Legislature(2007 - 2008)HOUSE FINANCE 519

04/10/2008 08:30 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved HCS CSSB 119(FIN) Out of Committee
Moved HCS SB 303(FIN) Out of Committee
<Bill Held Over to 4/11/08 @ 8:30>
<Bill Held Over to 4/11/08 @ 8:30>
+ Bills Previously Heard/Scheduled TELECONFERENCED
<Bill Held Over to 4/11/08 @ 8:30>
SENATE BILL NO. 303                                                                                                           
     An Act relating to certain grants awarded by the                                                                           
     Department of Environmental Conservation.                                                                                  
GINGER BLAISDELL,  STAFF, SENATOR  LYDA GREEN, addressed  the                                                                   
impact of  the bill by changing  the population  criteria for                                                                   
certain  match  requirements  on water  and  sewer  projects,                                                                   
increasing the municipality  size from 5,000 to  10,000.  The                                                                   
changes  would impact  positively eight  communities.   There                                                                   
are  only   three  communities   above  the  10,000   mark  -                                                                   
Anchorage, Fairbanks & Juneau.                                                                                                  
She  noted  that  the  cost  for  construction  projects  has                                                                   
significantly especially for costs  associated with steel and                                                                   
concrete.  Some projects have  become unattainable because of                                                                   
these  costs.   The  bill provides  a  higher State  matching                                                                   
rate, which  provides communities  opportunity for   improved                                                                   
water and sewer systems.                                                                                                        
Co-Chair Meyer  questioned why the three  largest communities                                                                   
had been excluded.                                                                                                              
9:32:39 AM                                                                                                                    
Ms. Blaisdell  agreed  every community  has been impacted  by                                                                   
high construction  costs, yet,  the hope  is that the  denser                                                                   
populated areas could absorb costs easier.                                                                                      
Vice-Chair Stoltze  countered the  reasoning, pointed  out an                                                                   
infrastructure  project  ongoing in  Palmer.   Ms.  Blaisdell                                                                   
9:34:02 AM                                                                                                                    
Representative  Thomas questioned how  the 15,000  number had                                                                   
been determined.   Ms. Blaisdell  said 10,000 was a  good cut                                                                   
off point; she did not know why  a higher number had not been                                                                   
Vice-Chair  Stoltze  observed  that 10,000  is  a  consistent                                                                   
number for  determining a  small community  and is  used over                                                                   
and over in  the State.  Co-Chair Meyer was  more comfortable                                                                   
with the 5,000  resident number because that group  has a tax                                                                   
base.    Co-Chair  Meyer  observed that  SB  303  is  another                                                                   
revenue sharing  bill.   Ms. Blaisdell  agreed it helps  with                                                                   
municipal revenue.                                                                                                              
Representative  Kelly  interpreted that  it  is a  "weighted"                                                                   
revenue sharing bill.                                                                                                           
9:36:12 AM                                                                                                                    
Co-Chair  Meyer  referenced  Page 1,  Line  14,  recommending                                                                   
changing 50%  to 60%.  Ms.  Blasdell responded that  would be                                                                   
acceptable.   She recommended that  if that change  was made,                                                                   
then  Page  2,   Lines  1-5  should  be   deleted,  following                                                                   
Representative  Gara  referenced  the  $3.7  million  dollars                                                                   
fiscal  note asking  why it  was  projected to  end in  FY09.                                                                   
When  the grant  ends, would  the Department  then cover  the                                                                   
remaining  costs.  Ms.  Blasdell explained  that the  way the                                                                   
municipal matching  grant program  works for water  and sewer                                                                   
projects   is  that   the  communities   send  in   extensive                                                                   
applications  and  then those  are  ranked by  Department  of                                                                   
Environmental  Conservation  and   the  highest  priority  is                                                                   
determined.   The determination  regarding whether  a project                                                                   
is included or not is determined by the appropriation cap.                                                                      
Currently, the  Governor's Office  has requested  $26 million                                                                   
General  Fund  matching  dollars  for those  projects.    The                                                                   
proposed fiscal  notes assume  that the same projects,  which                                                                   
would have been matched under  the $26 million dollar amount,                                                                   
would  have  a  higher  match  rate  and  would  provide  the                                                                   
additional  cost  for  the  impacted   programs.    The  zero                                                                   
indication for  FY10 resulted because the Department  has not                                                                   
considered any applications yet.                                                                                                
9:39:10 AM                                                                                                                    
Representative Gara asked if the  State currently only spends                                                                   
$26  million  dollars  on  grant  programs.    Ms.  Blaisdell                                                                   
replied that  was correct for  the General Fund  dollars only                                                                   
and that there are also federal clean water funds.                                                                              
Representative  Gara attempted  to determine  if the  request                                                                   
was a "reshuffling of the spending dollars".                                                                                    
BILL GRIFFITH, FACILITIES PROGRAM  MANAGER, DIVISON OF WATER,                                                                   
DEPARTMENT  OF   ENVIRONMENTAL  CONSERVATION   testified  via                                                                   
teleconference,  advised that the  fiscal effect of  the bill                                                                   
would be  that the Department  would need more  General Funds                                                                   
to provide  grants  for the same  number of  projects.   Each                                                                   
year, the Department  provides a new priority  list including                                                                   
the grant  requests made that year.   Funds would need  to be                                                                   
allocated by the Legislature each  year to fund the projects.                                                                   
Representative  Gara  worried   about  the  proposed  expense                                                                   
associated  with the  projects.   He  indicated concerns  for                                                                   
communities that  currently have no  water and/or sewer.   He                                                                 
mentioned the need to make changes  for communities currently                                                                   
using "honey-buckets".   He asked what portion  goes to those                                                                   
communities.  Mr. Griffith replied  those projects are funded                                                                   
through the  Village Safe Water  Program, federal  funds, 75%                                                                   
federal  funds  and 25%  State  match  dollars.   That  is  a                                                                   
separate program and separate  budget request.  The municipal                                                                   
matching grant projects are 100% State funding.                                                                                 
9:42:44 AM                                                                                                                    
Representative  Gara inquired  the current  amount the  State                                                                   
spends on the Village  Safe Water projects and if  there is a                                                                   
back log  for those  projects.   Mr. Griffith responded  that                                                                   
each  year,  the  Department  attempts  to  capture  all  the                                                                   
available federal  funds for such  projects and  requests the                                                                   
necessary State dollars to capture those fund matches.                                                                          
Representative  Gara  reiterated  concern  for areas  of  the                                                                   
State  that do  not have  flush  toilets and  asked if  those                                                                   
projects would  be fully funded.   Mr. Griffith did  not have                                                                   
the  numbers available;  typically,  the Department  requests                                                                   
the same  or more than  the State portion.   The  funding for                                                                   
the  Village Safe  Water projects  this year  was around  $30                                                                   
million  dollars.  He  advised that  the Department  captures                                                                   
three times that amount in federal funds.                                                                                       
Representative Gara inquired if  there was a project backlog.                                                                   
Mr. Griffith replied  there is a backlog and  that currently,                                                                   
there is  an unfunded  need for both  the Village  Safe Water                                                                   
projects  &  the  municipal matching  grant  projects.    The                                                                   
Department is never able to fully  fund all the requests each                                                                   
9:45:19 AM                                                                                                                    
Vice-Chair  Stoltze  pointed  out  that last  year,  a  total                                                                   
spending of $120 million dollars  was provided to Alaska.  He                                                                   
pointed out  that there  are people in  his district  that do                                                                   
not  have safe  drinking water  and have  failed septic  tank                                                                   
issues.     The  problems  are   not  regional   and  placing                                                                   
infrastructure  near regional  hospitals  is  important.   He                                                                   
suggested  the needs were  being presented  from a  one-sided                                                                   
point of view and  that there are areas in urban  Alaska that                                                                   
also have serious concerns.                                                                                                     
9:47:49 AM                                                                                                                    
Representative   Hawker  echoed   similar  sentiments.     He                                                                   
commented  on the  allocation  and rationing  of the  State's                                                                   
capital investment and the consideration  of how well managed                                                                   
the money is spent  and how extensive the projects  are.  The                                                                   
Village  Safe   Water  projects  has  experienced   financial                                                                   
mismanagement over the years.   The Department has undertaken                                                                   
a significant  effort to  remedy  the  situation.   He warned                                                                   
that it is important to know all  the facts that are involved                                                                   
in making allocation choices.                                                                                                   
Co-Chair Meyer  questioned how the program would  be affected                                                                   
if the percentage was changed  from 50% to 60%.  Mr. Griffith                                                                   
responded that  the Department was  working on a  fiscal note                                                                   
indicating  those changes  and acknowledged  it will  require                                                                   
additional funds.                                                                                                               
Representative Gara  wanted to see "honey-buckets"  disappear                                                                   
in  Alaska.   Any  community that  is  still  using them  has                                                                   
serious  needs.    He  stressed  that  mismanagement  of  the                                                                   
program should not result in people  being deprived of proper                                                                   
water and sewer.                                                                                                                
Representative  Gara did not agree  with spending  more money                                                                   
on  the larger  municipality size  from 5,000  to 10,000  and                                                                   
then 50,000  to 60,000 for Anchorage.   He worried  about the                                                                   
smallest communities with fewer  than 1,000 receiving the 85%                                                                   
match.   He believed  that the amendment  would help  the mid                                                                   
and  big   size  communities   but  would  leave   the  small                                                                   
communities  without  funding dollars.    He  urged that  all                                                                   
community size numbers be adjusted.                                                                                             
9:51:05 AM                                                                                                                    
Representative  Nelson  addressed   the  Village  Safe  Water                                                                   
Program  concerns.   She  noted  that she  had  worked for  a                                                                   
contractor in that program.  She  emphasized that many of the                                                                   
villages  have  had  their  concerns  addressed.    The  ones                                                                   
currently  on  the  list  are  the ones  that  are  the  most                                                                   
challenging and expensive.  She  acknowledged there are unmet                                                                   
village  needs,  while  pointing   out  how  expensive  those                                                                   
projects will be.  She reiterated the challenges.                                                                               
9:53:01 AM                                                                                                                    
Representative  Kelly  requested  a  list  of  the  statewide                                                                   
locations that have more than  50 people still on the "honey-                                                                   
bucket" system.   He appreciated  the progress the  State has                                                                   
made.   He  worried  about  the  lower limit  and  encouraged                                                                   
focusing  on  the  areas  with  a  population  density.    He                                                                   
reminded members  that the bill is about revenue  sharing and                                                                   
that he intended to vote against it.                                                                                            
9:55:00 AM                                                                                                                    
Co-Chair Meyer  acknowledged the  increase to steel  and pipe                                                                   
costs and  realized there  is a  need and  demand in  his own                                                                   
Co-Chair Meyer  MOVED to  ADOPT Amendment 1  to Page  1, Line                                                                   
14,  deleting  "50"  and  inserting "60".    There  being  NO                                                                   
OBJECTION, it was adopted.                                                                                                      
Co-Chair  Meyer  MOVED  to  ADOPT  Amendment  2  to  Page  2,                                                                   
deleting all language  on Line 1 to the end of  the bill from                                                                   
"however, if a municipality.."   There being NO OBJECTION, it                                                                   
was deleted.                                                                                                                    
Representative Gara MOVED to ADOPT  Amendment 3, Page 1, Line                                                                   
11, deleting  "1,000" and inserting "2,000".   Representative                                                                   
Hawker OBJECTED.                                                                                                                
9:56:26 AM                                                                                                                    
Representative  Hawker  asked   which  communities  would  be                                                                   
affected by  that change.   Representative Gara did  not know                                                                   
but wanted to  make sure that all statewide  communities were                                                                   
taken care of.                                                                                                                  
Vice-Chair  Stoltze pointed  out  that technically,  Line  13                                                                   
would also need to be changed.                                                                                                  
Representative  Nelson  interjected that  she  only knew  one                                                                   
village  over  1,000,  Hooper  Bay.    Representative  Hawker                                                                   
listed  the other areas  affected by  that change:  Wrangell,                                                                   
North Pole, Houston, Hooper Bay, Craig and Delta Junction.                                                                      
9:57:21 AM                                                                                                                    
In response  to Representative Kelly, Mr.  Griffith explained                                                                   
that communities would be able  to participate in either one.                                                                   
In  order to  be eligible  for  the Village  Safe Water,  all                                                                   
second  class  cities  would  be  if  they  were  over  1,000                                                                   
residents.  The municipal matching  grants are distributed to                                                                   
the first class cities with a population of over 600.                                                                           
Representative  Kelly  believed  that  information  clarifies                                                                   
that that the scale should not  be adjusted; he spoke against                                                                   
the amendment.                                                                                                                  
Representative Gara WITHDREW Amendment 3.                                                                                       
9:59:43 AM                                                                                                                    
Representative  Kelly agreed that  when the State  grows into                                                                   
that situation, the idea should be revisited.                                                                                   
Representative  Nelson asked  the position  of Hooper  Bay on                                                                   
the Village Safe  Water list.  Mr. Griffith  interjected that                                                                   
the Department  currently has a large, aggressive  project to                                                                   
pipe  water and  sewer system  into  that area.   Funding  is                                                                   
available for that project from  the three year priority list                                                                   
to keep the project going for the next 2-4 years.                                                                               
Representative  Nelson asked if  Amendment 3 would  have been                                                                   
beneficial for  that community.  Mr. Griffith  responded that                                                                   
the amendment would  not have affected that  project.  Hooper                                                                   
Bay  is eligible  under the  Village Safe  Water program  for                                                                   
100% grants.                                                                                                                    
10:02:07 AM                                                                                                                   
Vice-Chair  Stoltze MOVED to  REPORT HCS  SB 303(FIN)  out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying zero note.  There  being NO OBJECTION, it was so                                                                   
HCS SB  303(FIN) was  reported  out of Committee  with  a "do                                                                   
pass" recommendation  and with a  new zero note by  the House                                                                   
Finance Committee.                                                                                                              

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