Legislature(1993 - 1994)
04/24/1993 06:00 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 124 An Act relating to grants to municipalities, named recipients, and unincorporated communities; establishing capital project matching grant programs for municipalities and unincorporated communities; establishing a local share requirement for capital project grants to municipalities, named recipients, and unincorporated communities; and providing for an effective date. HB 124 was held in Committee for further consideration. HOUSE BILL 124 "An Act relating to grants to municipalities, named recipients, and unincorporated communities; establishing capital project matching grant programs for municipalities and unincorporated communities; establishing a local share requirement for capital project grants to municipalities, named recipients, and unincorporated communities; and providing for an effective date." Representative Foster MOVED that CS HB 124 (FIN) be the version before the Committee. There being NO OBJECTION, it was so ordered. SHELBY STASTNY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained the changes made to the finance work draft of the bill. A ratio was determined by adding community population and the total State population to create the weighted number for calculation purposes. Under the proposed program, a minimum of $25 thousand dollars would be allocated to every community. He added, when an allocation of money is made to a community, an account is established. That community at that time can decide how to allocate those funds. There is much latitude given for the types of projects allowed in the match. The bill is based entirely on population. Co-Chair MacLean added, that if the funds are placed into a grant account and the money had not been utilized for five years, it would be repaid and then returned to the general fund. Mr. Stastny pointed out the limit placed on funds allowed to go to administrative expenses for the municipality. For most projects, the limit would be ten percent of the grant amount. Mr. Stastny continued, the legislative intention would be to allocate some portion of the capital budget pro rata to all communities in the State. It is not intended to replace discretionary funding. Representative Brown questioned how the bill would improve the current process. Mr. Stastny replied, the legislation would insure that every community receive some funding and that community would provide a portion by matching. Representative Brown asked what "capital projects" would cover. She inquired if a municipality would be able to use their share to maintain or rehabilitate an operation. 2 JACK FARGNOLI, SENIOR POLICY ANALYSIS, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, replied there would be no requirements for a municipality to maintain a facility being maintained or operated by the State. The legislation is to encourage municipalities to take over the responsibility of their own operation and maintenance. The money would be used for the actual construction of projects only. Representative Brown suggested the definition of funds be expanded to include the maintenance and operations of existing local facilities. Mr. Stastny stated that was not the intention of the legislation. Co-Chair Larson suggested the weakness of the legislation would be in not asking the Legislature to decide which capital projects should be funded by the municipality. Representative Grussendorf discussed discretionary monies. Mr. Stastny reminded the Committee that the priorities are established by the communities. Lists would be submitted before the money was appropriated and projects would extend as far as the appropriated money would allow. Representative Hanley recommended that the appropriation be made after the amount has been determined. TAMARA BRANDT COOK, DIRECTOR, DIVISION OF LEGAL SERVICES, LEGISLATIVE AFFAIRS AGENCY, provided a sectional overview of the legislation. She pointed out that Section #3 is the heart of CS HB 124 (FIN) and establishes the municipal capital project matching grant program. There is a fund which has been established in the Department of Administration which consists of an appropriation. Once it is placed in that fund, the Department has a formula based upon population that applies to the amount of money in the fund to then allocate that money to individual municipal accounts. The money appropriated does not lapse. It sits in the fund for at least a five year period. (Tape Change, HFC 93-123, Side 2). Representative Hanley questioned the discrepancy between unincorporated communities consisting of less than one thousand persons who receive an eight percent match versus municipalities under one thousand population who would receive only a five percent match. Ms. Cook replied the reference is to the "step-up" provision which has been modified in the draft by using language "unincorporated". Mr. Stastny added, the original "step-up" was five percent rising to eight percent, fifteen percent rising to twenty- five percent and thirty percent rising to fifty percent of total project costs. Ms. Cook agreed it would be better to make the percentage 3 uniform. She pointed out that the draft only allows the "stair stepping" for the larger municipalities. It has eliminated "stair stepping" for the other two levels of population. Mr. Stastny advised that the Governor feels strongly that the appropriate match should be 50/50 for communities who have taxing ability, going to ten percent for the smallest unorganized communities, although he has indicated that he would be willing to compromise at 60/40. Representative Parnell emphasized the arrangement was not fair. Representative Brown provided the Committee with a xerox of Alaska Statutes regulations. [Attachment #1]. She asked if the definition would cover renovations and repairs. Mr. Stastny advised that if a major repair costing over $25 thousand dollars was needed, it would be allocated for. Representative Brown stressed that maintenance is an operational cost and that the communities are being pushed to build with this legislation. An adequate level of revenue sharing should be increased to cover the highest priorities which include maintenance. Mr. Stastny noted the Foundation Formula Program would cover operating costs for schools. Representative Brown asked if it was essential that the match be "in-hand" when the list was submitted to the Governor. Mr. Stastny replied, when the list is submitted the money does not have to be in-hand although when the project is drawn, the match must be in-hand. Mr. Fargnoli added that the bill does not specify the necessary level of detail. Representative Navarre MOVED a language change to Page 8, Line 18, deleting the remainder of the page, Lines 19-31. Co-Chair MacLean OBJECTED. Representative Navarre WITHDREW the MOTION. Representative Brown referenced Page 9, Line 7, stating that the "source" for the municipalities is the State. Mr. Fargnoli stated the legislation would exclude that source. He added, the point is legitimate although the language of the bill was written to meet specific purposes. Representative Brown recommended deleting the $25 thousand dollar limited discretionary money for the smallest community. Co-Chair MacLean suggested the base be set at a $10 thousand dollar limit. Representative Brown noted that a small computer would cost less than $10 thousand dollars. KEN SWISHER, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL LEAGUE (AML), JUNEAU, ALASKA, commented on the draft overviewed by 4 the Committee. He noted three items of concern: 1. Page 3, Line 21, the $25 thousand dollar minimum grant amount. The AML recommends that amount be $50 thousand dollars. 2. Page 4, Lines 20-26, questioned if the cost surpasses the listed administrative costs. 3. Page 9, Lines 1-2, addressing what is usable as administrative match. Considerations for management of the project are not taken into consideration with the current determination. These are real costs and should be incorporated. Representative Brown referenced AML's concern on Page 4. Mr. Stastny replied the language had been suggested by Senator Phillips. Representative Brown requested Ms. Cook adjust the language to address the intent. Representative Brown suggested a language change to Page 9, Lines 1-2, inserting "administration of the project as a viable expense of the match". Co-Chair MacLean objected. (Tape Change, HFC 93-124, Side 1). Representative Brown asked Ms. Cook to include an amendments to address these concerns.
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