Legislature(2005 - 2006)CAPITOL 124
03/29/2005 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB28 | |
| HB36 | |
| HB2 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 2 | TELECONFERENCED | |
| *+ | HB 36 | TELECONFERENCED | |
| *+ | HB 28 | TELECONFERENCED | |
HB 28-MUNICIPAL DIVIDEND PROGRAM CO-CHAIR OLSON announced that the first order of business would be HOUSE BILL NO. 28, "An Act relating to the municipal dividend program; and providing for an effective date." 8:14:32 AM ADAM BERG, Staff to Representative Carl Moses, Alaska State Legislature, explained that HB 28 proposes giving every incorporated municipality in the state an amount of money based on the municipality's population. The intent, he relayed, is to empower local officials by allowing them to decide how best to spend the money within their community. He explained that the dividend is $250 per person with a minimum payment of $40,000 per municipality. Boroughs would also receive a dividend based on the total population of the borough minus the total population of incorporated municipalities within the borough. The money will come from the earnings reserve account, and only after permanent fund dividends have been accounted for and inflation-proofing has taken place. In the event the earnings reserve account is less than the municipal dividend payments, municipal dividends would be reduced on a pro rata basis. 8:16:35 AM KEVIN RITCHIE, Executive Director, Alaska Municipal League (AML), opined that key components of this issue are the shift away from local services, local issues, and economic development over the last 10 years. The aforementioned came to a head with the elimination of revenue sharing last year. Next year at this time, as the facts indicate, there will be half the small cities that there are this year. Although these small communities are poor, they have been in existence for thousands of years and a higher standard of living has developed such that some public safety is expected as is the ability to fly or drive out of the community. However, those services are being lost and the smaller city population will migrate to the larger communities. Those larger communities are losing their ability to address problems. In fact, Alaska has some of the highest property taxes and some of the highest total local taxes in the nation. Mr. Ritchie then referred to a handout entitled, "Status Update (3/1/05) Municipal Governments (DCCED Division of Community Advocacy)," which provides a summary of what is happening in Alaska's small cities. He pointed out that the committee packet should also include letters from many of the impacted communities. The green sheet entitled, "Local Government Issue Paper" details property tax increases since 1986 as provided by the state assessor, and illustrates the correlation between property taxes and state funding. He noted that the committee packet should also include a document that provides a comparison of local taxes nationwide and in Alaska. One of the most significant pieces of information is that Anchorage's property taxes rank 17th in the nation in 2003, while on a per capita basis the tax revenues in Anchorage ranked 31st in per capita taxation in Alaska. MR. RITCHIE then highlighted that one of the major factors for rising taxes in communities is the fact that the state hasn't fulfilled its statutory obligation to reimburse municipalities for the senior citizen and disabled veteran property tax exemption. In summary, Mr. Ritchie stated that what the legislature does this year could save half of the small communities of the state. The economy of the state is largely dependent upon the commerce between small and large communities. 8:23:29 AM REPRESENTATIVE LEDOUX asked if Mr. Ritchie meant to say that Alaska has some of the highest local taxes in the nation. MR. RITCHIE replied yes. REPRESENTATIVE LEDOUX pointed out that the chart provided by Mr. Ritchie specifies that while property taxes are ranked 17th, when one considers [all taxes] Anchorage is ranked 50th. MR. RITCHIE acknowledged that the chart covers state and local taxes throughout the nation. He highlighted that Alaska is the only state without state taxes. The significance of having really high property and local taxes is in comparison with other states, which provide significant sharing of revenues with their communities. Furthermore, when any one tax is skewed, even more of the competitive edge with the country is lost. 8:25:14 AM REPRESENTATIVE CISSNA inquired as to why the [state] would want smaller communities. She said she wasn't surprised with Mr. Ritchie's testimony as she observed the problems small communities face in her visits to small communities over the interim. From all these, she has realized that what the legislature does has an impact. She characterized this legislation as good. She then indicated the need to know why incentives are necessary for small towns and why small towns are important to the state. Representative Cissna turned attention to her own district, which is the core of the health services in the state, including many of the institutions of last resort. Those institutions reported a huge influx. For example, one agency reported an increase in consumers in the amount of 3,000. Such an influx begins to erode capacity, which in turn impacts quality and causes costs to increase. Representative Cissna emphasized the need for the state to have policies that maintain stability. She said that revenue sharing is important to have in attempting to keep health care costs in line. She indicated that perhaps [the plight of small communities] is related to [health care costs]. 8:29:35 AM MR. RITCHIE said that he would address the value of "small cities to small cities" and to Alaska as a whole. In Alaska, nearly all of the very small rural communities are poor and have a rich cultural history. In the past 50 years, revenue sharing and other programs have allowed these small communities to have an acceptable level of services such as public safety, law enforcement, and transportation. However, the quality of life in these small communities is diminishing to the point that residents are moving out. He highlighted [an Institute of Social and Economic Research (ISER) study entitled, "Status of Alaska Natives 2004"], which states: "Out-migration of Alaska Natives from their homes in rural Alaska has accelerated over the last 30 years. In the last decade, 11,011 Alaska Natives (nearly 10% of the rural population) migrated to urban areas." With regard to the value these small communities have to the state, he related that about one out of five jobs in urban areas sell items to other areas of the state. An estimated 20 percent of the jobs in urban areas serve other parts of the state. Mr. Ritchie pointed out that poor small communities are magnets for federal funds that aren't available otherwise. If many small communities are lost or shrink to the point of being nonviable communities and more people move into urban areas, the urban areas lose some of the jobs that serve the rural areas. 8:33:13 AM REPRESENTATIVE LEDOUX pointed out that many small communities aren't municipalities and are operated through tribal governments. She surmised that this municipal dividend doesn't include tribal governments, although they have the same financial problems [as municipalities]. MR. RITCHIE said that he isn't competent to speak to the funding of tribes, which have a different funding stream than municipalities. However, he said that there is so little money in much of rural Alaska and thus if the tribal government or the municipal government doesn't work together, there are serious impacts on the quality of life in the community. He noted that those communities that have no municipal government at all, and in some cases have no tribe either, are part of the legislature's unorganized borough, to a large extent. "I think the legislature as a whole would be well-served to look at all communities and what could be done to assist them," he opined. 8:35:00 AM CO-CHAIR THOMAS referred to the document entitled "Status Update (3/1/05) Municipal Governments", which specifies that these small communities struggling with financial situations have made significant reductions to core services, including the closure of washeterias. He asked if some communities provide washeterias for the community. MR. RITCHIE replied yes, and clarified that sometimes the washeterias are run through a local health organization or a municipality. He explained that if there's no running water or sewer in a community, the washeteria becomes a center for washing clothes, washing oneself, and obtaining water. 8:35:56 AM REPRESENTATIVE MARY KAPSNER, Alaska State Legislature, interjected that many small communities run the local water and sewer plant to which the washeteria/laundromat is often attached. Many communities, she related, believe washeterias fall under the realm of public health. For instance, before there were washeterias it would have been almost impossible to stop a lice outbreak. She explained that traditionally [many of these small rural communities] had steam baths, but now, with more antibiotics being prescribed, bacteria that is more difficult to kill is surfacing. For example, steam bath boils are being transmitted and the steam bath has to be burned to eliminate the bacteria. Therefore, the washeterias are becoming more important [in these small rural communities]. 8:37:36 AM CO-CHAIR THOMAS related that he lives in a community that's economically depressed. He related that three of his five children have left Alaska because of the lack of jobs in Southeast. Although people strive to obtain an education, that education can't be used in [the small rural community] and thus those individuals migrate. MR. RITCHIE noted that in many Southeast communities when a major industry closes, the community struggles to recreate itself. However, when the initial wave of residents leave [due to the closure of a major industry] the infrastructure remains, which results in higher taxes or lower services. The aforementioned could cause others, who don't really want to leave, to do so. Therefore, the elimination of revenue sharing and avoidance of the Public Employees' Retirement System (PERS) and Teachers' Retirement System (TRS) issue pushes communities down further. 8:40:10 AM CO-CHAIR THOMAS recalled that when fishing was the hot industry and fishing prices dipped, people [in small rural villages] turned to logging, which also ultimately faced a downturn. 8:41:06 AM REPRESENTATIVE SALMON pointed out that HB 28 is similar to [HB 49]. As funds are taken away from these small communities, people have to move to the urban areas. The villages that really need funds aren't even on the list included in the committee packet. Tribal communities are still part of Alaska, he emphasized. He further emphasized the need to look at this problem [throughout] the whole of Alaska because the smaller communities are part of [Alaska's economic] formula. He echoed earlier testimony regarding the fact that resource-based industries, such as fish, timber, and fur, are diminishing. 8:44:03 AM KATHIE WASSERMAN, Alaska Municipal League, recalled her experience as mayor the of one of these small communities, and opined how it's virtually impossible to operate a small community. She related the diminished services that Pelican has experienced and the difficulty in taking care of a small community to which no money is entering. Although every entity, small community, and state may not operate wisely all the time, it doesn't mean it should be cut. With regard to the governor's recent comments at the Southeast Alaska Conference at which he related that life is good in Alaska, Ms. Wasserman opined that [the aforementioned view] is all about one's location. She questioned what business will want to enter a community without [basic] services. These communities, she opined, need the tools to build themselves back up to viable communities. 8:47:27 AM CO-CHAIR THOMAS remarked that he didn't like revenue sharing legislation because such legislation doesn't provide funds to the unorganized municipalities. He estimated that about 80 percent of Alaska's wealth is from the oil royalties from outside the urban areas. Furthermore, the impacts of [the industries producing those royalties] are felt in those [rural areas]. He characterized the oil industry and the wealth it brings as an asset that all Alaskans should share. He concluded by echoing Representative Salmon's comment that the unorganized municipalities should receive their share. 8:49:05 AM REPRESENTATIVE CISSNA asked if the sponsor has thought about ways to expand the impacted population. MR. BERG said that subject has come up. Mr. Berg related that Representative Moses is open to amendments that would include unincorporated areas. However, the legislature has [encouraged] the organization of communities. Therefore, the unincorporated areas aren't included in this legislation because [the sponsor] believes it's important to get these communities help. Whatever [legislation helping communities] can make it through the legislature is what the sponsor desires, he related. If including unincorporated areas kills the legislation, then no one would be helped. 8:50:56 AM CO-CHAIR THOMAS recalled that under the old municipal revenue sharing, everyone shared the funds. MR. BERG reiterated that the sponsor is open to include unorganized areas so long as it's backed by the will of the legislature. CO-CHAIR THOMAS surmised that allowing the funds to go to unorganized areas would dilute the total allocation to each community. MR. BERG suggested that the committee could increase the allocation. He reiterated that the desire is to provide as much help as possible to as many communities as possible. 8:52:44 AM REPRESENTATIVE SALMON pointed out that out of the 95 villages in District 6, 72 villages are not on list of those that will receive funds under HB 28. Therefore, he questioned what to tell those villages. He opined that he would rather not see any money go out [to any area], if those 72 villages aren't included. MR. BERG reiterated that the sponsor is open to amendments to HB 28. The desire is to provide help to all the communities [possible], but the sponsor wants to have legislation that will pass through both bodies. He also reiterated that if the political will is there to take care of the unorganized areas as well, the sponsor is supportive of that. 8:55:04 AM REPRESENTATIVE CISSNA interjected that [the state/legislature] has eliminated help to communities in many other ways beyond revenue sharing. If [the legislature] doesn't act soon, she opined that the nature of Alaska will change. Therefore, Representative Cissna said that she would like to see the committee do something with HB 28. 8:56:01 AM CO-CHAIR OLSON announced that the committee would not take action on HB 28 today.
| Document Name | Date/Time | Subjects |
|---|