Senate Labor & Commerce, 4/20/26, 1:30pm

Good afternoon. I'd like to call this meeting of the Senate Labor and Commerce Committee to order. The time is 1:34 PM. We're in Beltz Room 105 of the Thomas Stewart Building in the nation's most beautiful capital city of Juneau, Alaska. Today is Monday, April 20th, 2026.

Members present are Senator Gray Jackson, Senator Dunbar, Senator Merrick, Senator DeJuntt, and myself, Senator Bjorkman. Let the record reflect that we have a quorum to conduct business. Welcome everyone to Senate Labor and Commerce. Please turn off or silence your cell phones and join me in welcoming our recording secretary, Carrie Tupou, and our LAL moderator, Chloe Miller. Our agenda for today is 2 items.

First, Senate Bill 259, property tax assessment increases. Following that will be Senate Bill 272, health information exchange. First up, Senate Bill 259. This is our first hearing for the bill. During our first hearing, we had a presentation of the bill and spoke with Director Mohler with the Division of Community and Regional Affairs and Had committee discussion.

I would like to welcome back my staff, Sevea Bieber, to the table to provide a brief recap of the bill. Ms. Bieber, please put yourself on the record and begin your brief recap.

Thank you, Mr. Chair and members of the Senate Labor and Commerce Committee. For the record, my name is Sevea Bieber, staff to Senator Bjorkman. Thank you for hearing Senate Bill 259 today. This legislation provides municipalities with the authority to cap yearly increases in assessed property values by 3 to 10%.

The cap would reflect full and true value and would be enacted by ordinance. In the version before you, all types of property qualify for the limit on property tax assessments. The assessor is allowed to true up the assessed value of the property if the property is improved or if ownership is transferred based on the existing market conditions. This bill also requires the assessor to true up the property value every 10 years. Years.

Thank you very much, Ms. Bieber. Are there any questions for the bill sponsor or staff?

Seeing and hearing no questions. After our last committee hearing on the bill, committee questions were submitted to the Department of Community and Regional Affairs. Director Mohler, have you had an opportunity to review the Committee's questions, and do you have any information about those questions?

Yes, thank you, Mr. Chair and members of the committee. For the record, this is Sandra Mohler. I'm the Director of the Division of Community and Regional Affairs. Director Mohler, I'm sorry to interrupt you, but it is very hard to hear you.

Maybe if you're on speakerphone, if you could pick up like a handset or something. It's just you're really quiet.

Hello, Mr. Chair. Is this a little better? Yes, so much. Thank you so much.

Sure thing. Apologies. Again, this is Sandra Mohler. I'm the Director of the Division of Community Regional Affairs. And yes, I did receive two questions from the committee.

I'm happy to report on them as you would like. Yes, could you please do that now?

Sure, again, this is Sandra. The first question was, and I'm going to read what was provided, is the previous version of this bill applied only to residential properties. In the current version, are municipalities required to implement it across all property types simultaneously or do they have the flexibility to apply it to residential, commercial, or both? In other words, is this an all-or-nothing requirement? Um, so that's the question.

The answer is the local jurisdictions can decide which property the exemption can apply to. This is unless the legislation specifically specifies the exemption is only for one type of property or another. Without specificity, the jurisdiction can pick which property type an exemption is eligible for.

And, and that was the answer to question 1. If there aren't questions, I can do question 2. Any questions about that topic?

Seeing none, question 2, please. Sure. Question 2 is: In some areas of the state, residential property taxes are linked to or influenced by other sectors, such as industrial facilities. How would this proposed smoothing mechanism operate in those contexts? Could it create unintended distortions, for example, in mill rates or overall tax distribution, that municipalities may not be into?

Participate. So that was the question, and the answer is yes, it will have some impact. There will be unintended consequences, and this— it was very difficult for the division to determine the breadth of that, not knowing how many would participate or accept these optional exemptions, and we would have to look into each of those jurisdictions way in which they're doing their property assessments. Each jurisdiction could— I believe at the last hearing, Valdez was mentioned, and I have not had time to look for into their assessing practices, but depending on how they allocate their property taxes with the industrial commercial uses, there would be impacts.

And there are a number of other impacts and unintended consequences I think that this bill would also have.

Thank you for that answer. Are there any questions? Ms. Muller, I have a question in regard to that.

As we look at the, you know, making sure that there is a true-up at the end of every 10-year period so that municipalities have a goal of always shooting for the full and true value, just as they do under the current law. I'm having a hard time understanding if this is an optional thing that municipalities undertake where they're always shooting for full and true value. What would be an example of one of these possible negative impacts that you are referencing? Thank you, Chair Birkman. This is Senator Moller, the DCRA Director, calling.

One unintended impact might be a restraint on the government's current local, local government's current revenue. In other words, if you cap the revenue via the amount that can be assessed, it would reduce the total income, and therefore the local government would have to adjust its budget or its mill. Another is it could shift the tax burden, as most exemptions do, to shift the burden from one taxpayer to another, and that would, in this case, I think— well, I won't go into that. There's, there's lots of examples, or there's lots of items to discuss under that. It also would potentially actually disrupt the market as that analysis Assessment of real property is really a picture of the actual market in a location.

Therefore, putting a cap on the amount that can be increased, it would limit potential revenue that a community can earn or collect because it reduces the total value. For example, if a property is $100,000 and the next year it's $150,000, That is more than 5% of an increase. So if they had elected to do this in the hopes of providing relief for individual taxpayers, they would— they, the community, would lose a large part of that 50% gain that the market may have shown. So that is another I guess, disadvantage of putting a cap on. And then also, I think another one is it would put administrative challenges on the jurisdictions to track.

And it definitely would provide complexities for the state assessor to collect because we would have to compare apples and apples. If one jurisdiction has elected to do this exemption, we would have to look because our task is to true up, as you mentioned, the true value of each of those jurisdictions in order to calculate the full value determination. So there will be added complexity both at the local level and at the state level. There are additional ones, but I think those are the permanent ones. Most pressing ones.

Thank you for that. As we look at what, what the bill does, I think it's important to note, um, and, and understand what levers are available for local government under this. Looking at version L proposed committee substitute that we put on the, on the table at the last meeting, and knowing that the full value determination and assessed values generally, which are two different things, but assessments that are made by municipalities go up on average of 5%. Would you agree with that?

To the Chair, this is Sandra Mohler. I can't speak to that. I think that is a reasonable number, but I don't know for sure. So assessments generally go up on average of 5% per year, but they have some very significant spikes that occur. And so what the bill does by providing a range from 3 to 10% and then requiring local municipalities, again, at their option if they choose to take this up, and nothing requires a municipality to take it up, But they would not only be able to adjust their mill rate to meet any desired revenue goal that they may have, but they also could adjust the percentage by which their assessed values increase or not.

And I don't think that was contemplated by the assessment that you just provided to the committee. So as we look at what the bill does and options it provides, It provides, as discussed in the committee prior to this one, needed flexibility to deal with many of these concerns. And I understand that as we look at what communities are faced with, many times it is because of options that they choose to undertake on their own accord. Whether that be what the mill rate is, what they choose to undertake in optional exemptions, what they might choose to cap as far as other revenues or options. But those are all options that are available at the local level.

And I think providing municipalities with those options to meet the needs of, of their own folks is an important one. You mentioned comparing one community to another and determining assessed value. Is that currently how the state assessor lands on full and true value, are we comparing values and property from the Kenai Peninsula to Anchorage to Fairbanks to land on what full and true value is?

To the chair, this is Sandra Muller, Director of DCRA, and excuse me if I misspoke. What we do, the state assessor— and again, we are down a state assessor, so I'm doing my best to answer your questions as I understand it. What we do is we take what is reported from each jurisdiction and then put them on a level playing field as if— so we calculate back in the optional exemptions because not everybody, not every jurisdiction does exemptions and they do them at varying levels. So what we we look at for property tax they submitted. We look at various models and market conditions to look at how close the assessors are to the actual market, and we do that through what's a sales ratio.

And that's comparing— that's looking at a sale that may have happened and, and look at that parcel to see if it is how close it is to what actually sold versus what the assessor did. And that's, that's mentioned. And if you want more, that is in our Alaska Taxable, and it is a calculation. So what we do is we look at what's reported and adjust those values so that every jurisdiction is evaluated the same way. So apologies if I said we compare.

We do not compare. We ensure that the property, that all the property, personal and real, are allocated in the full value determination. And when we get to M&E, machinery and equipment, that gets a little more detailed because we look at car values, airport activity, or airport aircraft, etc., fishing vessels. And collect that, put them into our models to adjust. And again, the idea is that we get the full value in that jurisdiction so that when we report it to DEED, they use it for their calculations.

I hope that helped clarify what I said earlier. [Speaker] That's helpful, thank you. My final question is about the fiscal note that you submitted.

I'm a little unclear as to how the budget of DCRA would be implicated or impacted by this legislation.

Could you help me understand how DCRA and Commerce would be financially impacted by a local option like this? [Speaker:SANJAY] Thank you to the Chair. Sandra with DCRA. Again, thanks for that question. It is most, the impact of the pandemic.

DCRA and the division is the variability that each jurisdiction has. Once we would have to go and look into which jurisdiction is accepting these, or excuse me, implementing this bill and adding this exemption so that we would be correctly reporting what their true and fair value, full value is. So that would be the impact to it, not knowing how many jurisdictions may or may not, and it's going to change. It could potentially change every 3 to 5 years. So, and then, so that's, that's the unpredictability just for our department.

Isn't that already the case with pretty much all optional exemptions that exist in Title 29 right now. You have different amounts of properties which qualify for optional exemptions based on who occupies the home, if they're a senior citizen, disabled veteran, a volunteer firefighter.

To the chair, yes, that is correct. We do try to work with each community. Jurisdiction. So this would add to that requirement.

Thank you. Any further questions?

Hearing none, members have a draft proposed committee substitute in their packet. May I please have a motion? Yes, Mr. Chairman, I move committee substitute for Senate Bill 259, version 34-LS1249/s Sierra as the working document. Object for purposes of explanation. Ms. Bieber.

The changes from version L to version S, uh, we're just changing it to, um, to be all properties instead of just housing. Sorry, through the chair.

Very good. Are there any questions?

Hearing no questions, I'll provide a bit more explanation.

As you look at bringing this optional exemption, which is basically a deferment now in effect because of the retargeting of the fair and true value after periods of time, It would be much easier for assessors at the local level and the state assessor, as well as all involved, if it would apply to all property. So that is the reason for this change. It would streamline things significantly so that municipalities could operate those assessments as a larger unit. So that's the reason for the change and rationale. There.

With that, I'll remove my objection. Is there any further objection?

Hearing and seeing no objection, version 34-LS1249/s is before the committee as a working document. We'll now open public testimony on Senate Bill 259.

Is there anyone in the room or online who would like to provide public testimony? We'll go online to Dr. Barbara Haney. Thank you for joining us today. Please state your name and affiliation for the record. You have 2 minutes.

My name is Barbara Haney, and I am just myself here today, um, talking to you. I submitted a letter, uh, formally to you, but I wanted to call and just, uh, suggest my— give my wholehearted support to this bill. You know, it's been very disheartening for me. We've been told that assessments would go up by 2.1%, and yet we have many people here who have seen their assessments here in Fairbanks go up as much as 40%. And while we Easy to say, well, that you have an assessor who's maybe overly aggressive.

You're finding out that people in other boroughs are going through the same thing. And so I think this is a good measure to be able to put those assessments in check. And I want to applaud your efforts in this. I really do. I have a couple of things that I hope that you would look at to tighten up the bill a little bit, but I would still be in favor of proceeding even without these.

The first one is closing what I call the family transfer loophole. Right now it's unclear when you're a widow, as I was, um, my— I had to take my husband off the deed, and so that could technically qualify as a property transfer even though I did it as a quitclaim deed from my husband and myself to me. Um, and so I would not want to see widows or widowers be faced with reassessment simply because their spouse died and they had to clarify the deed. Second thing is, if you have a young man who builds a house and then he gets married, and part of his estate planning, he adds his wife onto the deed, that should not count as a change in ownership as well. And lastly, if two people get divorced and somebody gets the house that should probably be clarified as to whether or not that would constitute a change in ownership.

So those aren't really tax avoidance schemes. Those are things that are part of life. They don't change how the property is being used or anything like that. The other thing I would like to see is some sort of clarification on improvements because there have been instances where I've had to go back and argue that a piece of Tyvek paper does not constitute an improvement in my property. And, you know, this is the kind of thing that there's a lot of discretion about.

And I would hope that you would make clear what really constitutes an improvement. To me, fixing a leaking roof is not improvement, it's preservation of value. Planting flowers You know, planting 5 tulips is not an improvement necessarily. That's just, you know, loosen up the place, isn't it? And I think drilling down on what constitutes improvement would be very, very helpful for a lot of people in the state.

Last, I didn't talk about it in my written testimony, but as I was listening to department talk, it suddenly came to my mind that if a borough does do this, there should be some adjustment in the full value determination that gets sent over to the Department of Education. They currently do this now, for example, with the widow's exemption or the widower's exemption, whatever you want, and the senior exemption. What they will do is they will remove those properties from the full value determination before it gets sent over to the Department of Education for the calculation of the required local contribution. And it seems to me if a similar strategy is pursued here, they could also adjust the full value determination before they send that over for the calculation of the required local contribution. And I think that would be a good thing that would be well supported by most people in this state.

So anyway, I want to thank you for the opportunity to testify, and I hope you pass the bill. I would be past this bill. Thank you very much for your testimony. Is there anyone else in the room or online who would like to testify to this item?

Hearing and seeing none, we will close public testimony on Senate Bill 259. That brings the bill before— back before the committee. Is there any further committee discussion?

Seeing and hearing none, I will just note that this is an optional exemption that communities would be able to take up or not, but it's not really a full exemption in the fact that people would be necessarily excused from paying property tax on their full and true value. It simply is a smoothing that allows communities to reduce spikes in assessment over time with multiple safety valves that make sure that the value of assessment still trends toward full and true. And so I think that's important to recognize. So we are going to continue to work with the department on fiscal note. We will continue to communicate with members about what this bill does.

Some additional clarity is warranted, Senator Dunbar, and questions that you asked specifically regarding industrial properties as well. But I think as we look at the optional nature of this issue, it might not be a great fit for all communities. And if it's not a great fit for the community, then they shouldn't take it up and they can just keep going things have. So, but as it is, things are, things are the way they are until they aren't. So providing options may be the thing that some, some committees need, or it may not be.

So this time we'll set Senate Bill 259 aside for further consideration at a future meeting, and we will take a brief at ease while we set up for the next bill.

All right, we're back on the record. It is 2:03 PM now. We are moving on to Senate Bill 272. This is our second hearing on the bill. During our first hearing, we had a presentation of the bill and took invited testimony.

I would like to invite bill sponsor, the Honorable Senator Forrest Dunbar, and his staff Ariel Harbison to the table. Welcome back to Senate Labor and Commerce. Please put yourselves on the record and begin your brief recap of the bill. Thank you, Mr. Chair.

Forrest Dunbar, State Senator for District J, and Ariel Harbison, staff to Senator Dunbar. I'll just say thank you, Mr. Chair, for hearing the bill again. And if you'd like a brief recap, uh, Ms. Harbison has that prepared. Most excellently.

Thank you. For the record, Ariel Harbison, staff to Senator Dunbar. Thank you, Chair Bjorkman and members of the committee, for hearing this bill again. As a reminder, uh, the 26th Alaska State Legislature had passed SB SB 133, which provided the framework for to establish a statewide health information exchange. This was written when electronic health records were in their infancy and HIEs were more of an idea than a reality.

So, what SB 272 does is it updates language that is in current statute. It clearly articulates in statute to have a designee and outlines the responsibilities and roles of this designee. Last time you heard from their director, Kendra Sticca, um, from the Health Connect as an invited testifier. So, it outlines those roles and the roles of the Department of Health. It also provides clarity around the allowable uses of the Health Information Exchange so that uses are not left to assumptions of that designee.

It also allows individuals to authorize sending their data from the Health Information Exchange to a provider so that they're not having to contact provider to provider. They can send it from the exchange to lots of different providers in one phone call essentially or email. Creates a seat on the board for a behavioral health representative. So those are the main things that the new bill kind of updates and clarifies. Very good.

Thank you. We have online available for questions Chief Data Officer with the Department of Health, Jason Ball, as well as Director Kendra Sticca with Health eConnect on Teams. Are there any questions for Mr. Ball or Ms. Stika?

Seeing and hearing none, we will now open public testimony on Senate Bill 272. Is there anyone in the room or online wishing to testify to this item?

Seeing and hearing none, we will close public testimony on Senate Bill 272. That brings the bill back before the committee. Is there any committee discussion?

Senator Dunbar, do you have any closing remarks on the bill before we look to the will of the committee? No, Mr. Chair, thank you. Very good. Seeing, hearing nothing further, what are the wishes of the committee?

Thank you, Chair Bjorkman. I move to report Senate Bill 272, version 34-LS1383/A, from committee with individual recommendations and attached fiscal note. Is there any objection? Seeing and hearing no objection, Senate Bill 272, version 34-LS1383/A, as an anchorage, is reported from committee with individual recommendations and the attached fiscal note. Please stay after the— until the meeting adjourns, and we will sign the committee report then.

The Senate Labor and Commerce Committee will meet next on Wednesday, day after tomorrow, April 22nd, when we will hear HJR 38, Public Safety Telecommunicators, as well as SJR 25, supporting the U.S.-Mexico-Canada Agreement. As there is no further business to come before the committee today, we are adjourned at 2:07 PM.