Legislature(1995 - 1996)

04/24/1996 08:25 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  SENATE BILL 20                                                               
                                                                               
       "An  Act  establishing   the  Alaska  municipal   basic                 
       services program, relating to certain programs of state                 
       aid to municipalities and recipients in the unorganized                 
       borough; and providing for an effective date."                          
                                                                               
  SENATOR JOHN TORGERSON provided the Committee with a copy of                 
  Amendment #1, 9-LS0319\W.1, Cook, 4/19/96.   [Copy on file].                 
                                                                               
                                1                                              
                                                                               
                                                                               
  Senator Torgerson  stated that  Amendment #1  would put  the                 
  program in-line.  If  a Native council or Native  village is                 
  not incorporated within the State of Alaska  as a non-profit                 
  entity, a waiver would be required to be signed stating that                 
  they could  be  sued  under  the  laws of  the  State.    He                 
  maintained that there  are law  suits currently pending  and                 
  questions  which  need  to  be   answered  regarding  tribal                 
  authority  and municipal  government.   The  amendment would                 
  remove  the unincorporated communities,  making them  a non-                 
  profit corporation; then the funds paid to those areas would                 
  no longer be subject to court scrutiny.                                      
                                                                               
  Representative   Mulder   MOVED  to   adopt   Amendment  #1.                 
  Representative  Martin   discussed  his  concern   with  the                 
  "broadness" of the term non-profit corporation.  He asked if                 
  there would be a  limit to one non-profit per area.  Senator                 
  Torgerson  stated  that  the  Department  of  Community  and                 
  Regional Affairs (DCRA) would make that determination before                 
  the grant was made.                                                          
                                                                               
  Representative  Brown  inquired how  many villages  would be                 
  affected through the  passage of  the legislation.   Senator                 
  Torgerson  replied that thirty-six  (36) would  be affected,                 
  and in  order to receive  the funding, another  entity would                 
  need  to  be formed.   The  amendment would  recognize those                 
  villages as corporations within Alaska  subject to the laws.                 
  Currently, they are not.                                                     
                                                                               
  Representative  Brown  asked if  there  had been  a specific                 
  problem which required this change.   Senator Torgerson said                 
  that  his  intent   was  focused   on  future  concerns   in                 
  determining tribal  council rights.   He distributed "MEMBER                 
  ALERT, a Native American Rights Fund bulletin addressing the                 
  legal battle to save Alaska Native rights".  [Copy on file].                 
  Representative Brown OBJECTED to Amendment #1.                               
                                                                               
  A roll call was taken on the MOTION.                                         
                                                                               
       IN FAVOR:      Martin,   Mulder,    Navarre,   Parnell,                 
                      Therriault, Grussendorf, Kelly, Kohring,                 
                      Hanley, Foster.                                          
       OPPOSED:       Brown.                                                   
                                                                               
  The MOTION FAILED (10-1).                                                    
                                                                               
  Representative Parnell MOVED  to adopt Amendment #2.   [Copy                 
  on  file].   The  amendment  would  delete the  word  "safe"                 
  throughout the proposed legislation.  Representative Parnell                 
  thought  that  language would  not  fully describe  what the                 
  funds purpose was.                                                           
                                                                               
  Senator Torgerson commented  that each time the  formula was                 
                                                                               
                                2                                              
                                                                               
                                                                               
  adjusted, large  discrepancies surfaced.   He stressed  that                 
  there was support of the  legislation, regardless if it made                 
  money  or  not.   The  support  is not  necessarily  for the                 
  contents  of  the proposed  bill,  although, added  that the                 
  municipalities had requested language which would  guarantee                 
  them opportunity to  lobby.  To date,  the program continues                 
  to be cut.  The word "safe" and  prioritizing have no affect                 
  on  law,  although, it  would  have  an effect  at  the time                 
  members come  to lobby  their concerns.   Senator  Torgerson                 
  noted that he was "neutral" on Amendment #2.                                 
                                                                               
  Representative Grussendorf pointed out that Page 5 lists the                 
  communities priorities.    He  stressed  that  the  priority                 
  ranking indicates "safe" community interests.  The intent is                 
  to  protect public  welfare.   Representative  Martin stated                 
  that he agreed with Amendment #2.                                            
                                                                               
  There being NO OBJECTION, Amendment #2 was adopted.                          
                                                                               
  Representative  Parnell  informed  members   that  following                 
  discussion with Senator  Torgerson, he intended to  WITHDRAW                 
  Amendment #3.   [Copy on  file].  Representative  Therriault                 
  proceeded to MOVE to adopt Amendment #3.                                     
                                                                               
  Representative Brown asked what type  of accounting would be                 
  required to show  that the money  had gone for the  purposes                 
  listed on Page 5.   Representative Grussendorf spoke against                 
  Amendment #3.  He  ascertained that the category of  use for                 
  the money should  be indicated.  He  stressed the importance                 
  of not  deleting the  recommended language.   This  language                 
  specifies the items  which the municipalities can  return to                 
  the  Legislature  for,   when  it  is  indicated   that  the                 
  municipalities do not have safe communities.                                 
                                                                               
  Co-Chair Hanley discussed the fact that there does not exist                 
  a legal ability within the State  to delegate what the funds                 
  can be spent  on.  The municipalities pick their priorities.                 
  He   continued  that   his  concern   exists,  because   the                 
  regulations do not require that the priority list be used.                   
                                                                               
  BILL ROLFZEN, STATE REVENUE SHARING, DIVISION OF MUNICIPAL &                 
  REGIONAL  ASSISTANCE, DEPARTMENT  OF COMMUNITY  AND REGIONAL                 
  AFFAIRS, advised that  the intention  of the Department  was                 
  indicated  on  Page 4,  Line 31:    "A municipality  may not                 
  receive  payment  until  it  submits  to  the  department  a                 
  resolution   approved  by   the   governing  body   of   the                 
  municipality..."  He added that it  was the intention of the                 
  Department  that  the  priority  list  be  included  in  the                 
  request.    All   municipalities,  currently,  must   submit                 
  financial statements to the Department on a yearly basis.                    
                                                                               
  Co-Chair  Hanley  asked  if the  lists  were  required under                 
                                                                               
                                3                                              
                                                                               
                                                                               
  current law.  Mr. Rolfzen  replied that municipal assistance                 
  funds can be spent for any  public purpose at the discretion                 
  of the municipality.  Under the legislation,  a general list                 
  would be required.                                                           
                                                                               
  Representative  Brown questioned the purpose served with the                 
  additional accounting.  Mr. Rolfzen replied, in the last ten                 
  years,  the  program  has  been  cut  60%.   A  misconceived                 
  perception  exists that the  funds go toward  salaries.  The                 
  proposed accounting  would clearly  indicate the  purpose of                 
  the funds spent.                                                             
                                                                               
  Mr. Rolfzen added, at present time, the municipal assistance                 
  money goes into the  municipal general fund and is  spent on                 
  public  safety concerns.   A  direct track  does not  exist.                 
  Representative   Grussendorf   clarified    that   municipal                 
  assistance was the newer  of the programs and could  be used                 
  by the municipality for any services the municipality deemed                 
  necessary.  As  the appropriating authority for  that money,                 
  the  Legislature  provides guidelines  as  to how  the money                 
  should be spent.  He  voiced strong opposition to  Amendment                 
                                                                               
  Representative Martin commented  on the zero fiscal  note by                 
  the  Department of  Community  and Regional  Affairs (DCRA).                 
  Mr.  Rolfzen reiterated,  presently,  all municipalities  as                 
  determined  by law  must submit  a  financial report  to the                 
  Department.    Under   the  revenue  sharing  program,   the                 
  municipalities  receive money  for  safety  purposes.    The                 
  Department tracks that money.  The reports are already being                 
  received, and the only additional work  would be for the new                 
  services.                                                                    
                                                                               
  Representative Therriault thought that the material proposed                 
  for deletion would  only place extra "verbiage"  in statute.                 
  (Remaining testimony inaudible).                                             
                                                                               
  Representative Grussendorf refuted that if the  municipality                 
  should decide not  to offer a  service, they then should  be                 
  the  party  responsible  to their  constituency.    Co-Chair                 
  Hanley affirmed  that  additional  reporting  would  require                 
  communities more intent in using the funds because of threat                 
  of  having  the funds  withdrawn.   He thought  that smaller                 
  communities would more  often be  faced with that  situation                 
  than the larger ones, as financial scrutiny was increased.                   
                                                                               
  A roll call was taken on the MOTION to adopt Amendment #3.                   
                                                                               
       IN FAVOR:      Therriault, Brown, Kelly, Martin.                        
       OPPOSED:       Mulder,  Navarre, Parnell,  Grussendorf,                 
                      Kohring, Foster, Hanley.                                 
                                                                               
                                                                               
                                4                                              
                                                                               
                                                                               
  The MOTION FAILED (4-7).                                                     
                                                                               
  Representative Martin MOVED  to adopt Amendment #4,  to Page                 
  5, Line 2,  deleting "July 31"  and inserting "October  31".                 
  Representative  Mulder  OBJECTED.     Representative  Martin                 
  thought that the  language would remove the  earned interest                 
  opportunity;  he  opposed  interest  being   earned  by  the                 
  municipalities.                                                              
                                                                               
  Representative Mulder  stressed that  SB 20  was a  "gentle"                 
  balance.  Changing the  date would loose the support  of the                 
  municipalities of  Anchorage and Fairbanks.   Representative                 
  Martin agreed that  support from any government  which could                 
  make more money would be lost.                                               
                                                                               
  Senator Torgerson  voiced opposition  to Amendment  #4.   He                 
  added  that  there  was  a   "minimum"  entitlement  to  the                 
  unincorporated communities.   The money  is currently coming                 
  out of  those taxed  based communities  which would  benefit                 
  from having  the date  moved forward  from February  to July                 
  1st.  There is  $238 thousand dollars being removed  at this                 
  time.    The larger  communities  have agreed  to  make this                 
  amount   available  to  rural   Alaska  under   the  minimum                 
  entitlement.  The trade-off was to move the date  up to July                 
  in  order  that  they  could  then  take  advantage  of  the                 
  increased interest.                                                          
                                                                               
  A roll call was taken on the MOTION to adopt Amendment #4.                   
                                                                               
       IN FAVOR:      Brown, Martin.                                           
       OPPOSED:       Navarre,       Parnell,      Therriault,                 
                      Grussendorf,  Kelly,   Kohring,  Mulder,                 
                      Hanley, Foster.                                          
                                                                               
  The MOTION FAILED (2-9).                                                     
                                                                               
  Representative  Therriault asked about  the minimum  base of                 
  $40  thousand dollars.   He  inquired if  that amount  would                 
  include the  road  money.   Mr.  Rolfzen replied  under  the                 
  revenue  sharing  program,  after  the  basic  services  are                 
  calculated for road money, ice road  money, etc., and if the                 
  municipality  did  not have  at  lease $25  thousand dollars                 
  times the  cost-of-living differential,  they would then  be                 
  brought up to that level.                                                    
                                                                               
  The legislation  does not  tinker with  the revenue  sharing                 
  program.    He  explained  that  after the  revenue  sharing                 
  program is  calculated, including  the  entitlement and  the                 
  communities money, if the municipality is then not up to $40                 
  thousand dollar level, the Department would add enough funds                 
  from the Safe  Community Fund to bring  that municipality up                 
  to $40 thousand dollar level.                                                
                                                                               
                                5                                              
                                                                               
                                                                               
  Representative  Therriault  questioned  the   excess  dollar                 
  amount  that communities  would receive  differing from  the                 
  current system.  Mr. Rolfzen said  that amount would be $238                 
  thousand dollars.   Co-Chair Hanley asked if  everyone would                 
  receive the pro-rated percent reduction,  this year being 8%                 
  percent.  Mr.  Rolfzen explained, initially, everyone  would                 
  receive the 8% reduction, although, the minimum title add-on                 
  would provide money  to the smaller municipalities  to bring                 
  them up to  $40 thousand dollars,  so then the total  impact                 
  would be less than the overall 8% percent.                                   
                                                                               
  KEVIN RITCHIE, ALASKA MUNICIPAL LEAGUE, ALASKA CONFERENCE OF                 
  MAYORS,  JUNEAU,  commented   that  the   intent  was   that                 
  communities would share future cuts and that all communities                 
  would share to  some extend.   All communities  must have  a                 
  stake in the overall funding for the program.                                
                                                                               
  Senator Torgerson  added, in  future years,  all communities                 
  would be  cut  the same.   This  year, as  a  result of  the                 
  transitions and the hold-harmless, some  communities will be                 
  cut  differently.   Mr.  Rolfzen  corrected how  future cuts                 
  would  be  addressed.   He stated  that  because of  the $40                 
  thousand dollar  overall threshold, the  smaller communities                 
  would receive a percentage  of the cut, but  not necessarily                 
  the   prescribed  percentage   cut.      Every  year,   each                 
  municipality would  experience  the "pain"  of  a cut  as  a                 
  result of the proration factor, but not to the extend of the                 
  recommended percentage.                                                      
                                                                               
  (Tape Change, HFC 96-134, Side 2).                                           
                                                                               
  Representative  Mulder  commented   that  communities   like                 
  Anchorage and Fairbanks  have the ability to  generate their                 
  own income.   The smaller  village areas would  benefit from                 
  the passage of  the legislation, which would be  good public                 
  purpose.  He  suggested encouraging  the villages to  create                 
  city government  to handle their  own affairs would  be good                 
  planning.  If in providing financial assistance offers that,                 
  Representative Mulder encouraged passage of the legislation.                 
  Co-Chair Hanley commented  that it was his  personal opinion                 
  that providing these  communities money would not  be better                 
  for the long range plan of the State.                                        
                                                                               
  Representative Mulder MOVED to report HCS CS SB 20 (FIN) out                 
  of Committee  with individual recommendations  and with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  HCS CS SB  20 (FIN) was reported out of Committee with a "no                 
  recommendation" and with  fiscal notes by the  Department of                 
  Revenue dated 3/18/96  and the  Department of Community  and                 
                                                                               
                                6                                              
                                                                               
                                                                               
  Regional Affairs dated 3/18/96.                                              

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