ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 17, 2022
3:30 p.m.
MEMBERS PRESENT
Senator Shelley Hughes, Chair
Senator Robert Myers, Vice Chair
Senator Elvi Gray-Jackson
MEMBERS ABSENT
Senator Lyman Hoffman
Senator David Wilson
COMMITTEE CALENDAR
SENATE BILL NO. 177
"An Act relating to microreactors."
- HEARD & HELD
SENATE BILL NO. 172
"An Act increasing the residential property tax exemption."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 177
SHORT TITLE: MICROREACTORS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/01/22 (S) READ THE FIRST TIME - REFERRALS
02/01/22 (S) CRA, RES
02/15/22 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
02/15/22 (S) Heard & Held
02/15/22 (S) MINUTE(CRA)
02/17/22 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
BILL: SB 172
SHORT TITLE: PROPERTY TAX EXEMPTION
SPONSOR(s): SENATOR(s) WIELECHOWSKI
01/26/22 (S) READ THE FIRST TIME - REFERRALS
01/26/22 (S) CRA, L&C
02/17/22 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
ASHLEY FINAN, PhD., Director
National Reactor Innovation Center (NRIC)
Idaho National Laboratory
Idaho Falls, Idaho
POSITION STATEMENT: Presented the PowerPoint, "Advanced Reactor
Concepts and Safety Overview."
CARLO PARISI, PhD., Scientist
Idaho National Laboratory
Idaho Falls, Idaho, Alaska
POSITION STATEMENT: Answered questions and provided information
during the hearing on SB 177.
PIYUSH SABHARWALL, PhD., Senior Staff Scientist
Idaho National Laboratory
Idaho Falls, Idaho
POSITION STATEMENT: Answered questions and provided information
during the hearing on SB 177.
GWEN HOLDMANN, Director
Alaska Center for Energy and Power (ACEP)
University of Alaska Fairbanks
Fairbanks, Alaska,
POSITION STATEMENT: Answered questions and provided information
during the hearing on SB 177.
NICK MOE, Staff
Senator Bill Wielechowski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 172 on behalf of the sponsor.
SENATOR BILL WIELECHOWSKI
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 172.
ACTION NARRATIVE
3:30:16 PM
CHAIR SHELLEY HUGHES called the Senate Community and Regional
Affairs Standing Committee meeting to order at 3:30 p.m. Present
at the call to order were Senators Gray-Jackson, Myers and Chair
Hughes.
SB 177-MICROREACTORS
3:30:47 PM
CHAIR HUGHES announced the consideration of SENATE BILL NO. 177
"An Act relating to microreactors."
3:31:45 PM
At ease.
3:32:31 PM
CHAIR HUGHES reconvened the meeting and listed the individuals
who were available to answer questions, including Dr. Finan who
would give the presentation on microreactors.
3:34:31 PM
ASHLEY FINAN, PhD., Director, National Reactor Innovation Center
(NRIC), Idaho National Laboratory, Idaho Falls, Idaho, presented
the PowerPoint, "Advanced Reactor Concepts and Safety Overview."
She began her testimony with a detailed description of Dr.
Sabharwall's and Dr. Parisi's areas of expertise. She advised
that she would be talking about advanced reactor concepts and an
overview of reactor safety. She began with an overview of
advanced fission outlined on slide 2:
Advanced Fission
• Categorized in terms of capacity
Microreactors: <50 MWe
Small reactors: <300MWe (SMRs use modular
construction)
Medium reactors: 300MWe <700 MWe
Large reactors: >700 MWe
• Variety of coolants (gas, sodium, salt, lead,
water, etc.)
• Clean, high availability energy source
• Diverse market opportunities
• Improved safety, waste, security, and target
economics
• 60+ private sector projects underway
3:38:29 PM
CHAIR HUGHES asked if the Idaho National Laboratory was
federally funded.
DR. FINAN explained that the Idaho National Laboratory is:
located in and around Idaho Falls, a $1.6 billion organization,
a Department of Energy laboratory, and the nation's leading
nuclear energy laboratory. INL also works on cybersecurity for
the Department Homeland Security, integrated energy systems, and
renewable energy sources. The National Reactor Testing Station
was located on the INL site in 1949, giving it a legacy of
nuclear demonstration. About 52 reactors were demonstrated on
the site at that time and now there are plans to demonstrate
advanced reactors. About 5,000 people are employed at INL.
CHAIR HUGHES asked if all INL staff were federal employees.
DR. FINAN answered no, they're employees of the contractor that
operates the laboratory on behalf of the Department of Energy
(DOE).
CHAIR HUGHES asked her to talk about the information at the
bottom of slide 2 about the power uses for small and midsize
cities and the US.
DR. FINAN answered that a small town generally will use about 1
megawatt of electricity, a midsize city will use about 1
gigawatt, and the US uses about 1 terawatt of electricity.
CHAIR HUGHES asked what the population would be in a small town
that uses 1 megawatt of electricity.
DR. FINAN estimated that a small town in this context could be
up to 100,000, and said she'd follow up with a more definitive
answer.
3:41:34 PM
DR. FINAN described the Advanced Reactor Design Types:
• Key high-temperature gas reactors typically use a helium
coolant and a TRISO fuel form. TRISO is an important part of
the safety for high temperature gas and some other reactors.
It is used in many microreactor designs.
• Sodium fast reactors use a liquid sodium metal coolant.
• Lead fast reactors use a molten lead coolant.
• Salt-cooled reactors use a solid fuel with a molten salt
coolant. TRISO is the solid fuel in the current designs.
• Molten salt-fueled reactors use a liquid fuel. This is a
significantly different design because the fuel is dissolved
in the molten salt.
• Water-cooled reactors. Most of the reactors in the US now are
water-cooled, although some advanced designs seek to improve
on the existing fleet.
• The demonstrations moving forward in the US today represent
other variations of reactors.
DR. FINAN clarified that all the coolants listed above have been
demonstrated in some form in the last decade, but not
necessarily in reactors in the US. The point is that none of
this technology is entirely new.
3:43:49 PM
DR. FINAN described the diagram on slide 4 of a traditional
pressurized water reactor. This design, which is one of two
water reactor types, is reflected in many of the reactors
throughout the US. She described how it works. Inside the
containment structure depicted on the left is a red box that is
the reactor core. It holds the fuel that is fissioning. This is
the process that occurs when a neutron hits and splits a uranium
atom to produce energy and more neutrons. That reaction causes
subsequent reactions that release energy in the core. That
energy heats water in the reactor. The water is represented in
purple in the diagram. As the water is heated, the heat is
transferred from the containment structure to the plant where
energy products are produced. In the diagram, the heated purple
water and a secondary loop of cool water (represented in blue)
go into a generator to produce steam. A steam line goes out the
top of the generator and the steam drives a turbine generator
that, in this case, makes electricity. A cooling loop
(represented in light blue) goes out and the water is cooled
before it goes back to the steam generator where it is heated by
the reactor.
She relayed that a key goal of nuclear safety is to keep the
radioactivity in the fuel. It is the fission products that are
produced when uranium atoms are split (represented in the red
reactor box) that are radioactive. If everything is working as
designed, the radioactive particles stay inside the fuel, which
stays inside the reactor core. If the fuel is damaged, the
radioactive products are released into the water inside the
reactor. This means that the first level of protection is
broken. The focus at that point is to keep the radioactive
particles in the (purple) water, but if it gets out it's
theoretically contained in the containment structure. Should the
containment structure fail, any products leaving the containment
are filtered. If that fails, the next step is to evacuate. This
is what happened in the Fukushima disaster. She reiterated that
the goal is to avoid the situation where everything goes wrong.
3:47:29 PM
DR. FINAN directed attention to the two examples of advanced
reactors on slide 5. They are from the Generation IV
International Forum (GIF), which is an international effort to
develop and deploy advanced reactors. The diagram on the left
shows a very high temperature gas reactor (VHTR) and the diagram
on the right shows a sodium-cooled fast reactor (SFR). She said
she would not describe these in detail but the important point
is that they are very similar. Both have a core with fuel that
fissions and creates heat that is transferred. The heat in the
SFR is transferred to a liquid sodium that is used to make
steam, which drives a turbine generator that makes electric
power. In the VHTR, the fission and heat that is created is used
to produce hydrogen. Basically, it takes reactor heat and
removes it to the balance of plant to make an energy product.
The goal here too is to avoid damaging the fuel, but if it is
damaged the intent is to retain any radioactivity within the
reactor.
3:49:10 PM
DR. FINAN advanced to slide 6 to describe the US Nuclear
Regulatory Commission (NRC) role in overseeing nuclear safety.
She read the NRC mission:
NRC Mission:
The NRC licenses and regulates the Nation's civilian
use of radioactive materials to provide reasonable
assurance of adequate protection of public health and
safety and to promote the common defense and security
and to protect the environment.
DR. FINAN highlighted the NRC principles of good regulation:
NRC Principles of Good Regulation:
Independence
Openness
Efficiency
Clarity
Reliability
DR. FINAN explained that the NRC philosophy of defense-in-depth
is a key part of how NRC oversees safety and approaches the
design and oversight of nuclear facilities. This approach has
multiple independent, diverse, and redundant layers of defense,
so no single layer or system is relied upon exclusively. The
graphic on the right provides more detail on how the NRC
performs its oversight function throughout the lifecycle of
nuclear power plants. The process involves:
1. Regulations and Guidance: The NRC develops regulations and
guidance for applicants and licensees that promote nuclear
safety.
2. Licensing, Decommissioning and Certification: The NRC is
responsible for licensing or certifying applicants to use
nuclear materials, operate nuclear facilities, and
decommission facilities.
3. Oversight: An NRC inspector is always onsite to oversee and
assess licensee operations and facilities to ensure
compliance with NRC requirements.
4. Operational Experience: The NRC oversees all reactors in
the US, so any opportunities to improve are shared with
other reactors. What is learned in one plant is applied to
others.
5. Support for Decisions: The NRC conducts research, holds
hearings, and obtains independent reviews to support its
regulatory decisions.
3:52:57 PM
DR. FINAN advanced to slide 7 and described the basics of
nuclear energy safety. She acknowledged that there were other
goals and concerns, but she was focusing on preventing the
release of radioactive materials. She spoke to the following:
• Goal: Prevent offsite release of radioactive
materials
• Risk = likelihood of event x consequences or
severity
• Primary concern is damage to fuel and subsequent
release of radioactivity.
• Several possible causes of problematic fuel damage
exist. Most relate to overheating.
3:55:04 PM
SENATOR MYERS asked if the primary concern with overheating was
that the reactions speed up and potentially get out of control.
DR. FINAN said the issue is that the heat can cause the cladding
on the fuel pellet to degrade or melt and radioactive material
is released into the water and potentially other parts of the
system.
3:56:23 PM
DR. FINAN advanced to slide 8 to discuss preventing fuel damage.
Control Reactor Power
Traditional approaches
• A key element is to design the reactor core so that the
physics causes the reactor to shut down when something
goes wrong. This is referred to as a negative temperature
coefficient of reactivity, which means that as the
reactor gets hotter, reactivity reduces and fission
starts to shut down. This is referred to as a negative
temperature coefficient of reactivity, which means that
as the reactor gets hotter, reactivity reduces and
fission starts to shut down.
• Mechanical shutdown approaches include inserting control
rods with neutron absorbers into the core of the reactor
to stop the fission. Boron injection into the cooling
water is another traditional approach that absorbs
neutrons that shuts down fission and prevents runaway
chain reactions.
Innovations and Enhancements
• This includes the traditional approaches plus improvements
such as online refueling. This allows lower excess
reactivity in the reactor core and decreases the potential
to have a runaway chain reaction. She highlighted that
there have been no instances of runaway chain reactions in
commercial power in the US.
DR. FINAN explained that the fission and reactor can be shut
down, but the radioactive material in the reactor continues to
produce heat as it decays. When a reactor is shut down, about
6.5 percent of the full power heat is still being produced as
decay heat. An hour and a half later there is about 1.5 percent
of full power, and after a day there is about 0.4 percent of
full power heat. That heat needs to be removed to prevent the
fuel from being damaged and the release of radioactive fission
products into the core of the reactor. The heated water in the
core boils off and needs to be replaced.
DR. FINAN described the traditional and enhanced ways of
maintaining cooling to prevent fuel damage.
Maintain Cooling
Traditional approaches
• High- and low-pressure systems to injection water into the
core of the reactor. Water can also be circulated through
the containment system to bring the temperature down.
• Backup diesel generators are used to operate the pumps in
the event that electric power is lost.
Innovations and Enhancements
• Gravity-driven backup cooling is a passive approach to
bring water to the reactor without the need to rely on
pumps that require electricity
• Battery backups to ensure that key controls and valves
work properly if the power goes out
• Passive natural circulation approaches that circulate
water or air to remove heat without electricity
• Coolants with higher heat capacity, high boiling point,
and low-pressure operation to prevent coolant loss.
Sodium, lead, and salt can take a lot more heat than
water. They operate at lower pressure and don't readily
boil off or try to escape. A lot of advanced reactors
operate at very low pressure.
• The goal is to achieve increased or indefinite coping
time without electric power. A major issue with Fukushima
was the loss of power so pumps didn't operate. A key
safety feature of advanced reactors is they are able to
function without electric power for a certain amount of
time.
• Simplified design improves outcomes because there are
fewer things to go wrong
• Automation to reduce reliance on operator actions
4:05:38 PM
SENATOR MYERS asked if the water to cool a reactor could come
right out of a river.
DR. FINAN answered yes, or it could come from tanks, depending
on the site and design of the reactor. For a gravity-driven
system, tanks of water at a given height allow the water to flow
by gravity to cool the system.
DR. FINAN advanced to the chart on slide 9 to review the
traditional and enhanced procedures for confining radioactive
materials.
Physical Containment/Confinement
Traditional approaches
• Use large concrete or steel containment structure that
can withstand internal pressure from steam release or
other impacts as well as external pressures or impacts.
• Maintain active systems to manage hydrogen buildup. When
a water reactor loses coolant, reactions can take place
that cause free hydrogen to be released into the
containment system. There are active systems that work
well to eliminate the hydrogen so it does not cause a
fire.
Innovations and Enhancements in Advanced Reactors
• Low pressure operation. Use coolants that can be used at
very low pressure prevents the coolant from escaping or
materials to be dispersed. Steam seeks more space whereas
sodium and lead do not.
• Manage chemical interactions and minimize hydrogen
buildup. For example, accident tolerant fuels in water
reactors don't have the same tendency to produce hydrogen
under exigent conditions. Avoiding hydrogen buildup is a
way to eliminate the need to use active systems.
• Use of advanced fuels such as TRISO fuel. It is an
innovative fuel design that retains the radioactive
materials.
Reduce inventory available for release
Innovations and Enhancements in Advanced Reactors
• Higher efficiency operation. Most advanced reactors need
less fuel to produce the same amount of energy.
• Use smaller units such as microreactors. They have much
lower potential to release because they have lower
inventory of radioactive materials.
• Use online refueling and/or the removal of fission
products during operation. Instead of refueling every 18-
24 months, remove materials consistently so they aren't
available to be released if something goes wrong.
4:09:45 PM
SENATOR MYERS referenced an earlier presentation that indicated
that microreactors are housed in three or four container units.
His understanding of the refueling process was that the reaction
chamber was within a container and once that ran out it would be
removed and replaced with another container. He asked if she was
talking about that process.
DR. FINAN said that is a common model for very small reactors
that work for years and then are removed and replaced or sent
back to be refueled at a centralized location.
She said she was talking about reactors that are at least 50 MW
electric and more commonly 50-100 MW electric that are refueled
while operating. Online refueling uses fuel like TRISO fuel that
has a pebble design. The pebbles drop through the core and the
spent fuel pebble is removed from the bottom. Fresh fuel pebbles
can be put in or the spent pebble can be recycled as
appropriate. Similarly, molten salt reactors have mechanisms to
remove some of the radioactive fission products during
operation. She noted that this process was different than what
he described and was unlikely to be used in a remote location or
a very small reactor.
4:11:44 PM
DR. FINAN advanced to slide 10. She explained that tristructural
isotropic (TRISO) coated particle fuel is designed to retain
fission products in the fuel as opposed to a fuel pebble that
has a cladding that can crack and leak and release radioactive
material into the water. TRISO fuel maintains its structural
integrity so the fission products are retained in the fuel even
in temperatures as high as 1,600 degrees Celsius, which are
accident conditions. This is the heart of the safety basis for
high temperature gas reactors or other reactors that use TRISO
fuel. It has been qualified and developed over the last couple
of decades in the US, and longer in locations outside the US.
DR. FINAN advanced to slide 11 and reviewed the highlights of
the presentation:
• Civilian nuclear power is regulated by the U.S.
NRC
• Most safety measures focus on preventing damage
to the fuel or release of radioactive materials
if damage should occur
• Advanced reactors include safety enhancements and
innovations that rely more on inherent and
passive features and less on active engineered
systems
• Both traditional and advanced systems implement a
defense-in-depth philosophy
4:14:01 PM
CHAIR HUGHES reminded the members that the defense-in-depth
philosophy involves independent, diverse, and redundant layers
for safety purposes."
CHAIR HUGHES asked if there was a metric that Alaska communities
could use to evaluate the safety and environmental protection
features of different microreactors, or if she and other
scientists had identified the most promising design.
DR. FINAN suggested looking to the US Nuclear Regulatory
Commission (NRC) for an independent assessment of safety. All
the advanced microreactors have slightly different approaches
for achieving safety outcomes, but they all meet the gold
standard of the NRC.
CHAIR HUGHES asked whether the Nuclear Regulatory Commission had
any kind of scoring system so an Alaskan community would have a
better understanding of what would fit in a particular location.
DR. FINAN answered that NRC does a lot of deep analysis of
accidents, and that information will be available as innovators
move through the regulatory process. If Alaska were to develop
particular priorities, there are opportunities to ensure those
are sufficiently analyzed. NRC has the capability of looking at
and analyzing the impacts of a particular reactor in the context
of the environmental sensitivities of the particular site in
Alaska.
4:18:00 PM
CHAIR HUGHES invited Dr. Parisi, whose specialty was safety, to
speak to the last question.
CARLO PARISI, PhD., Scientist, Idaho National Laboratory, Idaho
Falls, Idaho, agreed with Dr. Finan's response that there are
several metrics available to evaluate the safety of different
technologies. The US has very good safety standards and these
advanced reactor designs have achieved the very low, 10 to -7
probability of core damage. He acknowledged that some reactor
designs were more mature than others, but that didn't mean that
the newer technologies were less safe because all reactors
deployed in the US have to adhere to the exacting standards for
safety.
DR. PARISI acknowledged that some reactor designs, such as light
water reactors, were more mature than others, but that doesn't
mean they are less safe because all reactors deployed in the US
must meet uniform and.
4:21:13 PM
CHAIR HUGHES asked what it means to have a 10 to -7 probability.
DR. PARISI answered that it's equivalent to having an event
every 10 million years; the probability of an event that's 10 to
-8 would be equivalent to one in 100 million years. The current
reactor designs are magnitudes safer than the first reactors
that were developed in the 1960s or 1970s.
4:22:35 PM
CHAIR HUGHES asked how he would compare the US NRC safety
standards to other parts of the world.
DR. PARISI answered that the US NRC is the gold standard.
CHAIR HUGHES asked if the Idaho National Laboratory was
available to assist communities in Alaska that were interested
in exploring the use of micronuclear reactors and comparing
different design options.
DR. PARISI answered yes; the Idaho National Laboratory has
plenty of scientific expertise to provide that help.
SENATOR MYERS asked if any of these advanced reactors designs
had been extensively tested to operate in cold climates.
DR. PARISI answered yes; a light water reactor was deployed in
Siberia. The designer has to do extensive study and have a clear
understanding of the meteorological conditions of the site where
the reactor will be installed.
CHAIR HUGHES asked Dr. Sabharwall to add his perspective about
how Alaska communities might evaluate particular microreactor
designs in terms of safety and environmental protection.
4:26:22 PM
PIYUSH SABHARWALL, PhD. Senior Staff Scientist, Idaho National
Laboratory, Idaho Falls, Idaho, stated that in his current role
as microreactor technical lead, he has been working with a team
of scientists to understand load technology readiness levels. To
the question about deploying a reactor in a cold climate, he
said his team was looking at using a thermosyphon (a heat pipe)
to remove heat from the core of a reactor to the power
conversion unit to produce power. He agreed with Dr. Parisi that
a microreactor could be studied to determine its suitability
under different conditions and locations.
CHAIR HUGHES asked Gwen Holdmann to tell the committee about
what she learned about the location of the reactor she described
during the last hearing that Russia had deployed on a barge not
far from Alaska.
4:29:07 PM
GWEN HOLDMANN, Director, Alaska Center for Energy and Power
(ACEP), University of Alaska Fairbanks, Fairbanks, Alaska,
advised that the barge was located about 575 miles from Point
Hope. She added that reactors had been installed in the Arctic
by several countries, but the mobile reactor designs Russia was
exploring are quite different in terms of design and deployment
compared to the US.
CHAIR HUGHES asked Dr. Finan if there was cause for concern
about this technology.
Dr. Finan answered that it's a light water reactor, so it does
not have any of the enhancements that are seen in the advanced
reactor designs, but that design reflects many thousands of
reactor years of experience. She also pointed out that light
water reactors were originally developed for use on submarines
so there is an abundant amount of water for a heat sink.
4:31:40 PM
Dr. Parisi advised that the reactor design on the barge is the
same as those on Russian icebreakers. He wasn't familiar with
the plant that was installed on the barge and whether or not it
was a passive system. Nevertheless, it would be able to operate
at the same level of safety as other light water reactors
deployed around the world.
4:33:27 PM
CHAIR HUGHES thanked the presenters and held SB 177 in
committee.
SB 172-PROPERTY TAX EXEMPTION
4:33:31 PM
CHAIR HUGHES announced the consideration of SENATE BILL NO. 172
"An Act increasing the residential property tax exemption."
4:34:25 PM
NICK MOE, Staff, Senator Bill Wielechowski, Alaska State
Legislature, Juneau, Alaska, introduced SB 172 with a
PowerPoint, "SB 172 An Act Increasing the Residential Property
Tax Exemption." He began with slide 2, discussing the highlights
of property tax relief reflected in SB 172:
• SB 172 increases the residential property tax
exemption from $50,000 to $75,000
• Optional tool for local communities to use to
reduce tax burden
• Increased exemption amount equals more than $400
in annual savings to average homeowner
• More than $12,000 in savings over the life of a
30-year residential mortgage
MR. MOE described why property tax relief in needed:
• Property taxes have dramatically increased
• The cost of living in Alaska has increased the
last few decades as well
• Average income has not even doubled during the
same time
MR. MOE spoke to the property tax burden SB 172 seeks to remedy:
• Anchorage saw the second largest property tax
growth in the country between 2019 and 2020
• Property assessment cards were sent out recently
in Anchorage, Mat-Su, and North Star Borough.
Some property owners saw 10% increases in
appraisals or more.
• Many Alaskans are looking for solutions to
increasing property taxes
MR. MOE provided some of the history of the property tax
exemption:
• On August 28, 2012, the Alaskan voters passed
Proposition 1, Property Tax Exemption Act
• Prop 1 Increased the residential property tax
exemption from $20,000 to $50,000
• Six boroughs and municipalities now take
advantage of the exemption set by the state.
• 54% of Alaskans enjoy property tax relief through
this exemption
4:37:10 PM
CHAIR HUGHES asked how many boroughs and municipalities that
have property tax were not taking advantage of the exemption.
MR. MOE answered that 12 of the 18 boroughs that are allowed to
collect property taxes are not taking advantage of the
exemption.
CHAIR HUGHES asked if that was both boroughs and municipalities.
MR. MOE said he would follow up with a definitive number.
MR. MOE turned to the state map on slide 6, that identifies six
boroughs and communities that take advantage of the $50,000
property tax exemption. These are: North Slope Borough,
Fairbanks North Star Borough, City of Valdez, Municipality of
Anchorage, Kenai Peninsula Borough, and Bristol Bay Borough.
MR. MOE mentioned the recent media coverage regarding property
tax values, including an article in the News Miner last week
that described dramatic increases. One homeowner saw the
assessed value of their home double from one year to the next.
MR. MOE advanced to the US map on slide 8 to illustrate that
property tax is the largest tax that most Alaska home owners
pay. The state is ranked second nationwide.
MR. MOE displayed the chart on slide 9 that shows that Alaska
ranked second in the nation for the highest property tax
increase from 2019 to 2020. He also provided charts to show
increases in the price of gasoline and natural gas compared to
the slow growth of personal income over the last 20 years.
4:39:16 PM
MR. MOE concluded the presentation with the following
highlights:
• Property tax relief is needed now
• The cost of living for Alaskans has increased
dramatically
• SB 172 increases the allowable residential
property tax [exemption] from $50,000 to $75,000
• Optional tool for local communities to use to
reduce tax burden, most Alaskans utilize current
exemption
• Homeowners could save $400 a year, and $12,000
over the life of a mortgage
4:39:39 PM
CHAIR HUGHES asked him to go through the sectional analysis.
MR. MOE stated that the bill has just one section, which
increases the property tax exemption from $50,000 to $75,000. It
is tied to the Consumer Price Index (CPI).
CHAIR HUGHES observed that ten years ago the exemption was based
on CPI for Anchorage and SB 172 changes that to the CPI for
urban Alaska.
MR. MOE agreed that was his understanding.
SENATOR HUGHES offered her understanding that the Mat-Su Borough
was not taking advantage of the exemption.
Mr. Moe agreed.
4:41:45 PM
SENATOR GRAY-JACKSON noted that she was a co-sponsor. She
corrected the record, advising that a homeowner whose assessment
doubles will see their tax assessment double as well.
4:42:27 PM
SENATOR MYERS referred to the US map that shows that Alaska
ranks second in the nation for property tax burden. He noted
that Alaska has a local property tax and a petroleum property
tax that is assessed at both the borough and state level,
depending on location. He wondered where Alaska would rank if
the petroleum tax were removed from the calculation.
MR. MOE offered to follow up with the information.
SENATOR MYERS asked if Anchorage had a tax cap.
MR. MOE answered yes.
SENATOR MYERS noted that Fairbanks also had a tax cap. He
offered his view that the discussion wasn't so much about
property tax relief as tax shifting because taxing jurisdictions
would still try to raise the same amount of revenue. The policy
call is whether or not to shift the tax burden from residential
property owners to commercial property owners.
4:44:37 PM
MR. MOE responded that each borough assesses differently
according to what works best for that jurisdiction. He
acknowledged that with a tax cap, there will be a little
redistribution as opposed to an overall decrease.
SENATOR GRAY-JACKSON explained that the tax burden is spread
throughout the entire tax base and everybody tax burden
increases based on the assessment.
SENATOR MYERS said it will be interesting to see what happens in
areas like North Pole that have both property and sales tax. If
the dollar amount coming in from residential property tax is
less, he wondered whether the mill rate or the sales tax would
be increased to make up the difference.
4:46:43 PM
CHAIR HUGHES pointed out that this was optional and North Pole
might decide not to take advantage of the exemption. She
questioned whether Palmer would be interested because it was
trying to attract more businesses. By comparison, Anchorage has
a much broader business base so each individual business
wouldn't see that much increase. She noted that the bill was
currently written so that a local assembly or city council could
decide to take advantage of this option. She offered her
perspective that it was a good idea to allow the voters as a
whole decide on the merits of a tax shift. She asked whether the
sponsor had considered getting voter approval.
MR. MOE said he didn't know, but would find out. To the comments
about increasing the burden on commercial properties, he pointed
out that in the Mat-Su and the Fairbanks North Star Borough,
both residential and commercial property assessments were
increasing so each group will pay more overall. He noted that
assessors in different parts of the state also thought both
groups would be similarly affected.
4:50:28 PM
SENATOR GRAY-JACKSON said she cares about the entire state and
wants property taxes to be distributed fairly, but in District I
the assessed values for commercial properties have not been what
they should be for many years and this year the assessed value
for residential properties increased more than 10 percent in
some areas.
4:51:13 PM
SENATOR MYERS reported that his property in the Fairbanks area
went up 10 percent this year and several friends saw a 25
percent increase. He noted that while a property owner has the
ability to challenge the assessment, the burden is on the
property owner to prove the valuation is wrong. He described
that as a large power imbalance between the homeowner and the
borough. He wondered whether the sponsor would be interested in
addressing the tax issue by shifting the burden of proof for
property tax valuations to the borough instead of increasing the
exemption for homeowners.
4:52:27 PM
SENATOR BILL WIELECHOWSKI, Alaska State Legislature, Juneau,
Alaska, sponsor of SB 172, answered that he could do some
research and check with local communities, but he wasn't sure
that the state could regulate property tax assessments. He
acknowledged that it also seemed odd that the state could
regulate the size of the property tax exemptions that local
communities can offer.
SENATOR MYERS relayed that state statute places the burden on
the homeowner to prove the borough's assessment of a property
was wrong.
4:53:55 PM
SENATOR GRAY-JACKSON related that in Anchorage assessments are
typically based on the assessed value of nearby properties. The
municipal property appraisal division works with individuals who
question their assessments and minor disagreements are generally
resolved before the matter goes to the next level.
CHAIR HUGHES noted that the presentation indicated that the
average savings would be $400 per homeowner. Using Anchorage as
an example, she asked what the average property tax increase
will be for homeowners based on the higher assessments and,
should the bill pass, what the average increase would be for the
higher assessed residential and commercial properties.
4:55:19 PM
SENATOR WIELECHOWSKI answered that he didnt know what the
average increase would be with the new property tax assessments,
because the Anchorage Assembly sets the mill rate. The estimated
savings of $400 was based on what the tax would be under the
current mill rate and increasing the exemption from $50,000 to
$75,000.
4:55:53 PM
CHAIR HUGHES asked, if the assessments go up 13 percent on
average, will the property taxes also increase 13 percent.
SENATOR WIELECHOWSKI answered not necessarily; it depends on the
mill rate.
CHAIR HUGHES narrowed the question to include the same mill
rate.
SENATOR WIELECHOWSKI deferred the question to Senator Gray-
Jackson.
4:56:30 PM
SENATOR GRAY-JACKSON responded with a hypothetical example. If a
residential assessment increased $100,000 and the mill rate is
14.5 percent, the homeowner would pay an additional $1,450 in
taxes.
CHAIR HUGHES asked the sponsor if he had considered asking the
voters to weigh in.
SENATOR WIELECHOWSKI stated that he had no strong feelings one
way or the other.
CHAIR HUGHES asked Senator Gray-Jackson if anything in the
Municipality of Anchorage charter would automatically send a
question like this to the voters.
4:58:18 PM
SENATOR GRAY-JACKSON answered she didn't think so, but if it did
go to the voters she was sure it would pass with at least a 70
percent margin.
CHAIR HUGHES asked the sponsor what kind of support or
opposition he'd heard.
SENATOR WIELECHOWSKI said he had not heard of any formal
opposition, but he would defer to Mr. Moe.
4:58:48 PM
MR. MOE added that there had been a lot of support for the bill
and realtors were eager about the potential to lower property
taxes. He'd heard no formal opposition.
CHAIR HUGHES asked if chambers of commerce or the Alaska
Municipal League had weighed in.
MR. MOE answered no.
4:59:13 PM
SENATOR MYERS commented that it was a concern if realtors were
excited because they were likely thinking it would result in the
increase in both homes sales and valuations.
SENATOR WIELECHOWSKI offered his experience that realtors
typically oppose property tax increases because people are more
likely to purchase when the prices are lower. He acknowledged
the possibility that future property tax appraisals might be
affected.
MR. MOE offered his perspective that in smaller communities,
lowering the homeowner property taxes with an exemption helps to
encourage people to stay in the community because they are not
priced out of their homes.
5:00:39 PM
CHAIR HUGHES held SB 172 in committee.
5:01:30 PM
There being no further business to come before the committee,
Chair Hughes adjourned the Senate Community and Regional Affairs
Standing Committee meeting at 5:01 p.m.