Alaska Legislature: Senate Finance - May 4, 2026 9:00am

Senate Finance Committee to order. Today is May 4th. We're in State Capitol Senate Finance Room. Present today: Chairman Olson, Chairman Steadman, Senator Keehl, Senator Merrick, Senator Kaufman, Senator Cronk, and myself. [FOREIGN LANGUAGE] Two items on our agenda.

First being HB 162, Species of Legal Tender. This is the first hearing on this piece of legislation. I invite Senator Cronk to introduce Senate Bill 162 to the committee.

Thank you, Mr. Chair and Senate Finance Committee. Senator Cronk, representing District R. And I have my staff, Paul Mankey, here with me. Senate Bill 162 is a companion bill to House Bill 1, which was the reintroduction of House Bill 3 from the 33rd Alaska Legislature. This bill passed out of the other body to the Senate, made it through Senate State Affairs and Senate Finance, where it stalled here 2 years ago.

Senate Bill 162 is about constitutional fidelity and financial freedom. Specifically, it recognizes gold and silver as legal tender in Alaska to the fullest extent allowed under federal law. It ensures that money itself is not taxed as a commodity, and it protects individual choice. Across the country, states are revisiting sound money policy, and Alaska should not fall behind. 45 States have already eliminated state-level sales tax— or sales and use tax on precious metals.

Um, version N of Senate Bill 162 reflects collaboration and refinement. It incorporates bipartisan amendments considered in both bodies to clarify original intent and address operational concerns. For the committee's reference, the Alaska Municipal League, who originally testified in opposition to version A of this bill, has sent a letter of qualified non-opposition in recognition of the bipartisan changes that was made in version N. What Senate Bill 162 does not do: it does not create a state currency, does not mandate acceptance of specie by private or public entities, and it does not eliminate municipal authority. Alaska doesn't have a sales— their state sales tax, and local municipalities do not track precious metals sales separately, so the precise fiscal impact is indeterminate. Given the limited volume of these transactions in Alaska, any potential local revenue impact is expected to be minimal.

This bill ensures that gold and silver species are not treated as taxable commodities, but instead are treated consistently with other lawful forms of money. It restores constitutional clarity. It protects individual choice. It treats money as money. In closing, this legislation provides parity for Alaskans to align with a growing national trend of sound money policy.

Alaska would become the 12th state to reaffirm gold and silver as legal tender. This would be a good chance for Alaska to capitalize on this golden opportunity for our state. With that, Mr. Chair, I have my staff available to go through a sectional analysis, or we'd be happy to go straight to invited testimony. Thank you.

Do members of the Senate Finance Committee have questions of the senator from Toke? We will go directly to invited testimony. We have JP Cortez, the executive director of Solomoni Defense League Online. Mr. Cortez, please identify yourself and to proceed with your invited testimony.

Hi there, can you hear me? Yes, we can. Perfect. My name is JP Cortez. I'm the executive director of the Sound Money Defense League.

Uh, co-chairs and the rest of the members of the Senate Finance Committee, thank you very much for the opportunity to testify today. Like I said, I'm with the Sound Money Defense League, and we're a grassroots public policy organization focused on gold and silver policy at the state and federal level since 2014, with supporters in every state including Alaska.

I ask that you please vote yes on Senate Bill 162. Gold remains a reliable hedge against inflation with thousands of years of price stability, which is why the authors of the U.S. Constitution specifically prescribed gold and silver as money. As inflation rages on and the nationwide cost of living crisis worsens, dozens of U.S. states have adopted policies to reduce barriers to buying, selling, using gold and silver as money, reaffirming gold and silver status as constitutional money, establishing gold reserves, and more. Under current law, the state of Alaska doesn't levy a sales tax on gold and silver, but boroughs and localities can. 45 States, like Senator Cronk mentioned, 45 states have already partially or fully eliminated this tax on purchases of gold and silver.

I'd also like to quickly highlight the letter of qualified non-opposition from the Alaska Municipal League and the fiscal note which reports none to minimal estimated cost to the state. Senate Bill 162 is important because investments are not typically subject to sales tax. When you buy a stock, a bond, an ETF, a mutual fund, a piece of real estate, you're typically not charged the purchase— on the purchase for that asset, you're charged a capital gains tax or you're not typically charged when you buy the asset. But in this case, uh, while the state doesn't, localities do, and that's unfair and not— it produces a lack of parity to other investment assets. Uh, it's also important to note that gold and silver investors are not typical fat cat investors.

These are not typically very wealthy people that are buying gold and silver. It tends to be investors of modest means buying regular amounts or small amounts at a time hedge against inflation. So for those reasons and more, it doesn't cost the state very much, but it would be a big statement in favor of sound money and constitutional principles that those embody. So I ask you to please vote yes on Senate Bill 162. I'm available for any questions, and thank you very much for the opportunity to testify.

Thank you, Mr. Cortez. We also have online Sandra Mohler, the director of of the Division of Community and Regional Affairs available for questions that any members may have. Do we have any questions of Mr. Cortez at this time? Seeing none, that concludes the invited testimony. Is there anyone online that would like to testify at this time?

Is there anyone in the audience who'd like to testify? Seeing none, we will close the public hearing. Senator Steadman. Yes, thank you, Mr. Chairman. I just got a few questions how this works, because it's kind of new to the table.

I understand how gold coins work, just like silver coins or whatever coins, coins. But these bills, or whatever you want to call them, gold-backed series, printed dollar things, you bring them into a store, buy product with it, and then the store has to— the merchant has to deal with it at the bank, or— kind of walk me through how that works. For the record, Paul Menke, staff to Senator Mike Cronk, through the Chair to Co-Chair Steadman. In particular, with relation to the gold backs, the gold backs are imprinted with their weight and purity of gold. They are typically almost 100% pure gold.

And so if that was to be exchanged, the merchant would look up the price of gold at that time point, look up the multiplier. So there's one bill that's 1/2000th of an ounce. So then they would determine what 1/2000th of an ounce of gold would be worth, and then they would hold on to it. And in order to get monetary value of it, they could exchange it at a gold store.

And I don't think I have any gold stores in my district, at least not that I can think of. I know there's gold stores in Fairbanks because they have a lot of mining. So can you help me with that a little bit, how that would work in places that are not in a mining district that actually mines and has gold mines, gold floating around where you could merchants or whatever you call the guy in downtown Fairbanks that buys your bullion? For the record, Paul Menke, staff to Senator Mike Cronk, through the chair to co-chair Steadman. I believe a lot of these options, you are able to sell gold online to merchants.

So if there was a person that did not have access to a brick-and-mortar gold store, that they would be able to go on to goldback.com or a similar— JB Bullion is another website— that they would be able to exchange their goldbacks for for U.S. dollars. Senator Steadman? No, that's all for right now. I'm just kind of a new concept. Thank you, Senator Steadman.

Further questions? Senator Kiel. Thank you, Mr. Chairman. Just to follow up on that, so the bill talks about specie is gold or silver valued on its metal content in the form of coin or bullion. So that That piece of paper with a 2,000th of an ounce, I think you said, of gold, is that piece of paper a coin or is that piece of paper bullion?

For the record, Paul Mankey, through the Chair to Senator Keel, that goldback would be considered bullion because it is weighted and stamped with its weight and purity of the metal contained within the specie. Okay. Thank you. Senator Steadman, what's that gold coin you have on your lapel there? I've seen some examples.

$5, 1911 Indian head. Okay, I'll give you $10 for it. I was going to give him $20. Further questions of the prime sponsor, Senator Kiel? Well, thank you, Mr. Chairman.

I'm not going to join the auction. But a question right to that point, because I need to understand a little bit about how this is going to work with things that have, I guess, collectible value or other value. We could talk about Senator Steadman's watch chain, but my grandma used to send me the little cardboard folder with the first, with the issue of all the coins from whichever mint, I can't remember. So nowadays, I looked them up, it's got a dollar coin and a half dollar, it's got 2 special quarters minted that year and then dime, nickel, penny. So there's $2.16 on the thing, but it sells for about $100, and I don't think it's the cardboard folder.

So assume now that that's, that's gold or that's silver or something. What's the taxable value of that collection, and what's the non-taxable value of the, of the metal or the coin? Help tell me how this works. For the record, Paul Makey, through the chair to Senator Keele. So in this bill, if you had, for instance, a gold coin, like a 1-ounce American Golden Eagle, and there was, due to its rarity or its some value that is beyond the metallic content, the taxable value of that specie would be any value associated with it beyond the actual metal content.

For instance, if there was an ounce of gold, approximately right now it's worth about $5,000 an ounce. If that coin was worth, say, $6,000, at a collector's, the taxable value would be that $1,000 above the price of the gold or the metal contained within that specie. So— Thank you, Mr. Chairman. So in a municipality with a sales tax, I assume that the cash-for-gold guy or the assayer can figure this out. Who else can figure this out when they do a transaction, or do we just I would not imagine there's going to be transactions with these things.

For the record, Paul Menke, staff to Senator Cronk, through the chair to Senator Keele. In this bill, it does not force any merchant to deal in these coins. If a merchant does not want to accept specie during the course of their business, then they do not have to. There are various ways that merchants can detect the— or can look up the value, the spot price of gold, and can determine— do various counterfeiting measures against— or to detect counterfeit. Goldbacks or bullion or silver coins or that matter.

Senator Keele? Well, thank you, Mr. Chairman. I'm trying to figure out how the sales tax administrator spot checks or audits. I'm not sure I've quite grasped it yet, but I appreciate it. Thank you, Senator Keele.

Further questions?

Seeing none, Any closing comments, Senator Cronk? No, Mr. Chair, thank you for giving us the time to listen to the bill. Thank you, Senator Cronk. We will go to fiscal notes.

Senator Keele. Thank you, Mr. Chairman. Senate Bill 162 has a pair of zero fiscal notes. The first one comes from Commerce, Community and Economic Development, Division of Community and Regional Affairs. They show no cost, no revenue No regulations.

The second comes from the Department of Administration, Division of Finance, and they also show zeros across the board. Thank you, Senator Keehl. We'll set this bill aside for further consideration at a later date. The second item on our agenda, the last item, is Senate Bill 259, Property Tax Assessment Increases. First hearing on this piece of legislation.

Senator Bjorkman and his staff to the table to introduce the bill to the committee. Senator. Thank you very much, Chair Hoffman and members of the Senate Finance Committee. For the record, my name is Jesse Bjorkman and I represent the northern and central portions of the Kenai Peninsula. The bill before you seeks to smooth out property tax assessments at the local level because when folks get property tax assessment notices and they increase by 20, 30, or 40% sometimes, year over year, that creates a lot of mistrust and angst in the assessment process.

And people start to ask questions very legitimately about why their assessments are going up so much when they have not made significant improvements to their property, when they are not seeing other homes of similar value comparable to theirs sell in their neighborhood. And they begin to wonder whether or not those assessment factors that resulted in their increased assessments are being undertaken in a, uh, just way. The bill before you seeks to allow a municipality the optional policy of smoothing that assessment over time in a range that would over time lead to spikes of assessed value being flattened out. And then over the long term lead to the assessed value of individual properties matching the long-term value of the full and true assessed value over a period of 10 years, as called out in this bill. On average, assessed values typically increase about 5% per year.

However, when assessed values spike up at the numbers I mentioned previously, it does create those questions and points of concern leaning to many appeals of assessed value, creating lots of work for real estate boards and other folks who are evaluating those assessments. So that's, that's a problem. And those boards of equalization undergo significant stress and workload when there are lots of appeals. So the bill comes at the request of the Kenai Peninsula Borough Assembly. To smooth assessments over time.

It does not create in the long term a division of the role whereby which certain members of a neighborhood we would be paying drastically different property taxes as other members who may have recently moved in. Some states have adopted those policies. This bill does not offer that option. It specifically states that an assessor would have to true up all property property in 10 years so that it has that target of the full and true value for assessments. It simply is an option that locals can undertake in order to smooth assessed values out over time.

Thank you, Mr. Chairman. I stand ready for your questions. Thank you, Senator. Do members of the committee have questions at this time? Senator Steadman.

Yes, thank you, Mr. Chairman. I think just for clarity, I can't— I think the assessor Assessing now is supposed to be within either 5 or 10% of the fair market value. I can't recall. Do you know if it's— I want to say it's— you're supposed to be within 5%, but maybe 10. Do you know what that happens to be?

What they're required to be within? Senator? Through the chair to Senator Steadman. Currently, because of our state laws in place without mandatory disclosure of what the actual sale price of property is. Assessment is much more of an art than a science.

I think it's well known by many and felt by many more that sometimes assessed values, they may not actually reflect what the true sale price is or the value of that property. We can go through the assessment rolls and see that. I'm not sure to answer your question directly, Senator, about what those guidelines are. But the problem is the calculus used to achieve the assessed values is very inexact because we don't have good data because we have so many data points missing with the lack of disclosure. Senator Steadman.

Thank you, Mr. Chairman. I think we need to clarify what that actually is because numerous times from my past service at the municipality people would be concerned that their taxes are up. And nobody likes to pay property tax, but we all have to pay it, at least the ones that own property, and indirectly, people that even rent.

And then when you tell them that it has to be within 5 or 10% of that value, and we can find out what the market value is, the argument goes away. Unless they clearly have property that's worth less than that, then they go in before the assembly or the council and get that adjusted. So I think we need to find out that legal requirement, but I think, you know, and pinpoint that. And I do recognize that there's a lot of lack of reporting. On financial transactions on real estate.

And some folks don't even let the assessor on their property. They got to drive by and look at it more or less, or let them in, or what have you. That's just, I guess, the way it's structured and how it operates. But at the end of the day, it seems to me like the communities get behind on their assessed value sometimes, and then they have to catch up. And when they do the catch-up provisions, it's rather shocking.

But anyway, Mr. Chairman, I think we could— we can find out what that data point is. Thank you, Senator Steadman. Senator Bjorgman, do you know if the Municipal League has taken action on whether they support or oppose this particular piece of legislation?

I don't recall if the Alaska Municipal League has taken a position on this. So we can have staff check with them just to get their position known before we take it up again. Further questions? Senator Keehl. Thank you, Mr. Chairman.

A question about the tenure true-up. Not terribly worrisome if a municipality sets a high cap. On the amount that the value can be— can go up year over year. But if a municipality sets a lower cap, I think the bill proposes to let them go as low as 3%. I can think of a time when over a 10-year period, I think the average increase in assessed values here in Juneau was 8% a year, some years more, some years less.

But that's quite a snapback at the end. How do you envision that working?

Thank you for the question. Through the chair to Senator Keele, the goal of the legislation is to allow at a local option the assembly flexibility to enact through ordinance a system that would smooth out the assessment process with the exact goal to prevent themselves from falling behind. That's why there is a range from 3 to 10. So if they know that their assessments are more than 5%, more than the average, then they could set optionally at their own ordinance level the ability to have a higher percent so that they move closer to what would be the natural full and true value for assessed property. So it's very clear then that over time they need to hit full and true every 10 years at least.

So the goal through that true-up every 10 years is so that they specifically don't fall behind. They know the target that they have to hit. And then they are adjusting their assessed value increases to smooth them in a way that they can hit full and true at the end of a 10-year period. So that's specifically what it is. The problem that locals are facing, we saw it here in Anchorage last year, we've seen it on the Kenai certainly, is you get hit, and in Juneau recent years as well, you get hit with assessed values of 30 to 40%, and people have a very hard time understanding why.

If then we cap that increase over a period of years, to 8% or 5%, whatever gets you to a target date of full and true in 10 years, then I think that would be much more acceptable to the public and much more predictable for people rather than saying, hey, your assessment went up, we can't really put a finger on as to why, but your taxes are going up 30% this year for no other reason than because we say so. That does not sit well with the public. And some of those pressures are exactly reasons why throughout the country you have entire states now contemplating whether or not they should have property taxes at all.

This optional provision is entirely designed to smooth those assessments over time so you avoid the disruptions which you just spoke about, Senator Keele. You have a predictable increase if there is to be an increase at all, so that you're not getting hit with large 20, 30, 40% increases in one year.

Thank you. I appreciate the explanations. I think back on when there was a state assessor required a methodology change of a local assessor while I was in local government. They're not fun. And I get smoothing that.

Where I'm having a little bit of trouble is when— is the difficulty in predicting the real estate market and what the— what's going to happen with the fair value and arm's length transactions in the future. If you're in the midst of smoothing in a valuation change and from a methodology issue, an assessor's office issue. And you have just increases in the market, don't you risk building in the same snapback at year 10? Senator Kiel, Senator Bjergman. Thank you for the question through the Chair to Senator Kiel.

I'm not certain as to the hypothetical that you just painted because I'm unfamiliar with those changes to assessment methodology which I think we worked together last legislature on through Senate Bill 179 and appreciate your efforts in that. And I think that's why if you have large changes like that occurring in local municipalities and those things are— need to settle out before additional changes are made, I think that's why it is vitally important that this exemption is optional. It's not a mandatory thing that all locals have to take up. It's an optional thing that municipalities can enact if it fits them and if it works for them. And that's why it's very important to me that this is an optional thing that communities can do.

And if it doesn't work for the community, then they don't have to take it up. Thank you, Senator Keehl. Senator Steadman. Mr. Chairman, the other side of that coin is at the municipal level. You've got your assessments that are adjusted every year, pretty much every year, but then you've got your millage rate that is adjusted.

So if assessments are escalating at such a rate that, that the revenue exceeds some of the needs or requirements at City Hall, they can lower their millage rate and offset that. I'm not so sure that allowing properties off of the full and true value annually is a good idea. You have opportunities sometimes to buy or own valuable real estate. It could be waterfront, which in Southeast is more of a premium property than non-waterfront, or if I was in Kenai, area, I think I'd be tuned into liquefaction plant and whatever impacts that may bring to that region. Or, you know, any other area of the state that's going to have some big development boom.

I'm not so sure that this wouldn't hamstring some of the authority at the local level. Because they could, the local level, they can adjust the millage rate down. Even though assessments are going up. So anyway, there's just some concerns, just thinking back in my days sitting on the assembly and the planning commission having to deal with some of these value problems. But to have 7 of us around the table all owning properties, all being treated a little bit different on our assessed value when we have to pay the fiddler, if you're the mayor at the end of the table and we gotta cut you the check, I don't want to pay any more than Senator Cronk or Senator Olson or Senator Keele.

And I'm sure they wouldn't want me to have a substantial discount on my real estate taxes to keep all the sniveling in the community at the same level. Because nobody likes to pay taxes. Except for maybe— very, very wealthy people where it doesn't matter. Thank you, Senator Steadman. Do you have any comments on Senator Steadman's comments?

Absolutely. Thank you through the chair to Senator Steadman. I think that pragmatically, the idea that somehow assessments in the state reflect full and true value is a bit of a fairy tale. That's something that I think people would like to believe, But as you go and look through different municipal websites and you look at which properties are assessed that are for sale, and then you go and look at what those asking prices are for those properties, you will see a gulf, if you will, between the asking price of the property and then what the property actually sells for. And then the assessed value is usually quite a bit below that.

It would be nice if, in theory, the mill rate that is enacted at the local level indeed worked as a true bobber to meet the needs of only the essential costs and services that people had to pay for in government. However, pragmatically, because it's a political decision made by electeds, that's simply not how the mill rate works in almost every community that I've ever been a part of or known of. So there is pressure and lots of political reward to lower a mill rate over the years and say, wow, I've cut taxes, isn't this great? The opposite problem occurs then when a community needs more funds to grade roads, pay for schools, upkeep buildings, do other things that a municipality needs to do. There's an inverse pressure to keep those taxes down.

And so what happens is the community feels that when the local government needs to raise funds in that way due to political pressure to keep the mill rate down or an artificial millage cap that is in place in some of our communities, many folks feel, and I believe there's lots of evidence to support that, a community will go out and raise assessed values in order to raise more funds. And that's not right. The policy here is pragmatic in the fact that it smooths assessed value over time with a target of full and true value. It does not mean that over time you are going to have a development of inequity between people who have lived on their property or owned their property a long time versus people who have newly improved or that property has changed hands, precisely because of the target to full and true value that the local assessor has to make sure they are always working toward, or you will have a snapback to full and true, which you were trying to avoid in the first place. The bill does not propose or contemplate that anyone would get out of paying taxes.

It's simply that any increase in taxes paid or tax burden that falls on a property owner is spread over time, and then you look at that equally over time, instead of saying, hey, your assessed value on your property hasn't increased in 12 years, but surprise, it's up 40% this year. Often things happen just like that in local communities around the state. My guess is that's not terribly popular with folks. I would rather see a rationalized system adopted again at the option of the local community that could say if we do need to increase, we are going to limit your increase year over year to 10% or less with a target of full and true at the end. That's what the bill contemplates doing.

Thank you. Thank you. Further questions of Prime Sponsor?

See none. Do you have any closing comments, Senator? Appreciate you hearing the bill today. Appreciate the discussion. It's simply meant to reduce a pain point that many people feel in local government so that their assessed values increase at a predictable and reasonable level if they have to increase at all.

Thank you. Thank you, Senator Bjorgman. We'll open the public hearing at this time. Is there anyone online that would like to testify? Is there anyone in the audience that would like to testify?

On this Senate Bill 259? Seeing none, we'll close the public hearing and go to Senator Keele for a review of the fiscal notes on this bill. Thank you, Mr. Chairman. Senate Bill 259 has one fiscal note from the Department of Commerce, Community and Economic Development, Division of Community and Regional Affairs. They list an indeterminate fiscal note in terms of cost.

The division says they are not able to estimate what their costs might be. Thank you. Are there questions on the fiscal notes? Seeing none, we will set this bill aside for further consideration at a later date. This concludes this morning's meeting.

Our next meeting is scheduled for 1:30 this afternoon. We have 3 items to be considered by the committee: Senate Bill 208, Agricultural Land Leases; Senate Bill 174, Evasive Species Management; and consideration of the Governor's appointment to the State Assessment Review Board. With that, we are adjourned.