences disabilities could not have the same exemption as provided to senior citizens in statute, and SB 325 is an attempt to represent him and all those similarly situated Alaskans. He added it is his way of raising the policy discussion to a public level. SB 225 provides for an optional municipal tax exemption for real property occupied as the primary residence by a person who is the owner and is disabled. The bill merely provides the authority and option to local governments without mandating the tax exemption. It leaves it up to local governments to establish perimeters and definitions related to the exemption. Senator Parnell read into the record a portion of a letter of support from Mary Jane Michael, Executive Director of the Arc of Anchorage: "The Arc of Anchorage is a non-profit organization providing an array of services and supports for people who experience disabilities in the Anchorage community. I strongly support your efforts to assist individuals with disabilities in obtaining a tax exemption on their primary residence. Your efforts would greatly enhance their ability to become homeowners and provide stability to their lives. Finding accessible housing in the Anchorage community is next to impossible, and many people are faced with unsuitable rental accommodations. This is further compounded by the fact that many of these individuals are employed at minimum wages or survive on benefits alone. Your bill will complement existing programs, like the home ownership program with Alaska Housing Finance Corporation, furthering the opportunities for home ownership by people who experience disabilities." Concluding his testimony, Senator Parnell said SB 325 has the following benefits: it will provide greater independence; it will provide greater stability; and it will provide greater opportunity for people who experience disabilities. He urged the committee's support for the legislation. Number 052 CHAIRMAN MACKIE asked Senator Parnell to explain why he opted not to adopt the language that currently exists in state statutes in terms of defining what "disabled" means. SENATOR PARNELL explained that he intentionally left that up to the local government to define "disabled" as well as the perimeters of what evaluations of property they might exempt because he thought those issues were properly left to the local governing body. CHAIRMAN MACKIE inquired what the current mill rate is for real property in Anchorage. SENATOR PARNELL answered that it varies from 17 to 21 mills, depending upon the location. Number 085 SENATOR PHILLIPS referred to line 7 of the bill and the phrase "primary residence and permanent place of abode," and he asked if there was a reason for having it worded that way. SENATOR PARNELL responded that it was a drafting choice made by the drafter, however, he thought it may mirror the language in the senior citizen tax exemption statute. Number 100 SENATOR WILKEN related that in a recent discussion with Mayor Hove of the Fairbanks North Star Borough, the intent of the legislation was applauded, but concern was expressed about what the cost of this legislation would be to local governments, and it was likened to the senior citizen property tax exemption which costs the borough $27 million a year. Senator Wilken asked if any municipality has indicated that this type of program should be offered. SENATOR PARNELL replied that he has not heard from any local governments, but he is more concerned with constituents who see this need and want him to address it. He reiterated that the program is optional to local governments and that's why it is different then the senior exemption. SENATOR WILKEN countered that once the program is made available, it puts the local governments in a difficult "do it, or else" type of situation. SENATOR WILKEN asked Senator Parnell if had any idea how much this would cost if half of the disabled Alaskan property owners would take advantage of this program. SENATOR PARNELL said there is no way to put a number on it because each local government will decide the level of exemption, what property evaluation the exemption applies to, and who is defined as "disabled." Number 146 CHAIRMAN MACKIE commented that right now the state mandates the property tax exemption for senior citizens all across the state whereas this exception would be optional. He said he thinks a good argument could be made that senior citizens are exempted from property taxes regardless of their personal wealth or physical ability, while at the same time, someone who has a disability with no wealth is not exempted. SENATOR PARNELL, addressing Senator Phillips' question concerning the language "primary residence and permanent place of abode," confirmed that AS 29.45.030, which relates to the senior citizen tax exemption, contains the identical language. CHAIRMAN MACKIE suggested that as the bill moves through the process, it would be helpful to have information on the number of disabled Alaskans that possibly would qualify for this program, especially if the issue of the cost of the program continues to be raised. Number 195 KIM METCALFE-HELMAR, Special Assistant, Department of Community & Regional Affairs, voiced the department's support for SB 325 because they believe there should be local control on these kinds of programs. However, she said they do have a concern with the lack of a definition of "disability" in the bill because of the possibility of local governments having different definitions for the word. The department believes that if this program were to initiated, it would be better to get the term defined at the outset. CHAIRMAN MACKIE noted the arrival of Senator Donley. Number 252 BERTHA SHIMOE-STRONG, representing the People First advocacy group and speaking in support of SB 325, said she also belongs to the Key Coalition, as well as serving on a couple of housing boards. She related she has a birth defect, as well as having suffered a head injury in 1987. Ms. Shimoe-Strong pointed out that there are a variety of people that are disabled in different ways and to different degrees. However, she is concerned that some people with just a broken leg or a broken arm would say that they are disabled, and she suggested possibly adding the word "permanently" before the word "disabled," requiring a doctor's certificate verifying the disability, and possibly instituting a sliding fee according to income. Ms. Shimoe-Strong advised that if the committee is interested in getting statistics on the number of disabled persons in the state, to contact the Social Security Administration and Adult Public Assistance. Ms. Shimoe-Strong restated her strong support for SB 325. She said most disabled are at the poverty level, and this would help to make them self-sufficient and to improve on their development of leadership. Number 320 SENATOR PARNELL said it was always his intent that this legislation should apply to the permanently disabled and that he agreed with Ms. Shimoe-Strong that the would "permanently" should be inserted before "disabled." Number 330 SENATOR DONLEY said he has spent some time looking at other handicapped laws, but he has found that over the years the guidelines that were put into place for the handicapped parking law have been really manipulated by people who didn't deserve that privilege. He said it is so unfair to the people who truly need assistance when the not truly needy abuse the system, and then it turns the public against the preference. He suggested that as the bill moves through the system working on a definition that keeps that kind of abuse from happening in this program. Number 365 SENATOR WILKEN stated that before moving SB 325 out of committee he would like to see some work done on the definition of "permanently disabled," as well as getting a sense of what the cost to local governments might be. Number 390 CHAIRMAN MACKIE asked if there was a motion to add the "permanently" to the language in the bill. SENATOR DONLEY moved to add the word "permanently" before the word "disabled" on page 1, lines 3 and 8. Hearing no objection, CHAIRMAN MACKIE stated the amendment was adopted. There being no further testimony on SB 325, CHAIRMAN MACKIE stated SB 325 would be held in committee so further work could be done on the legislation, and that it would be back before the committee on Wednesday, March 18 . He then adjourned the meeting at 2:12 p.m.