Legislature(1997 - 1998)
02/24/1997 01:37 PM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 86
3
"An Act relating to the payments in lieu of taxes
program for cities in the unorganized borough; and
providing for an effective date."
TOM WRIGHT, STAFF, REPRESENTATIVE IVAN testified in support
of HB 86. He noted that HB 86 establishes the Payment In
Lieu of Taxes program (PILT) within the Department of
Community and Regional Affairs for home rule and general
law cities located in the unorganized borough within
federally designated areas of Alaska.
This program is financed by funds the state receives
annually from the federal government under 31 U.S.C. 6901 -
31 U.S.C. 6902. An amendment, sponsored by Senator Stevens,
was passed as part of the Omnibus Parks and Public Lands
Management Act of 1996 (P.L. 104-333, sec. 1033) to allow
cities in the unorganized borough to receive payment.
Mr. Wright observed that the main purpose of this bill is to
provide a method for the Department of Community and
Regional Affairs to distribute this funding and to establish
criteria to determine whether a city is eligible to receive
payment under the program as intended by federal law. The
amount of money to be distributed to each eligible home rule
and general law city in the unorganized borough will be
based upon the population of the city, as certified by the
commissioner of the Department of Community and Regional
Affairs, for the fiscal year preceding the year in which
payment is made to the city. The bill establishes an annual
payment date of November 1. Money received from the program
may be used for any general purpose for which a city is
authorized under federal, state or local law. Finally, the
bill is given an immediate effective date in order to meet
the first year's application and payment schedule set out in
the bill.
In response to a question by Representative Davies, Mr.
Wright clarified that there are eleven federal census areas
within the unorganized borough. The legislation pertains to
federally entitled lands within each federal census area.
Payment will be based on the formula that is currently used,
the amount of acres divided by the population within the
federal census area.
In response to a question by Representative Martin, Mr.
Wright stated that there has not been an analysis of
revenues unorganized communities receive through school
districts or their relationship to the PILT Program.
Representative Martin asked if the legislation would
discourage organization.
Co-Chair Therriault noted that boroughs receive money
through similar programs. He acknowledged that access to
4
federal funds could take the pressure away from
organization.
Co-Chair Hanley asked the dollar amount per area. He
suggested that the legislation may offer an incentive to
incorporate. Mr. Wright explained that funds are divided
among incorporated communities. Unorganized communities are
counted but do not receive this funding.
Co-Chair Therriault noted that the Southeast Fairbanks
Census District has a population of just under 6,000.
Within this area only Delta Junction (population, 828) and
Eagle (population 146) are eligible. Based on the total
area population (5,913) the estimated PILT payment is $278
thousand dollars. This amount would be split between Eagle
and Delta Junction. If other areas incorporated they would
receive a share of this amount.
BILL ROLFZEN, PROGRAM MANAGER, DIVISION OF MUNICIPAL AND
REGIONAL ASSISTANCE, DEPARTMENT OF COMMUNITY AND REGIONAL
AFFAIRS agreed that the State's payment is based on the
total population and entitlement area in the federal census
area. Once the State receives the check for the federal
census area they pay only the incorporated municipalities
within the area.
In response to a question by Representative Davies, Mr.
Rolfzen clarified that the check will not be based on the
amount of people living in the incorporated areas. It is
based on the total population in the federal census area.
Co-Chair Hanley explained that the payment is made on
property that could be taxed. In response to a question by
Co-Chair Hanley, Mr. Rolfzen noted that municipalities can
use the money for any governmental purpose.
In response to a question by Representative Martin, Mr.
Rolfzen observed that the federal calculation is based on
federal census numbers. The State's calculation to
municipalities utilizes the Department of Labor figures
based supllied by the Permanent Fund Division.
Representative Martin questioned if federal resource
payments are subtracted. Mr. Rolfzen explained that there
are two options (used by the Bureau of Land Management) for
calculating PILT payments. Federal census areas can receive
$.93 cents per acre, after subtracting the prior year's
federal payments in forest receipts or $.13 cents per acre
without the subtraction of forest receipts. The method that
provides the greater payment is used. (Each federal census
area is calculated separately.) He argued that the
legislation is an incentive to local governments to
5
incorporate or remain incorporated.
Co-Chair Therriault observed that if Tok organized they
would be eligible for $154 thousand dollars. Mr. Rolfzen
recounted that there are other programs that offer
incorporated cities greater support.
Co-Chair Hanley noted that second class cities receive more
money through Municipal Assistance and Revenue Sharing. He
asked the responsibilities of second class cities. Mr.
Rolfzen replied that second class cities are responsible for
raising revenues and providing services. Incorporation
allows greater control over local affairs. State laws
provide guidelines for municipal functions.
In response to a question by Co-Chair Therriault, Mr.
Rolfzen explained that federal law provides that, if a
school district is completely independent of the local
government and forest receipts are passed through the local
government, forest receipts do not have to be deducted. He
clarified that school districts in Alaska are not considered
to be independent of local government because taxes are
generated to pay for school districts. Therefore, forest
receipts going to a school district in Alaska are deducted
from PILT payments.
Co-Chair Hanley referred to SB 29. Mr. Rolfzen clarified
that SB 29 would raise the minimum entitlement, after
deductions, for Municipal Assistance to $40 thousand
dollars.
Co-Chair Hanley asked if administrative costs could be
deducted from federal funds. Mr. Rolfzen did not think that
federal funds could be used for administration purposes.
There are no federal provisions for administrative costs.
Representative Grussendorf observed that PILT funds are more
general and less restrictive than forest receipt funds. He
asked for the Department's position.
LAMAR COTTEN, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY
AND REGIONAL AFFAIRS testified via the teleconference
network. He stated that the Department of Community and
Regional Affairs supports HB 86.
In response to a question by Representative Mulder, Mr.
Rolfzen noted that estimates are based on the best case
scenario. He pointed out that the program has been in
existence for 20 to 50 years. He expected funding for the
program to continue.
Representative Foster MOVED to report HB 86 out of Committee
6
with individual recommendations and with the accompanying
fiscal note. There being NO OBJECTION, it was so ordered.
HB 86 was reported out of Committee with "no recommendation"
and with a zero fiscal note by the Department of Community
and Regional Affairs.
| Document Name | Date/Time | Subjects |
|---|