Legislature(1999 - 2000)

04/22/1999 06:05 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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SENATE BILL NO. 151                                                                                                             
"An Act relating to exemptions for municipal property                                                                           
taxes for certain primary residences; relating to                                                                               
property tax equivalency payments for certain                                                                                   
residents; and providing for an effective date."                                                                                
                                                                                                                                
Co-Chair Parnell explained that the bill addresses the                                                                          
municipal property tax exemptions for senior citizens and                                                                       
disabled veterans.  He spoke to work draft 1-LS0842\G, Cook,                                                                    
4/22/99 and the unfunded mandate.  Co-Chair Parnell noted                                                                       
that the committee substitute would add a new Section #1, so                                                                    
that any property exempted from taxation for purposes not                                                                       
included in the local contribution calculation for school                                                                       
funding would remain in State law.  Additionally, the                                                                           
proposed committee substitute would add Section #4, Page 3,                                                                     
which would move the exemption for the seniors to the                                                                           
optional exemption portion of the statute.                                                                                      
                                                                                                                                
Co-Chair Parnell MOVED to adopt the committee substitute as                                                                     
the working draft before the Committee.  Senator Adams                                                                          
OBJECTED.                                                                                                                       
                                                                                                                                
Senator Adams questioned the exclusion from local tax                                                                           
limitations.  Co-Chair Torgerson pointed out that Amendment                                                                     
                                                                                                                                
Senator Donley asked if local government would be                                                                               
responsible for passing an ordinance in order to continue                                                                       
the existing exemption.  Co-Chair Parnell explained that the                                                                    
legislation would clarify that the municipality, by                                                                             
ordinance, would be wholly or partially exempted by taxation                                                                    
and would be responsible for taking that step.                                                                                  
                                                                                                                                
Senator Phillips referenced Page 2, Line 19, and asked if                                                                       
$150 thousand dollars was the determined cap.  Following                                                                        
discussion among Committee members, Senator Adams maintained                                                                    
his objection to adopting version "G" of the proposed                                                                           
legislation.  He advised that pressure would be released in                                                                     
specific portions, however, would be applied more deeply to                                                                     
other cost areas.                                                                                                               
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Donley, Green, P. Kelly, Leman, Parnell,                                                                              
Phillips, Torgerson, Parnell                                                                                                    
OPPOSED:  Adams                                                                                                                 
                                                                                                                                
The MOTION PASSED (8-1).                                                                                                        
                                                                                                                                
EDDY JEANS, Manager, School Finance Section, Department of                                                                      
Education, commented that the Department of Education did                                                                       
have a "problem" with Section #1 of the legislation                                                                             
because it changes the way the value determination is                                                                           
calculated.  It would make it vary from community to                                                                            
community based upon what the voters of that community                                                                          
accepts for property tax.                                                                                                       
                                                                                                                                
He continued that under Title 29, the State Assessor                                                                            
determines the full and true calculation of real and                                                                            
personal property within each community in the State.  There                                                                    
exists a "mandatory exemption", which is $150 thousand                                                                          
dollars and an "optional" exemption which the community                                                                         
can exempt over and above the $150 thousand dollars.  Under                                                                     
Section #1, it states that the property value may not be                                                                        
included in the determination to the extent of the                                                                              
exemption.                                                                                                                      
                                                                                                                                
                                                                                                                                
TAPE SFC-99 #106 Side B                                                                                                         
                                                                                                                                
                                                                                                                                
Mr. Jeans continued.  He stated that the Department                                                                             
recommends that there is a uniform calculation used in                                                                          
applying for a determination for State foundation purposes.                                                                     
                                                                                                                                
Co-Chair Torgerson asked if the end result would be                                                                             
increased local effort, and State aid decreased.  Mr. Jeans                                                                     
acknowledged that was correct.  Co-Chair Torgerson pointed                                                                      
out that the $150 thousand dollars was already deducted from                                                                    
the full and true value.  Mr. Jeans advised that an amount                                                                      
must be set and that vague language will create a problem.                                                                      
                                                                                                                                
Senator Adams asked if there should be a "grandfather                                                                           
clause" included in the legislation.  Mr. Jeans replied                                                                         
that his concern was only with the inclusion of the language                                                                    
"$150 thousand dollars".  He recommended that a uniform                                                                         
process be used to determine the local effort.                                                                                  
                                                                                                                                
In response to Co-Chair Torgerson's concern, Mr. Jeans                                                                          
reiterated that he had had a conversation with the State                                                                        
assessor and that by moving it from a required exemption of                                                                     
$150 thousand dollars to an "optional" exemption would                                                                          
cost municipalities approximately $6 million dollars                                                                            
statewide.                                                                                                                      
                                                                                                                                
ROSALEE WALKER, Older Persons Action Group, Juneau,                                                                             
requested that the legislation be held in Committee.  She                                                                       
noted that many important groups had not been consulted                                                                         
regarding such an important piece of legislation.  Ms.                                                                          
Walker emphasized that this should not be an "optional"                                                                         
amount, and that instead it should stay mandatory.                                                                              
                                                                                                                                
GARY BERRY, American Legion, Juneau, indicated that he was                                                                      
present to testify on a section of the bill which had been                                                                      
deleted.                                                                                                                        
                                                                                                                                
KEVIN RITCHIE, Alaska Municipal League (AML), Juneau,                                                                           
advised that the AML supports the passage of SB 151.  He                                                                        
agreed that it is important that the school issue had been                                                                      
addressed.  Additionally, AML supports giving the                                                                               
municipalities the broadest possible options in working with                                                                    
the senior community.  Some of the options discussed by the                                                                     
municipalities would be to make that option "needs" based,                                                                      
potentially reducing the amount.  The average exemption                                                                         
under the program is a little under $100 thousand dollars.                                                                      
He recommended that options be included in the package in                                                                       
order to allow the opportunity for deferral.                                                                                    
                                                                                                                                
Senator Parnell requested Mr. Ritchie to explain the concept                                                                    
of "deferral".  Mr. Ritchie explained that tax deferral is                                                                      
a concept used nationally which would simply allow a senior                                                                     
to defer taxes, and that it essentially becomes a lien on                                                                       
the property and not become payable until the property is                                                                       
either sold or the senior dies.                                                                                                 
                                                                                                                                
Senator Leman inquired if AML would continue to support the                                                                     
legislation if the exemption was included, but the                                                                              
municipalities were allowed to opt out.  Mr. Ritchie replied                                                                    
that the bill in the present form is relatively new and that                                                                    
he would not be able to comment on that possibility.  He                                                                        
noted that the AML policy, which was adopted in November                                                                        
1998, states that the choices of the organization provide                                                                       
that there are exemptions.                                                                                                      
                                                                                                                                
Senator Adams asked if AML would support the desires of the                                                                     
senior citizens with the property tax exemptions.  Mr.                                                                          
Ritchie replied that AML adopt its policy statement                                                                             
annually.  Co-Chair Torgerson requested that Mr. Ritchie                                                                        
closely study Section #1 to further discuss the impact.                                                                         
                                                                                                                                
GERALD DORSCHER, Legislative Officer, Veterans of Foreign                                                                       
Wars (VFW), Juneau, asked if the disabled veterans would be                                                                     
affected by the proposed legislation.  Co-Chair Parnell                                                                         
acknowledged that was correct.  The disabled veterans'                                                                          
exemption would remain in place under the proposed draft and                                                                    
would not be affected.                                                                                                          
                                                                                                                                
DALE BONDURANT, Kenai, (Testified via Teleconference),                                                                          
testified against SB 151.  He stated that it would downgrade                                                                    
medical health care, social benefits, schools, roads and so                                                                     
forth.  The oil company knows that the citizens as a whole                                                                      
have less personal benefits from the income of depleting oil                                                                    
resources than the oil industry can easily rate.  Mr.                                                                           
Bondurant noted that fewer benefits equate to less public                                                                       
watchdog interest.  He claimed that the oil companies are                                                                       
raping the Alaska resources.                                                                                                    
                                                                                                                                
ED ZASTROW, Alaska Association of Retired Persons (AARP),                                                                       
Ketchikan, (Testified via Teleconference), spoke in                                                                             
opposition to SB 151.  He noted that there are a growing                                                                        
number of senior citizens that have chosen to live in their                                                                     
homes because of the property tax exemption, permanent fund                                                                     
checks and longevity bonus.  These monies are major factors                                                                     
in their fixed income.  He emphasized that a threat to                                                                          
eliminate any of these sources of funds creates a major fear                                                                    
within the senior population.                                                                                                   
                                                                                                                                
Mr. Zastrow pointed out that the latter portion of the bill                                                                     
addresses local elections.  AARP sees that as "pitting"                                                                         
the seniors against their neighbors which is totally                                                                            
unacceptable.  He urged that the bill be left in Committee.                                                                     
                                                                                                                                
BOB GORE, Past President, Pioneers of Alaska, Ketchikan,                                                                        
(Testified via Teleconference), spoke in opposition to the                                                                      
proposed legislation.  He stated that this is a "hardship"                                                                      
bill and that there is not enough space in the Pioneer Homes                                                                    
to take care of all the seniors that will need to sell their                                                                    
homes with the bill's passage.  He emphasized that this bill                                                                    
does not treat the older Alaskans with respect.                                                                                 
                                                                                                                                
Co-Chair Parnell MOVED to adopt Amendment #1, 1-LS0842\A.2,                                                                     
Cook, 4/22/99.  [Copy on File].  There being NO OBJECTION,                                                                      
it was adopted.                                                                                                                 
                                                                                                                                
Co-Chair Parnell MOVED to adopt Amendment #2.  [Copy on                                                                         
File].  The amendment would insert language on Page 3, Line                                                                     
4:  "An ordinance adopted under this subsection may limit                                                                       
the exemption to only those individuals with financial need                                                                     
as defined in the ordinance".  There being NO OBJECTION, it                                                                     
was adopted.                                                                                                                    
                                                                                                                                
Senator Leman MOVED a conceptual amendment, Amendment #3,                                                                       
which would change the "opt in" method to the "opt out"                                                                         
option on Page 4, Line 3.  The language would make the                                                                          
option a municipal decision rather than going before the                                                                        
voters.                                                                                                                         
                                                                                                                                
Senator Adams questioned language on Page #2 regarding the                                                                      
$150 thousand dollars.  Co-Chair Torgerson noted that these                                                                     
concerns would be addressed at a later time.                                                                                    
                                                                                                                                
Senator P. Kelly requested clarification regarding the                                                                          
proposed amendment.  Co-Chair Parnell explained that it                                                                         
would be by ordinance and not by the approval of voters.                                                                        
There being NO OBJECTION, Amendment #3 was adopted.                                                                             
                                                                                                                                
SB 151 was HELD in Committee for further discussion.                                                                            
                                                                                                                                

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