Legislature(2007 - 2008)HOUSE FINANCE 519
02/29/2008 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB72 || SB72 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 72 | TELECONFERENCED | |
| += | HB 313 | TELECONFERENCED | |
SENATE BILL NO. 72
"An Act relating to the community revenue sharing
program; and providing for an effective date."
Co-Chair Meyer announced that public testimony would be
taken first from the communities.
1:52:55 PM
JEREMY WOODROW, COMMUNICATIONS COORDINATOR, ALASKA MUNICIPAL
LEAGUE, presented a PowerPoint program on the application of
revenue sharing funds by communities (Community Revenue
Sharing: How Communities Use Their Share, copy on file). Mr.
Woodrow began with a slide illustrating revenue sharing for
the last twenty years (Historic Revenue Sharing Tools, p.
2). He remarked that in 1985, the communities received,
through revenue sharing, approximately $140 million. This
amount has been steadily decreasing. He indicated that the
asterisks, beside 2004 through 2007, were funds received
called "revenue sharing", but they were not "titled" revenue
sharing funds. Mr. Woodrow cited that the Legislature and
the Governor reinstated revenue sharing at $48 million. Mr.
Woodrow began the review of the communities' use of the
revenue sharing money by first referencing the Municipality
of Anchorage (Municipality of Anchorage, p. 4). The
Municipality of Anchorage received approximately $13 million
which was used for property tax relief. He pointed out that
the average single family home in Anchorage, in FY 07, saved
$389 with the revenue sharing that resulted in a $1.2
million reduction in overall property taxes. Each family
received a Green Card (Municipality of Anchorage, p. 5) that
reflected the taxes with and without the property tax
relief.
1:55:28 PM
Mr. Woodrow quoted Mayor Mark Begich of Anchorage:
For the last two years, Anchorage has used its revenue
sharing to lower property taxes for Anchorage
residents. The Assembly and I remain committed to using
any revenue sharing funds again this year for property
tax reduction" (Municipality of Anchorage, p. 6).
Mr. Woodrow commented that Anchorage, as the largest
municipality in the state, received the largest share of
revenue. Mr. Woodrow proceeded to the Matanuska-Susitna
Borough (Mat-Su), which received over $3 million used for
property tax relief (Matanuska-Susitna Borough, p. 7). Mr.
Woodrow showed that in FY 08, revenue sharing reduced
property taxes by more than half a million dollars. The Mat-
Su district resident received a brochure entitled "Your
Property Tax Dollars" (Matanuska-Susitna Borough, p. 8). He
indicated on the slide, circled in red, the Tax Relief
amount.
1:56:51 PM
Mr. Woodrow quoted Mayor Curt Menard:
For us in the Mat-Su, revenue sharing means our
citizens paid less in property taxes.
Mr. Woodrow cited that the Haines Borough used its revenue
sharing money differently (Haines Borough, p. 10). The
Haines Borough received $355,279 which was used to increase
school funding. Mr. Woodrow remarked that, for the first
time, one of the seventeen boroughs in the state hired a
full-time maintenance position to address deferred
maintenance. Mr. Woodrow quoted Borough Manager Robert
Venables:
This fiscal year Haines was able to-for the very first
time, establish a full-time maintenance position that
will help us address the years of deferred maintenance
problems and "band-aid fixes" throughout all of our
facilities. This will save the taxpayers in many ways
both now and in the future. Also, after many years of
flat-funding for our school district, the Haines
Borough was able to increase its contribution to the
school with its funds from revenue sharing. (Haines
Borough, p. 11)
1:58:16 PM
Mr. Woodrow revealed that the City of Saint Paul used their
$96,610 in funding to purchase fuel and to provide basic
services to the community (City of Saint Paul, p. 12).
1:58:46 PM
Mr. Woodrow quoted the City Clerk Phyllis Swetzof:
The City of St. Paul used all of their Revenue Sharing
money from the State of Alaska to pay their fuel bill.
(City of Saint Paul, p. 13)
Mr. Woodrow declared that the Kenai Peninsula Borough funded
education at the CAP with their $1.7 million (Kenai
Peninsula Borough, p. 14). Mr. Woodrow elaborated that this
provided another way to reduce property taxes; it simply did
not increase them. Mr. Woodrow quoted the Borough Finance
Director Craig Chapman:
The Kenai Peninsula Borough used the Revenue Sharing
received from the State of Alaska during FY 2008 to continue
its practice of funding education at the cap. Without these
funds, the Borough's mill rate would have needed to increase
.33 mills, to continue funding education at the cap (Kenai
Peninsula Borough, p. 15)
2:00:02 PM
Mr. Woodrow remarked that the City of Gustavus, one of the
smaller communities in Southeast Alaska, received $95,718
which was used to support basic services and offset high
energy costs (City of Gustavus, p. 16). Mr. Woodrow quoted
Mayor Ken Klawunder:
The City of Gustavus used their Revenue Sharing from
the State of Alaska to offset their high energy costs
and to help support all city services such as: our
library; our fire department; our EMS squad; our health
clinic and our City Hall.
2:00:39 PM
Mr. Woodrow talked about the Denali Borough's $321.219 that
was used to fund fire and emergency medical services to over
one hundred miles of the Parks Highway (Denali Borough, p.
18). Mr. Woodrow quoted Mayor David Talerico:
The Denali Borough budget for '08 included $271,589 for
local fire/EMS and the lion's share of that is spent on
visitors including response along over 100 miles of the
Parks Highway (Denali Borough, p. 19)
Mr. Woodrow reflected that Denali's use of their funds is an
example of revenue sharing not just assisting local
communities but also visitors to Alaska. Mr. Woodrow
expressed the Alaska Municipal League (AML) thanks for the
legislature's support addressing revenue sharing as a
statewide issue. He stressed that the AML urges the
Committee to adopt SB 72 with an Annual Payout of $75
million by increasing the Revenue Sharing Fund to $225
million. He commented that the Revenue Sharing, combined
with education funding and the PERS/TRS fix, is a positive
step to building sustainable communities in Alaska
(Conclusion, p. 20).
2:02:54 PM
Representative Gara inquired if the minimum amount is
$20,000 for a community. Mr. Woodrow answered that $20,000
was designated for a smaller community, not a city or a
borough. Representative Gara wondered if this caused any
concern to the smaller communities. Mr. Woodrow admitted
that not much can be achieved with $20,000 but the amount
was set to give incentives for communities to become
organized communities. Representative Gara asked for the
names of the unorganized communities in the Bethel area.
Representative Nelson listed a number of unorganized
communities but she remarked that there is no incentive to
become organized if it only creates another layer of
government to fund.
2:04:15 PM
Representative Gara thought that $20,000 appeared very low.
Mr. Woodrow remarked that the communities would always
welcome more funding. Representative Meyer remarked that
smaller villages have commented that $20,000 provides a
great help in offsetting fuel costs and city service
expenditures.
2:05:10 PM
WALT WREDE, CITY MANAGER, CITY OF HOMER (Testified via
teleconference), supported SB 72 with the increase in the
revenue sharing fund to $225 million and the annual payout
of $75 million as proposed by the Governor. Mr. Wrede
mentioned that Homer used its revenue sharing funds as
matching money that the council had set aside for fleet
depreciation and a new fire truck. He expressed Homer's
thank you to the legislature.
2:06:18 PM
LYNNE WOODS, DEPUTY MAYOR, MAT-SU BOROUGH (Testified via
teleconference), supported SB 72 with the increase in the
revenue sharing fund to $225 million and the annual payout
of $75 million as proposed by the Governor. Ms. Woods
believed the legislation is set up to be sustainable and
equable in its distribution. She remarked that the $3
million received last year allowed the community to maintain
the mill levy and fund the school budget to the previous
year's level. She stressed that the senior and disabled
veterans' exception was $20,000 short of $6 million and
these local residents need the services that the borough is
providing. Ms. Woods observed that the money also helps the
ten to twelve years olds by not putting a greater burden on
the school district for building and operating the schools.
2:08:59 PM
DAVE TALERICO, DENALI MAYOR (Testified via teleconference),
supported the Senate Committee substitute and encouraged the
increase to $225 million with the annual payout of $75
million. Mr. Talercio noted that the money could expand
services in the growing Denali community for both locals and
the large visitor industry. The funding also helps to
provide better fire protection and other infrastructure
needs.
2:09:58 PM
BILL ALLEN, CITY MANAGER, PALMER (Testified via
teleconference), supported SB 72 and encouraged the increase
to $225 million with the annual payout of $75 million. He
noted that the community worked hard to maintain the level
of services that the community deserves. He believed that
the rural communities have been diminishing over the years
and the Palmer region is seeing a migration of rural
residents, placing a larger demand on the costs for local
services. Mr. Allen contended that the rural migration to
Palmer has increased crime, social issues, and the demand
for city services. Representative Gara questioned where it
is mentioned in the bill that there will be an annual payout
of $75 million, and wondered how that formula was
determined. Co-Chair Meyer responded that the Senate changed
the amount, as proposed by the Governor, to $75 million over
a three year period. Co-Chair Meyer remarked that the
present appropriation, of $150 million, will provide at
least $50 million to be paid out for the next three years.
When the price of oil reaches a certain level, it is re-
appropriated to refill the fund. Co-chair Meyer specified
that the $75 million figure was not actually available at
this time; the amount has only been proposed by the
Governor.
2:13:48 PM
Representative Gara inquired if the Senate bill read
differently from the House version. Co-Chair Meyer responded
that the Governor had proposed $75 million revenue sharing
program similar to last year's capital budget.
Representative Gara inquired if the Senate version was the
Governor's version. Co-Chair Meyer responded that it was
different and remarked that David Teal would explain how the
three year program would work. Representative Gara
questioned if the $75 million was ever mentioned in any
version of the bill. Representative Meyer responded that the
governor's proposal is only for one year; the Senate bill is
proposing at least three years.
2:15:06 PM
GLEN GARDNER, MAYOR, CITY OF SAND POINT (Testified via
teleconference), supported SB 72 with the increase to $225
million and the annual payout of $75 million. He explained
that the money is very crucial to the City of Sand Point,
especially with low fish taxes, the rising costs of fuel and
insurance costs that are all taking larger amounts from the
decreasing budget dollars. Mr. Gardner emphasized that the
revenue sharing funding is needed for the community to
provide basic services.
2:16:08 PM
Representative Gara questioned Mayor Gardner what the effect
to Sand Point would be if there was the $225 million with
$75 million payout. Mr. Gardner said they would be affected
because last year they received $116,000.
2:16:58 PM
KAY ANDREWS, SECRETARY/TREASURER OF ALEKNAGIK (Testified via
teleconference), supported SB 72 with the increase to $225
million and the annual payout of $75 million. She thanked
the committee for sharing the revenue with smaller
communities. Ms. Andrews commented that last year the
community received $86,000; $50,000 was used for fuel with
the remainder being used to purchase a copier, fund general
administration and provide for other services. If the amount
were to increase to the Governor's suggestion, the community
could employ a planning director to help address and better
serve the residents of the community.
2:20:08 PM
RON WOOLF, CHIEF FINANCIAL OFFICER, CITY OF FAIRBANKS
(Testified via teleconference), supported SB 72 with revenue
sharing fund of $225 million and an annual payout of $75
million. Mr. Woolf reported that the cost of energy was very
high and not enough had been budgeted to meet community
needs. Mr. Woolf mentioned that a large part of Fairbank's
revenue sharing funding would go to capital improvement,
specifically, street repairs. Mr. Woolf noted that when
revenue sharing ended a few years ago, Fairbanks was forced
to lay-off eight key positions and, without the new revenue
distribution, he foresaw similar problems.
2:21:15 PM
LUKE HOPKINS, ASSEMBLY AND ALASKA MUNICIPAL LEAGUE BOARD
MEMBER, FAIRBANKS NORTH STAR BOROUGH, (Testified via
teleconference), supported SB 72 with the increase to $225
million and the $75 million annual payout. Mr. Hopkins
commented that the local community has been impacted by
rising fuel and electric needs. The revenue sharing fund has
helped offset this cost for the residents.
2:23:33 PM
SCOTT BRANDT-ERICHSEN, CITY ATTORNEY, KETCHIKAN GATEWAY
BOROUGH (Testified via teleconference), supported SB 72 with
the increase to $225 million and the $75 million payout. He
explained that this would be a six percent increase to the
community. The community of Ketchikan has been able to
reduce the local mill levy by $.4 million and support
education funding.
2:27:04 PM
Representative Thomas asked Mr. Brandt-Erichsen if the
Alaska Municipal League tallied the amount of money that
this legislative body is giving to the municipalities. Mr.
Brandt-Erichsen responded that Mr. Woodrow presented a
PowerPoint presentation at the beginning of the meeting that
identified, in 2007, $18 million in PERS relief and $48
million to offset rising energy cost impacts. The last
municipal league had pointed out that there are a
significant number of second class cities not involved in
the PERS/TERS system. The state and some municipalities
benefited from the PERS/TERS, but since not all
municipalities are part of the system, there were some that
did not see any benefits. Mr. Brandt-Erichsen stressed that
all municipalities have benefited from revenue sharing.
2:28:46 PM
FERDINAND SHARP, MAYOR, MANOKOTAK (Testified via
teleconference), supported SB 72 with the increase to the
$225 million and the $75 million annual appropriation. He
remarked that a good portion of the revenue sharing is used
to offset the high cost of electricity and energy, including
street lights. The revenue sharing is also used to help
budget heavy equipment operators for snow removal and school
bus up keep. Mayor Manokotak mentioned that locally they
have a sales tax of two percent which put $16,000 toward
fuel and gas.
2:32:13 PM
JEROME SELBY, MAYOR, KODIAK ISLAND BOROUGH (Testified via
teleconference), supported SB 72 with the increase to the
$225 million and the $75 million annual appropriation. He
appreciated the hard work of the committee and the funding
that has helped the communities. He stressed that the six
percent increase request was not an arbitrary figure but the
minimum amount determined to run a small community. This
money will keep the communities sustainable for a longer
period and promote new opportunities for the community
rather than just remain at a sustainable level.
2:36:20 PM
CAROLYN FLOYD, MAYOR, CITY OF KODIAK (Testified via
teleconference), supported SB 72 with the increase of $225
million and the annual payout of $75 million. She stressed
that revenue sharing funding is very important in deferring
energy costs.
2:37:36 PM
JENNIFER JOHNSTON, ASSEMBLY MEMBER, ANCHORAGE (Testified via
teleconference), supported SB 72 with the increase of $225
million and the annual payout of $75 million. This money
allows for property tax relief for the local community.
2:38:43 PM
CHRIS KLABUNDE, CITY COUNCIL MEMBER, CITY OF DILLINGHAM
(Testified via teleconference), supported SB 72 with the
increase of $225 million and the annual payout of $75
million. He declared the proposed funding was needed to
offset the rising costs of fuel freight, and transportation.
2:40:03 PM
JAMES HORNADAY, MAYOR, CITY OF HOMER (Testified via
teleconference), supported SB 72 with the increase of $225
million and the annual payout of $75 million. He expressed
that the citizens of Homer pay there fair share in local
taxes but the funding has helped in fuel costs, purchasing a
fire truck and other community needs.
2:41:45 PM
Co-Chair Meyer questioned if there were any others online or
in-house who would like to testify, and being none, closed
the public testimony.
AT EASE: 2:42:18 PM
RECONVENED: 2:48:20 PM
2:48:48 PM
Co-Chair Meyer signified that David Teal would be presenting
a model for how revenue funding distributions would be
effected using different numbers.
DAVID TEAL, DIRECTOR, LEGISLATIVE FINANCE DIVISION,
presented a model and explained how the Senate arrived at
the provisions for this bill. He noted that, last year, $49
million was distributed throughout the communities; this
year the number was rounded to $50 million. The amount for a
borough, $250,000 last year, was bumped to $300,000 this
year. As the base amount changes, the borough amount, being
floating, reflect other base changes. Mr. Teal showed the
changes from last year's bill to this year's bill. He
explained that while the communities may lose a small amount
of money, the boroughs are up slightly due to the base rate
rising. If the base rose to $5,500,000, the small
communities would become winners.
2:52:58 PM
Mr. Teal manipulated the figures for the legislators to show
how different amounts of base money would change the payout
to communities and boroughs. He showed that when money is
added to the distributed amount, the borough base floats up.
Because the base floats, all the communities continue to
receive the same amount that they received the prior year.
Mr. Teal told the legislature they might want to experiment
with the amount of money put into the program, decide on the
borough base, and then, if the money declines as oil prices
fall, observe the impact on the communities.
2:54:22 PM
Co-Chair Meyer asked what would happen if the money fell
below $50 million. Mr. Teal explained that, if oil fell
below $60 a barrel, the first year of $50 million payouts
would be distributed, but without any surcharge revenue
coming in, the following year the fund balance would fall to
$100 million with a distribution of one third making the
distribution amount $33 million. The borough base, being
floating, would now fall to $220,000 and city bases would
fall as well. Co-Chair Meyer commented that there was a
handout available that illustrated when the price of oil was
at a certain level, twenty percent of the amount would be
taken for revenue sharing, and then it would show how much
would be available for appropriation. He explained that,
even if the price of oil were to fall below $60 a barrel for
the next three years, there would still be three years worth
of revenue sharing at $50 million. He concluded this would
give the communities time and notice to make adjustments.
2:56:29 PM
Mr. Teal added that as the program begins to fade out to $33
million, the borough base is $220,000, but the calculation,
if it were free to float with no restrictions; the base
would then be $198,000. He explained that this is why some
communities would receive a different portion. Mr. Teal
continued that if the base floats, using $160,000 as a base,
then the free floating base of $198,000 is distributed then
all communities receive the same amount as before. The base
determines the amount that goes to the smaller communities
and the boroughs. Every dollar put into the base is less
money to be distributed by population, therefore the larger
the number, the distribution leans toward the smaller
communities at the expense of the urban centers.
2:57:53 PM
Co-Chair Meyer requested that Mr. Teal show the numbers for
Anchorage at the $50 million payout and the $75 million
payout. Mr. Teal responded that at $50 million, Anchorage
would receive $13.5 million; at $75 million, with the base
floating to $450,000, Anchorage would receive $20 million.
This remains twenty seven percent. He specified that under
the Governor's proposal, the base is not floating, so the
base would be $250,000; Anchorage share then goes to $25
million or thirty four percent of the total. The Governor
did not build up the base when more money was added, so the
distribution is heavily weighted toward the urban centers.
Co-Chair Meyer remarked that the floating base really
impacts the numbers. Co-chair Meyer requested that Mr. Teal
take the base from $300,000 to $320,000.
3:00:00 PM
Mr. Teal responded that if the base rose to $320,000,
Anchorage would receive $13 million. This becomes twenty six
percent of the totals instead of twenty seven percent.
3:01:00 PM
Co-Chair Meyer asked if the last column of Mr. Teal's
figures indicated the PERS contribution. Mr. Teal responded
that Anchorage would receive $20 million for PERS
assistance, thirty nine percent of the PERS total.
3:01:56 PM
Representative Gara remarked that he sees a problem of
disappearing revenue sharing. He questioned if the CAP of
$50 million would be higher if the oil prices were higher.
Co-Chair Meyer responded that it states in the bill that if
the amount falls below $50 million, the money will still be
distributed at one third of whatever remains. Mr. Teal
agreed but believed that Representative Gara did not want to
look on downside, but the upside of oil being higher. If oil
remains at $90, with multimillion dollar surpluses, the
amount remains at $50 million but, in the law, the
legislature could appropriate more. The $50 million is a
minimum revenue sharing amount.
3:03:38 PM
Representative Gara wondered about the logic of keeping the
amount at $50 million, no matter how high the price of oil
rises. Co-Chair Meyer believed that the $50 million was a
minimum, so more money can be appropriated if the
legislature chooses. Representative Gara thought the bill
unnecessary if the legislature was going to appropriate a
different amount each year.
3:04:32 PM
Vice-Chair Stoltze explained that this might be looking at
sustainability, predictability, and the downward curve on
production.
3:05:20 PM
Representative Thomas remarked that if $50 million is spent
this year, and next year being another high oil price year,
and another $250 million is put in the account, he believed
it important to put a cap on the municipality amounts to
prevent reckless spending.
3:06:02 PM
Mr. Teal pointed out that if $250 million were plugged in
the budget it would increase the distribution by one third.
Representative Thomas asked if it would be possible to put
language in the bill to not exceed $75 million.
3:06:35 PM
Co-Chair Meyer remarked that there could be an amendment to
make the maximum amount to be distributed $75 million, not
to exceed one third of amount of fund.
3:07:18 PM
Mr. Teal agreed that an amendment is easy but public
testimony emphasized the $225 million with the payout of $75
million. In order to sustain the $75 million payout, the
bill would have to be amended to say that twenty percent of
the revenue would not exceed $75 million as opposed to $50
million.
3:08:00 PM
Representative Kelly remarked that he would be more
comfortable with a ten year projection of oil prices and
budgets. He pointed out that the Prudhoe curve is moving
down below 700,000 barrels this year, but budgets are rising
by fifteen percent each year. He remarked that it will be
hard on municipalities if the amount is raised only to be
removed later. Representative Kelly stressed that the state
government is going to run out of funding in the next three
to seven years, moving into huge deficits until first "gas."
Representative Kelly believed the challenge is to save
enough money to function through the downward period.
Representative Kelly asked if there was a ten year plan
available.
3:09:56 PM
Mr. Teal responded that a memo from Sherry Newhouse, dated
February 28, 2008, announced that, given the official
forecast of prices, the maximum available for the
communities' appropriation in revenue sharing would be $70
to $80 million a year, projected through FY 2014. Given the
funding mechanism, the legislature can not afford to have a
larger distribution than is in the bill at the moment.
3:11:27 PM
Representative Kelly commented that this ignores the size of
the budget. He remarked that the legislature is balancing
the budget at $60 a barrel. If the budget is going to
continue to rise by seven to fifteen percent per year, then
the budget will not be balanced on the base rate, but the
balance of the progressivity piece, which will be needed
just to fund the government.
3:12:32 PM
Mr. Teal agreed but emphasized that only if the price of oil
rises, will it be possible to balance a constantly rising
budget. Representative Kelly believed that a missing part in
the bill is the growth in the budget.
3:14:31 PM
Representative Hawker agreed that no current mechanism is in
the state for taking the current proposals out for next ten
years. He noted that HB 125, now residing in the Senate
Finance, would require each year a ten year comprehensive
model to respond to these questions.
3:15:47 PM
Representative Kelly wondered why there was not already a
ten year forecast for this information.
3:17:06 PM
Co-Chair Meyer MOVED to ADOPT Amendment #1.
Page 4, line 31
Delete "to assist communities"
Insert "as grants to municipalities, reserves, and
communities for any public purpose"
Page 5, line 4
Delete "up to"
Insert "an amount equal to"
Page 5, line 5,
After "(g)."
Delete "Appropriations for a fiscal year may also
be limited to"
Insert "The amount may not exceed"
Page 5, line 28
After "subsection"
Insert ",rounded to the nearest $1,000"
Page 5, line 29
After "amount"
Insert",rounded to the nearest $1,000"
Page 5, line 30
After "amount"
Insert ",rounded to the nearest $100"
Page 6, line 1
After "amount"
Insert",rounded to the nearest $100"
Representative Thomas OBJECTED for discussion.
Suzanne Armstrong, Staff to Representative Meyer, presented
amendment #1 as technical cleanup language, requested from
legislative legal, on a few provisions in the bill. She
introduced a new section of the amendment on page 1, line 3,
to delete "as grants."
Representative Hawker MOVED a conceptual amendment as
described by Ms. Armstrong.
Representative Stolze WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
Co-Chair Meyer MOVED to ADOPT New Amendment #2.
Page 2, line 14
Insert new section
Sec.2. AS 29.20.640(b) is amended to read:
(b) Compliance with the provisions of this section is a
prerequisite to Receipt of community revenue sharing under
AS.60.850-29.60.879[MUNICIPAL TAX RESOURCE EQAULIZATION
ASSISTANCE UNDER AS 29.60.010-29.60.080 AND PRIORITY REVENUE
SHARING FOR MUNICIPAL SERVICES UNDER AS 29.60.100-
29.60.180]. If a municipality does not comply with this
section, the department shall withhold the allocations until
the required Reports are filed.
Page 2, line 14
Delete "Sec.2."
Insert "Sec.3."
Page 4, line 1
Insert new sections
Sec. 4. 29.45.020(b) is amended to read:
(b) Compliance with the provisions of this
section is a prerequisite to Receipt of community revenue
sharing under AS 29.60.850-29.60.879 [MUNICIPAL TAX RESOURCE
EQUALIZATION UNDER AS 29.60.010-29.60.080 AND PRIORITY
REVENUE HARING FOR MUNICIPAL SERVICES UNDER AS 29.60.100-
29.60.180] The department shall withhold annual allocations
Under those sections until municipal officials demonstrate
that the requirements of this section have been met.
Sec. 5. AS 29.45.660(b) is amended to read:
(b) Compliance with the provisions of this
section is a prerequisite to receipt of community revenue
sharing under AS 29.60.850-29.60.879 [MUNICIPALITY TAX
RESOURCE EQUALIZATION UNDER AS 29.60.010-29.60.080 AND
PRIORITY REVENUE SHARING FOR MUNICIPAL SERVICES Under as
29.60.100-29.60.180]. The department shall withhold annual
Allocations under those sections until municipal officials
demonstrate that the Requirements of this section have been
met.
Page 4, line 1
Delete "Sec.3."
Insert "Sec.6."
Page 4, line 27
Delete "Sec.4."
Insert "Sec.7."
Page 7, line 28
Delete "Sec.5."
Insert "Sec.8."
Page 8, line 4
Delete "Sec.6."
Insert "Sec.9."
Page 8, line 22
Delete "Sec.7."
Insert "Sec.10."
Page 10, line 26
Delete "Sec.8"
Insert "Sec.11."
Page 11, line 25
Delete "Sec.9."
Insert "Sec.12."
Page 12, line 5
Delete "Sec.10."
Insert "Sec.13."
Page 12, line 16
Delete "Sec.11."
Insert "Sec.14."
Page 12, line 21
Delete "Sec.12."
Insert "Sec.15."
Page 12, line 21-line 22
Delete "AS 29.20.640(b); AS 29.45.020(b), AS
29.45.660(b);"
Page 12, line 26
Delete "Sec.13."
Insert "Sec.16."
Representative Thomas OBJECTED for discussion.
3:21:29 PM
Ms. Armstrong explained that the new amendment #2 proposes
to repeal several statutes relating to revenue sharing
programs that are currently on the books. This amendment
clears up some statutory references under current law and
removes those statues from the repealed sections that they
are not repealed and changes the section numbers.
Representative Thomas WITHDREW his OBJECTION. There being NO
further OBJECTION, it was so ordered.
3:22:33 PM
Co-Chair Chenault MOVED to ADOPT New Amendment #3.
Page 7, lines 11-13
Delete all material
Insert "assembly approval. If there is more than one
qualified entity in an unincorporated community in a borough
or unified municipality, one of the entities may receive the
entire payment, or the payment may be shared between two or
more of the qualified entities, as determined by the
assembly.
(c) An unincorporated community in a borough or unified
municipality is eligible for a community revenue sharing
payment only if at least three of the following services are
generally available to all residents of the unincorporated
community and each of the three services, in any
combination, are provided by one or more qualifying
incorporated nonprofit entities or a Native village council
or are substantially paid for by the residents of the
unincorporated community through taxes, charges, or
assessments levied or authorized by the borough or unified
municipality.
Representative Hawker OBJECTED for discussion.
3:22:54 PM
TOM WRIGHT, STAFF, REPRESENTATIVE CHENAULT, clarified that
Amendment #3 allows unincorporated communities, within an
organized borough, to participate in the revenue sharing
program. He stressed that the communities have to meet three
of the seven criteria already in the bill, but it is the
borough that will make final determination if the community
qualifies. The borough will submit the names of those
communities to DCEED for their review and approval.
Representative Joule questioned if the unincorporated
community in the borough that has the services being
provided would qualify. Mr. Wright responded that it will be
the borough that determines if the community is meeting the
criteria listed within the bill. Mr. Wright gave an example
that in the unincorporated community of Sterling, within the
Kenai Peninsula, some services are provided but their mill
rate goes toward other services that the borough provides.
Mr. Wright continued that if the borough determines they
meet three of the seven criteria under this amendment, they
would be eligible.
3:25:52 PM
Co-Chair Meyer remarked that the idea is to incentivize the
communities to incorporate, but he wondered if this takes
away the incentive.
BILL ROLFSON, DEPARTMENT OF COMMERCE, addressed the question
that there is an incentive for municipal incorporation, but
the unorganized borough is outside any municipal government.
Mr. Rolfson empathized that state law would rather have the
borough provide those services rather than have another city
government within their municipal boundaries.
3:27:07 PM
Co-Chair Meyer questioned if the borough could just say the
unorganized community qualifies in order to receive more
money. Mr. Rolfson explained that the way the amendment is
drafted, the community, a native village council or non-
profit community organization or the borough, must meet at
least three of the seven criteria and the services provided
within the borough are generally available to all residents
in that community. This amendment is trying to identify that
there are unincorporated communities where the service is
not being provided by the native village council or the non-
profit, but by the borough, and the city is paying taxes for
those services.
3:28:27 PM
Mr. Rolfson identified thirty one unincorporated communities
last year that met the criteria. To meet the criteria the
native village council or a community association had to be
providing at least three of the services within the
community. Some boroughs, Kenai and Mat-Su, had communities
where services were being provided and the residents were
paying taxes and fees, but because the services were not
being provided by a non-profit or native village council,
they were not eligible to receive this $20,000 payment.
3:30:15 PM
Representative Hawker wanted assurance that, subject to
meeting three of seven criteria, the community of Hope would
be classified as unincorporated. Mr. Rolfson declared that
at this time the department can not provide an eligibility
list. He reiterated that they would rely on the borough to
identify these communities but Hope would be in a community
that the borough could look at for the funding.
3:31:45 PM
Vice-Chair Stoltze questioned if there was a list available
of the eligible communities. Mr. Rolfson commented that the
department can not generate a with list but they have
determined that thirty one communities meet these criteria.
3:34:14 PM
Representative Kelly stressed that when the legislative body
is considering an amendment that significantly increases the
number of eligible communities, from thirty to sixty, more
information would be needed, especially in dealing with
tribal issues.
Co-Chair Chenault WITHDREW Amendment #3.
Representative Kelly noted there is a fiscal note attached
to Amendment #3 and suggested that prior to the amendment
being brought before the committee in the future, more
information would be needed.
3:37:35 PM
Tom Wright clarified that the communities would only qualify
for the minimum based on population for the unincorporated
communities. Co-Chair Meyer remarked that would be $20,000
times the number of possible communities, which are
potentially sixty. Mr. Rolfson signified that would be
$620,000 for thirty communities and $1.2 million for sixty
communities.
SB 72 was HEARD and HELD in Committee for further
consideration.
3:38:37 PM
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