Talking Points for SB 30
Questions and Answers

• Does this bill mandate the incorporation of boroughs? NO

After the Local Boundary Commission approves a borough incorporation proposal, residents in that region vote to determine whether to incorporate. If the proposal is voted down, the area will remain unorganized, but be designated a separate unorganized borough. There will no longer be just the one unorganized borough.

• Does this bill affect school districts and REAA's? NO

This bill does not deal with schools or school districts. Existing school districts and REAA'S would consolidate only if residents chose to incorporate as a borough. Consolidation of districts upon incorporation already exists in statute. If an area chooses not to incorporate, the school districts and REAAs will not be affected under this legislation.

• Will this bill affect existing boroughs? NO

This bill deals only with the unorganized borough.

• Who does this bill tax? This bill institutes a tax on residents of unorganized areas only.

Residents who choose to remain unincorporated will have a tax levied on the full and true value of property in their regions or the equivalent of such a tax. This is no more than the amount that residents living within incorporated areas are currently required to contribute for education.

• 87% of Alaska’s population live in boroughs and are required to pay a local contribution--they receive 74% of State foundation formula;

• 5% live in cities outside of boroughs and are required to pay a local contribution--they receive 6% of the formula;

• 8% of the population pay no taxes and receive 20% of the state’s foundation formula.

This is not technically a new tax--it is already paid by most state residents.

• How can you have a property tax in areas where there isn't any property value and what land there is, is mostly tax exempt? According to 1994 estimates, approximately $3.1 billion in full and true property value is not currently taxed by local jurisdictions.

This estimate does not include Native, federal, or other types of land that are exempt from taxation, both in the unorganized borough and incorporated areas. Land that is currently exempt from taxation remains exempt and is not included when calculating either the full and true property value or the required local contribution.

• Many residents of the unorganized borough are too poor to be able to pay taxes - how will this affect them? The same way it affects the organized borough.

There are poor people in organized borough also. Current tax laws and the accompanying exemptions would also apply to residents in the unorganized boroughs. Exemptions from taxation that currently exist for residents within incorporated boroughs would apply to those with low-income, the elderly, and others who qualify.

• How would this tax affect development of resources in the unorganized borough? The same way it does in the organized boroughs.

There are current tax breaks in statute relating to resources and development. This argument will be made regardless of when or where a tax is imposed. Resource development’s economic viability should not be placed in jeopardy by a six mill equivalency.

• If a person can't afford to pay the tax, would they lose their home? NO.

Once again there are exemptions currently in statute which offer protection. The same exemptions that exist for residents in boroughs would exist for residents in the unorganized areas. This is another reason why if areas choose not to incorporate, the area becomes a separate unorganized borough. This allows the legislature to impose the least detrimental types of taxes on the individual areas. It allows the areas to be looked at separately and allows the possibility of different types of taxes being levied. If the entire area remains one unorganized borough, then one type of tax would be imposed. A tax that is not overly burdensome on one area may be extremely so on another.

• Why tax the unorganized borough at all--they don’t receive any services? Yes they do receive a service - education.

The tax levied on the unorganized borough is the same as what is required of incorporated areas for education only. There are residents within boroughs who do not have borough-provided water and sewer services; fire services; police protection and so on. They must dig their own wells; maintain their own septic systems; plow their own roads, etc. But these residents pay for education.

• Doesn't the bill require incorporation to occur too quickly? Not really.

The time frames in the bill are starting dates only. It would take approximately 10 months after the proposals are first submitted before a borough was incorporated. It is another five years before the transition is complete and residents are paying the full 6-mill equivalency.