Monday, the Parnell Administration began explaining the reasons behind a 249 percent increase in licensing fees for Real Estate professionals. The Division of Corporations, Business and Professional Licensing increased the cost of a license from $275 to $685.
Legislators have received correspondence and complaints from Realtors protesting the increase. Today’s meeting was of the House Finance Subcommittee for Commerce that deals with the divisions budget.
Division Director Donald Habeger pointed out that by statute, the division must cover all of its costs by the fees from licensees. He told lawmakers that the current increase followed a spike in the number of complaints about real estate transactions – leaving the board with a deficit of $150,000. Habeger had examples.
“One of the things we have recently seen is that there was a particularly difficult case. And I don’t have all the figures in front of me, but I was looking at this in the last couple of days. This is an FY’11 case. And just looking at the cost to the Real Estate Commission on this particular one, it was about $35-thousand just for the department of law,” Habeger said.
Legislators wanted to know, however, about the flow of money – what goes into reducing the cost of commission operations. Anchorage Democrat Max Gruenberg pointed to a recent legislative audit that found a half million dollars in expenses were incorrectly charged to professions.
“Presumably, here you may have another $200,000 that should be borne by the offenders rather than by the innocent members of the profession. That’s $700,000 there – not saying it’s all due to real estate. But, I would appreciate it if we can get some kind of recommendations by the beginning of the session how this can be addressed, so the right people are paying it and the innocent people are not,” Gruenberg said.
Besides incorrect expenses that Gruenberg mentioned, the question of under-reported income also arose. Past President of the Alaska Association of Realtors Jerry Rice has been a broker in Anchorage for 25 years. He pointed to an element in the legislative audit that found income to boards and commissions had not been credited – verified by his own calculations.
“The Real Estate industry has been overpaying by about $300,000 a year for the last 20 years. We have overpaid over $3 million to pay for our professional services which are not being credited in the analysis in the setting of these fees,” Rice said.
The subcommittee offered the administration time to respond to the questions and claims from Rice and others. The subject will come up again during the session next year – if not before.