Legislature(2001 - 2002)
04/23/2002 08:06 AM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 518-MUNICIPAL ORGANIZATION GRANTS CO-CHAIR MEYER announced that the next order of business would be HOUSE BILL NO. 518, "An Act relating to organization grants for mergers, consolidations, or unifications involving third class boroughs." CO-CHAIR MEYER turned the gavel over to Co-Chair Morgan. Number 1843 BILL LAWRENCE, Staff to Representative Morgan, House Community and Regional Affairs Standing Committee, Alaska State Legislature, explained that HB 518 amends AS 29.05.190 which currently prohibits an organizational grant being given to a borough incorporated by consolidation or a unified municipality that occupies the area formerly occupied by a borough. This bill provides for a $200,000 organizational grant for a merger or consolidation. REPRESENTATIVE SCALZI inquired as to the impetus for HB 518. Number 1937 ROBERT VENABLES, City of Haines, explained that HB 518 intends to assist with organizational grants from third class boroughs, which were originally prohibited [from obtaining these grants]. That was viewed as an oversight. This legislation attempts to remedy that oversight at a reduced level. Therefore, HB 518 allows organizational grants of $200,000 [to third class boroughs] rather than the $600,000 grants that are currently allowed for boroughs that qualify. REPRESENTATIVE SCALZI related his understanding that currently the statute provides grants for all other classes [of boroughs] that merge or move from second class to first class except for third class boroughs. MR. VENABLES replied, "Not necessarily." He explained his understanding that the more sophisticated boroughs have already evolved the systems of government such that this level of state assistance isn't necessary. Certain criteria must be met in order to receive organizational grants, which are intended to create sound local governmental units. He specified that the unorganized areas and third class boroughs are those that [don't have sound local governmental units]. In further response to Representative Scalzi, Mr. Venables pointed out that Haines is the only third class borough in existence. Number 2049 REPRESENTATIVE MURKOWSKI asked if organizational grants are already available at some level and HB 518 is merely expanding this to third class boroughs. Or, would third class boroughs, specifically Haines, be the only borough that could avail itself of these organizational grants. MR. VENABLES clarified that the grants available in AS 29.05.190 allow for three years of assistance, totaling $600,000, to new boroughs. House Bill 518 is currently aimed at third class boroughs and has a reduced level of assistance because third class boroughs do have some level of functionality. Mr. Venables said, "There is a level of assistance that we'd like to work out in order to allow governmental units to go to a home rule government from a third class borough." REPRESENTATIVE MURKOWSKI surmised then that [HB 518] provides for a $400,000 grant rather than a $200,000 grant. MR. VENABLES replied yes. REPRESENTATIVE KERTTULA asked if the reason [Haines, a third class borough] wasn't able to get the $600,000 when it became a borough was because it wasn't the type of borough that could utilize the grant. MR. VENABLES explained that third class boroughs were established as a compromise in order to [address] school funding. He informed the committee that the Haines community is looking to consolidate and obtain assistance in allowing that consolidation. In further response to Representative Kerttula, Mr. Venables reiterated that the $600,000 is available to new boroughs that have unified under certain criteria. [The $600,000 grant] wouldn't apply to consolidated boroughs, which, per statute, refers to first or second class boroughs. Third class boroughs are abolished. Therefore, the desire is to find a place in statute for third class boroughs to be consolidated with a level of assistance that allows it to properly function. REPRESENTATIVE KERTTULA directed attention to Section 2 of HB 518, which refers to a third class borough. She asked if the third class borough was previously in existence and thus doesn't really exist now. MR. VENABLES reiterated that there is only one third class borough, Haines, in existence now. However, there is pending legislation that may enable third class boroughs to form. Number 2269 REPRESENTATIVE SCALZI noted his belief that it's in the best interest of the state to have incentives for boroughs to form and consolidate. However, he inquired as to how the $200,000 a year was determined. MR. VENABLES informed the committee of the situation in Haines. Haines, a small community with a population of 2,400, has two legislative bodies, two mayors, two planning commissions, separate comprehensive [health] plans, two legal systems, two financial systems, two personnel systems, and two very different computer systems. Therefore, the intent is to bring in expertise to merge these two different [governments] while [both are] functioning. Marco Pignalberi, City Manager of Haines, recommended that $200,000 would be necessary to merge the two systems. REPRESENTATIVE SCALZI expressed the need to justify the $200,000. Number 2356 REPRESENTATIVE MURKOWSKI posed a situation in which a [third class borough] would obtain $200,000 in December and then in the following month, January, could obtain another $200,000. She said that $400,000 would seem to be a large, perhaps unjustifiable, incentive. Although she agreed with the notion of encouraging consolidation and unification, $400,000 seems like a large incentive in the current fiscal climate. MR. VENABLES said that he would be happy to supply information regarding how the $200,000 figure was chosen. In regard to the timing of receiving the grant, Mr. Venables informed the committee that the vote for consolidation won't occur until June 25th and will be certified after the new fiscal year. Therefore, Representative Murkowski's concern wouldn't be realized in this case. Number 2467 REPRESENTATIVE KERTTULA inquired as to how much Homer had to spend on its recent [annexation]. REPRESENTATIVE SCALZI said he didn't know, although he estimated that it cost about $150,000 for the preliminary portion [of the annexation]. He projected that the transition period will be quite a bit more. Comparing Haines to Homer is like comparing apples and oranges, he said. REPRESENTATIVE SCALZI reiterated his support of consolidations. Representative Scalzi said that he didn't mind moving HB 518 out of committee, but he recommended that the justification for the $200,000 be forward to the House Finance Committee. Number 2547 REPRESENTATIVE MURKOWSKI moved to report HB 518 out of committee with individual recommendations and the accompanying fiscal note. There being no objection, HB 518 was reported from the House Community and Regional Affairs Standing Committee. The committee took an at-ease from 8:45 a.m. to 8:49 a.m.
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