Legislature(2011 - 2012)HOUSE FINANCE 519

04/12/2011 08:30 AM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 102 AK AFFORDABLE HEATING PROGRAM PAYMENTS TELECONFERENCED
Heard & Held
+ HB 183 APPLICATION OF VILLAGE SAFE WATER ACT TELECONFERENCED
Heard & Held
+= HB 103 POWER PROJECT; ALASKA ENERGY AUTHORITY TELECONFERENCED
Scheduled But Not Heard
+ HJR 4 CONST. AM: TRANSPORTATION FUND TELECONFERENCED
Heard & Held; Assigned to a Subcommittee
+ HB 89 EXTRACTION OF BEDLOAD MATERIAL TELECONFERENCED
Moved CSHB 89(RES) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 183                                                                                                            
                                                                                                                                
     "An Act relating to the Village Safe Water Act."                                                                           
                                                                                                                                
9:30:26 AM                                                                                                                    
                                                                                                                                
SHEILA PETERSON,  STAFF, REPRESENTATIVE ALAN  DICK, explained                                                                   
CS  HB 183  (CRA) and  the proposed  changes in  the CS.  She                                                                   
related  that  the  Village Safe  Water  Act  (VSW)  provided                                                                   
grants for  water and sewer  in small communities  in Alaska.                                                                   
The bill  addressed issues of  eligibility. She  informed the                                                                   
committee  that VSW defined  a village  as an  unincorporated                                                                   
community, a second  class city, and a first  class city with                                                                   
less  than  600  residents.  The   legislation  modified  the                                                                   
definition,  modestly  eased   eligibility,  and  established                                                                   
accountability.                                                                                                                 
                                                                                                                                
Ms. Peterson  detailed that the  City of Nenana,  (population                                                                   
370)  applied for  a  VSW grant.  The  community worked  with                                                                   
city  officials  to  plan  and design  an  upgrade  to  their                                                                   
existing water and  sewer system. The existing  system was in                                                                   
use   since  1970.   The   grant   was  awarded.   The   city                                                                   
subsequently  learned  that  they  were  ineligible  for  the                                                                   
grant because Nenana  was a "home rule" city  organized under                                                                   
a charter.  She  delineated that  a home  rule city  received                                                                   
their authority  under an adopted  charter rather  than state                                                                   
statute. The  bill added home  rule municipalities  with less                                                                   
than 1000 residents  eligible for the VSW program.  Under the                                                                   
provision,  Nenana   and  Yakutat   were  eligible   for  VSW                                                                   
funding.                                                                                                                        
                                                                                                                                
Ms. Peterson continued  to discuss the legislation.  The bill                                                                   
raised the population  limit for eligibility for  first class                                                                   
cities   to   1,000.   The  legislation   ensured   that   an                                                                   
"unincorporated   community"  with   a  governing   body  was                                                                   
eligible.  She   defined  "unincorporated  community"   as  a                                                                   
community that  was not a home  rule, first class,  or second                                                                   
class city.  Villages identified  under Alaska Native  Claims                                                                   
Settlement  Act (ANCSA) qualified.  The legislation  intended                                                                   
that  ANSCA villages  would operate  under governing  bodies.                                                                   
She  identified   the  problem.  The  Alaska   Native  Claims                                                                   
Settlement  Act required  that  a village  must  form a  non-                                                                   
profit  or  for profit  corporation  but  did not  mandate  a                                                                   
governing body.                                                                                                                 
                                                                                                                                
9:34:15 AM                                                                                                                    
                                                                                                                                
Ms.  Peterson indicated  that  the CS  endeavored to  include                                                                   
unincorporated  communities. The  CS required  unincorporated                                                                   
communities to adopt governing bodies for VSW eligibility.                                                                      
                                                                                                                                
Vice-chair  Fairclough  asked   whether  Representative  Dick                                                                   
supported the CS. Ms. Peterson affirmed.                                                                                        
                                                                                                                                
Representative  Wilson MOVED to  ADOPT CS  Work Draft  HB 183                                                                   
27-LS0601/I (4/11/11  Bullard) as  a working document  before                                                                   
the committee.                                                                                                                  
                                                                                                                                
Representative Doogan OBJECTED.                                                                                                 
                                                                                                                                
Representative  Doogan asked for  a list  of the eight  first                                                                   
class cities  that would  benefit from  the population  limit                                                                   
increase.  Ms. Peterson  referred  to an  email addressed  to                                                                   
her from Bill  Griffith (4/11/11) (copy on  file) distributed                                                                   
to  the committee  that listed  the  communities. She  listed                                                                   
the   eligible  communities:   Akiachak,   Kipnuk,   Yakutat,                                                                   
Klawock, Hoonah, Ninilchik, King Cove, and Sand Point.                                                                          
9:37:27 AM                                                                                                                    
                                                                                                                                
BILL  GRIFFITH,   FACILITY  PROGRAMS  MANAGER,   DIVISION  OF                                                                   
WATER,  DEPARTMENT   OF  COMMERCE,  COMMUNITY   AND  ECONOMIC                                                                   
DEVELOPMENT (via  teleconference), in response  to a question                                                                   
by  Representative  Neuman,  explained   that  Talkeetna  had                                                                   
water facilities  operated and maintained by the  borough not                                                                   
the   city.  The   borough  received   funding  through   the                                                                   
municipal  matching grant  and  loan program.  Talkeetna  was                                                                   
eligible for the VSW program.                                                                                                   
                                                                                                                                
LINDSAY WOLTER,  ASSISTANT ATTORNEY GENERAL,  CIVIL DIVISION,                                                                   
ENVIRONMENTAL  SECTION,  DEPARTMENT  OF LAW,  ANCHORAGE  (via                                                                   
teleconference),affirmed  Talkeetna's   eligibility  for  VSW                                                                   
grants .                                                                                                                        
                                                                                                                                
Representative  Neuman commented that  the City of  Talkeetna                                                                   
imposed a  tax for water and  sewer services to help  pay for                                                                   
the system the Mat-Su borough provided.                                                                                         
                                                                                                                                
Representative  Costello wondered  about  the change  related                                                                   
to  the   definition  of   "unincorporated  community."   She                                                                   
anticipated  unintended  repercussions  with  the  change  in                                                                   
statute.  Ms.   Peterson  replied  that  the   definition  of                                                                   
village only applied  to the Village Safe Water  Program. She                                                                   
pointed  out that  the CS removed  the ANCSA  list. She  read                                                                   
the  definition  that  replaced  the ANCSA  list  related  to                                                                   
eligibility from the CS, Page 1, lines 9-16:                                                                                    
                                                                                                                                
     (D) the Annette Island Reserve established by 25                                                                           
          U.S.C. 495 for the Metlakatla Indian Community;                                                                       
                                                                                                                                
     (E) a community  with a population between  25 and 1,000                                                                   
          that is represented by (i) a council organized                                                                        
          under 25  U.S.C. 476 (sec. 16 of the Indian                                                                           
          Reorganization Act);                                                                                                  
          (ii) a traditional village council recognized by                                                                      
          the  United States…                                                                                                   
                                                                                                                                
Ms.  Peterson reassured  the  committee  that the  definition                                                                   
only applied to the VSW program.                                                                                                
                                                                                                                                
Ms. Wolter  expressed uncertainty  about the  interpretation.                                                                   
She  discerned  that  the language  appeared  to  single  out                                                                   
native or  tribal governments  eligible  for the grants.  She                                                                   
cautioned  that  possible  constitutional  concerns  existed.                                                                   
She  understood   that  DEC  would  like  to   have  a  local                                                                   
government in place  to administer the grant  and operate the                                                                   
water and sewer  system. She wanted assurance  that mandating                                                                   
tribal  governments  to  form  a  governing  body  would  not                                                                   
present constitutional issues.                                                                                                  
                                                                                                                                
Representative  Costello  understood  that a  governing  body                                                                   
for an unincorporated community was the legislature.                                                                            
                                                                                                                                
9:44:12 AM                                                                                                                    
                                                                                                                                
Ms. Wolter  stated  that she was  unaware of  a statute  that                                                                   
authorized  the  legislature as  the  governing  body for  an                                                                   
unincorporated  community.  She qualified  that  she was  not                                                                   
familiar  with the  particular  area of  law. She  understood                                                                   
from  other  statutes  that the  legislature  empowered  some                                                                   
unincorporated  communities   to  accept  grant   funds.  She                                                                   
indicated that the  major concern behind the  legislation was                                                                   
to ensure  a responsible  entity existed  to account  for the                                                                   
VSW funds. The  solution consisted of a statute  that defined                                                                   
the  entity and  conformed to  the  Equal Protection  Clause.                                                                   
Representative  Costello expressed  concerns with having  two                                                                   
different  meanings for unincorporated  community defined  in                                                                   
statute. She thought that problems would arise.                                                                                 
                                                                                                                                
Vice-chair Fairclough  asked whether the  definition included                                                                   
in the  CS was  specific  to VSW or  if it  related to  other                                                                   
portions  of   the  law.  Ms.   Wolter  confirmed   that  the                                                                   
definition of village only related to VSW.                                                                                      
                                                                                                                                
Co-Chair  Thomas   related  from  personal   experience  that                                                                   
tribal  governments  waived  their sovereignty  in  order  to                                                                   
accept  funds  from  the  state,  including  VSW.  Vice-chair                                                                   
Fairclough  wondered  whether that  was  a question  for  the                                                                   
Department of Law.                                                                                                              
                                                                                                                                
9:48:10 AM                                                                                                                    
                                                                                                                                
Ms.   Wolter  was   unable  to   confirm  Co-Chair   Thomas's                                                                   
statement.  She stated  she was  new to the  program and  did                                                                   
not have further information.                                                                                                   
                                                                                                                                
Mr.  Griffith confirmed  that  Co-Chair  Thomas was  correct.                                                                   
Tribal  governments  were  required   to  sign  a  waiver  of                                                                   
sovereign immunity to receive VSW funds.                                                                                        
                                                                                                                                
Representative  Guttenberg referred  to Mr. Griffith's  email                                                                   
(copy on file)  to Sheila Peterson. He noticed  the inclusion                                                                   
of unincorporated  communities inside of larger  boroughs. He                                                                   
asked  whether that  was an  issue. He  wanted to  understand                                                                   
how  VSW defined  unincorporated  communities.  Mr.  Griffith                                                                   
identified  that  over  100 communities  in  the  state  were                                                                   
unincorporated  and had  no  tribal government  or  governing                                                                   
body. Some were  located within a borough and  some were not.                                                                   
The program  learned of  their existence  when the  community                                                                   
contacted  VSW to  request funding.  He  was often  uncertain                                                                   
what type of  governing organization, if any,  existed in the                                                                   
communities.                                                                                                                    
                                                                                                                                
Representative  Gara wondered  whether the  VSW was the  only                                                                   
funding mechanism  available for communities that  were using                                                                   
outhouses and honey  buckets. Mr. Griffith answered  that the                                                                   
VSW  was the  primary program  that  funded most  communities                                                                   
waste  water  improvements.  Municipal  matching  grants  and                                                                   
loans  to  larger  communities   and  occasional  legislative                                                                   
grants from  Department of  Commerce, Community and  Economic                                                                   
Development  (DCCEC)   were  available.  He  added   that  no                                                                   
established  program existed  to administer  the DCCED  grant                                                                   
funds.                                                                                                                          
                                                                                                                                
Representative Gara  asked how many communities  in the state                                                                   
did not  have sewer systems.  Mr. Griffith acknowledged  that                                                                   
there were  roughly 40  communities where  more than  half of                                                                   
the  homes   were  without  running   water  and   sewer.  He                                                                   
mentioned that VSW  had ongoing projects to  provide services                                                                   
in half of the communities.                                                                                                     
                                                                                                                                
Representative  Gara  related  that his  only  concern  about                                                                   
expanding  the program  was that  the  communities with  more                                                                   
serious   problems   had  to   compete   against   additional                                                                   
communities  for the same  pot of money.  He wondered  if VSW                                                                   
would prioritize  communities with the most  severe problems.                                                                   
Mr. Griffith replied  that VSW used a prioritization  process                                                                   
and  scoring criteria  to establish  legislative funding  for                                                                   
the  program. The  criteria determined  need primarily  based                                                                   
on the health  impacts of the community.  Communities without                                                                   
running water or sewer were prioritized higher.                                                                                 
                                                                                                                                
9:54:01 AM                                                                                                                    
                                                                                                                                
Representative  Gara deduced  that  the  communities most  in                                                                   
need would  still get priority  under the bill.  Mr. Griffith                                                                   
thought   that  was  a   fair  assumption.   He  added   that                                                                   
occasionally  VSW funds  projects  that were  not first  time                                                                   
water and  sewer. Other  criteria were  also considered  such                                                                   
as the ability to operate and maintain existing services.                                                                       
                                                                                                                                
Representative   Neuman  inquired   about   the  meaning   of                                                                   
"governing body."  He mentioned the Legal Services  Memo from                                                                   
the Division  of Legal  and Research  Services (4/6/11  Cook)                                                                   
(copy  on file).  He  referenced  the community  of  Settlers                                                                   
Bay, located  in the Mat-Su  borough, governed by  a covenant                                                                   
board. He  wondered whether a  subdivision would  qualify for                                                                   
the VSW program.  Ms. Wolter reminded the committee  that the                                                                   
Department  of Law  (DOL) did  not write  the legal  opinion.                                                                   
She  discussed the  legal opinion  with  DEC and  ascertained                                                                   
that city councils  were not unincorporated  communities. She                                                                   
believed  that the  legal services  definition of  "governing                                                                   
body" needed revision.                                                                                                          
                                                                                                                                
9:58:18 AM                                                                                                                    
                                                                                                                                
Representative Doogan WITHDREW his objection.                                                                                   
                                                                                                                                
The CS Work Draft HB 183 27-LS0601/I was ADOPTED.                                                                               
                                                                                                                                
Vice-chair Fairclough OPENED public testimony.                                                                                  
                                                                                                                                
JASON MAYRAND,  MAYOR OF  NENANA (via teleconference),  spoke                                                                   
in  favor of  expanding  the definition  of  "home rule."  He                                                                   
expressed  concerns  that  Nenana   was  precluded  from  VSW                                                                   
funding  as  a home  rule  municipality.  He noted  that  the                                                                   
"home  rule"  definition  escaped  statute.  The  legislation                                                                   
attempted  to   remedy  the  situation.  He   explained  that                                                                   
Nenana's  original sewer  and water system  was installed  in                                                                   
the 1970's  by Public Health  Services (PHS). In  the 1990's,                                                                   
a  sewer and  water expansion  project  was constructed.  The                                                                   
project was  funded by a DEC  matching grant. The  match cost                                                                   
the community  $400 thousand.  Four years ago,  the community                                                                   
researched eligibility  and applied  for the VSW  grant which                                                                   
provided 100 percent  funding. He elaborated that  Nenana was                                                                   
working  to rehabilitate  their water and  sewer system.  The                                                                   
piping    experienced    frequent   cracks    and    required                                                                   
replacement.  The PVC  had  a tendency  to  crack and  fixing                                                                   
leaks underground  was expensive  and time consuming.  Nenana                                                                   
was  awarded VSW  design and  construction  funds. The  grant                                                                   
was  subsequently revoked  and the  only option  to fund  the                                                                   
project  was a  capital  appropriation.  The community  could                                                                   
not repay the  exorbitant cost ($1 million to  $2 million) in                                                                   
loans  needed to  replace  the  failing system.  He  stressed                                                                   
that the  community competently  operated and maintained  the                                                                   
existing system. He urged passage of the legislation.                                                                           
                                                                                                                                
Vice-chair Fairclough  asked whether he had  heard discussion                                                                   
on the  CS. She  invited the  mayor to  share his opinion  on                                                                   
the CS.  Mr. Mayrand  referred to CSHB  183 (CRA)  Section 1,                                                                   
line 2  that listed  the definition of  village as  listed in                                                                   
statute 43  U.S.C. 1610 or  1615 and deleted  "unincorporated                                                                   
community."  He  offered  that  the  CS  should  include  the                                                                   
statue and leave in "unincorporated community."                                                                                 
                                                                                                                                
Representative    Edgmon   concurred    with   the    mayor's                                                                   
suggestion.  He wondered  whether  that  idea was  discussed.                                                                   
Ms.  Peterson  replied  that   the  concern  with  the  ANCSA                                                                   
definition was twofold.  The ANCSA definition did  not ensure                                                                   
a   governing   body.   The   Department   of   Environmental                                                                   
Conservation  strongly urged  inclusion of  a governing  body                                                                   
to ensure accountability.  The second concern was  related to                                                                   
conformity with  the Equal Protection Act. She  solicited the                                                                   
legal  memo   to  determine  the  constitutionality   of  the                                                                   
definition.  Legal Services  suggested  the definition  focus                                                                   
on a governing  body as opposed  to Native status.  The ANCSA                                                                   
definition was  removed. She noted  that DEC worked  with DOL                                                                   
to develop the language in the current CS.                                                                                      
                                                                                                                                
10:06:32 AM                                                                                                                   
                                                                                                                                
Representative  Edgmon discussed  the  legal opinion  related                                                                   
to the Equal  Protection Clause. He wondered  about including                                                                   
Indian  Reorganization  Act (IRA)  and village  councils.  He                                                                   
identified that  federal tribal  dollars were available  that                                                                   
could  enhance VSW  grants. Vice-chair  Fairclough  requested                                                                   
the information at a later meeting.                                                                                             
                                                                                                                                
Representative Gara  asked if DEC led Nenana  to believe that                                                                   
they  qualified  for  funding.  Mr. Mayrand  replied  in  the                                                                   
affirmative. He detailed  that in addition to  the VSW design                                                                   
grant,  DEC awarded  Nenana construction  funds  appropriated                                                                   
by the legislature  in 2008. Representative Gara  opined that                                                                   
if  the   legislation  was  not   passed  this   session  the                                                                   
legislature   should  appropriate   capital  funds   for  the                                                                   
project  on moral  grounds.  He  believed the  situation  was                                                                   
wrong.                                                                                                                          
                                                                                                                                
Vice-chair  Fairclough asked if  Nenana incurred  outstanding                                                                   
costs due  to the  rescinded funding.  Mr. Mayrand  explained                                                                   
that the  city was  permitted to  retain the design  funding;                                                                   
only  the  construction  funds   were  withdrawn.  Vice-chair                                                                   
Fairclough asked  for the  project's construction  costs. Mr.                                                                   
Mayrand responded  that the total cost was  estimated at $9.5                                                                   
million over a period of 5 to 6 years.                                                                                          
                                                                                                                                
Representative  Gara asked  if the  city was  "out-of-pocket"                                                                   
for costs associated  with the project. Mr.  Mayrand answered                                                                   
in the negative.                                                                                                                
                                                                                                                                
10:11:11 AM                                                                                                                   
                                                                                                                                
Vice-chair Fairclough CLOSED public testimony.                                                                                  
                                                                                                                                
HB  183  was   HEARD  and  HELD  in  committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
HB103-FERC Public Processes.pdf HFIN 4/12/2011 8:30:00 AM
HB 103
SB 102 Eplanation of Benefits.docx HFIN 4/12/2011 8:30:00 AM
SB 102
SB 102 Sponsor Statement.docx HFIN 4/12/2011 8:30:00 AM
SB 102
HJR 4 Legal opinion aviation fuel tax.pdf HFIN 4/12/2011 8:30:00 AM
HJR 4
HJR 4 ltr support businesses.pdf HFIN 4/12/2011 8:30:00 AM
HJR 4
HJR 4 Ltr support Sorenson.pdf HFIN 4/12/2011 8:30:00 AM
HJR 4
HJR 4 supporters.docx HFIN 4/12/2011 8:30:00 AM
HJR 4
HJR4 - Sponsor Stmt Ver D.pdf HFIN 4/12/2011 8:30:00 AM
HJR 4
HJR4 ATIF Payout 6.0.pdf HFIN 4/12/2011 8:30:00 AM
HJR 4
HJR 4 ltr support Harbormasters.pdf HFIN 4/12/2011 8:30:00 AM
HJR 4
HJR4 support ltr Mobility coalition.pdf HFIN 4/12/2011 8:30:00 AM
HJR 4
HJR4 Support Miners 1-2011.pdf HFIN 4/12/2011 8:30:00 AM
HJR 4
CSHB 183 (CRA) Sponsor Statement.pdf HFIN 4/12/2011 8:30:00 AM
HB 183
ANCSA Reference.pdf HFIN 4/12/2011 8:30:00 AM
SFIN 4/17/2011 10:00:00 AM
HB 183
HB 183 CS WORK DRAFT 041111.pdf HFIN 4/12/2011 8:30:00 AM
HB 183
Impact of Proposed CSHB 183 ( ).pdf HFIN 4/12/2011 8:30:00 AM
SFIN 4/17/2011 10:00:00 AM
HB 183
Nenana Letter.pdf HFIN 4/12/2011 8:30:00 AM
HB 183
CS HB 183 ( ) Changes for FIN.pdf HFIN 4/12/2011 8:30:00 AM
SFIN 4/17/2011 10:00:00 AM
HB 183
HB 183 Legal Memo.pdf HFIN 4/12/2011 8:30:00 AM
SFIN 4/17/2011 10:00:00 AM
HB 183
HB 106CS(RES)-NEW DEC-WQ-04-12-11.pdf HFIN 4/12/2011 8:30:00 AM
HB 106