Legislature(2015 - 2016)HOUSE FINANCE 519

04/14/2016 08:30 AM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as
Download Video part 2. <- Right click and save file as
Download Video part 3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+= HB 81 EXEMPTION: LICENSING OF CONTRACTORS TELECONFERENCED
Moved CSHB 81(FIN) Out of Committee
+ SB 196 POWER COST EQ FUND: RESERVE ACCT;DIVIDEND TELECONFERENCED
Heard & Held
+ SB 210 COMMUNITY REVENUE SHARING/ASSISTANCE TELECONFERENCED
Heard & Held
+= HB 194 AK SECURITIES ACT; PENALTIES; CRT. RULES TELECONFERENCED
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
CS FOR SENATE BILL NO. 210(FIN) am                                                                                            
                                                                                                                                
     "An  Act  relating  to the  community  revenue  sharing                                                                    
     program;  and  changing  the   name  of  the  community                                                                    
     revenue  sharing program  to  the community  assistance                                                                    
     program."                                                                                                                  
                                                                                                                                
9:40:23 AM                                                                                                                    
                                                                                                                                
SENATOR  ANNA MACKINNON,  SPONSOR,  spoke to  the bill.  She                                                                    
related  that the  legislation  changed  the program's  name                                                                    
from  Community Revenue  Sharing  Program  to the  Community                                                                    
Assistance Program due to the  fact that the state currently                                                                    
"did not have anything to  share." She discussed that SB 210                                                                    
was  a  step  to  continue  providing  assistance  to  rural                                                                    
communities.  She   shared  that   some  members   of  urban                                                                    
communities  were pointing  to  rural communities  reproving                                                                    
them of  not contributing  their fair share  in the  form of                                                                    
taxes. In response,  she engaged in a  dialogue with Senator                                                                    
Hoffman  regarding  finding a  way  PCE  could help  support                                                                    
community revenue  sharing. She related that  the result was                                                                    
SB 196 proposing  the mechanism to provide  the support. She                                                                    
recounted that  50 percent of  the extra earning on  the PCE                                                                    
endowment   would   support    community   assistance.   She                                                                    
reiterated that  the bill  changed the  name of  the program                                                                    
from revenue  sharing to  community assistance.  She pointed                                                                    
to page  5, line 3 and  explained that the bill  changed the                                                                    
amount from  $220 thousand based  on the  population formula                                                                    
to $300 thousand  in order to create an  equitable spread to                                                                    
account for years of high  or low investment and ensure that                                                                    
the  larger communities  would still  receive assistance  in                                                                    
the  same "proportionate  way as  the smaller  communities."                                                                    
She  added  that if  the  revenue  sharing program  remained                                                                    
unchanged, she believed her hometown  would receive up to 40                                                                    
percent of revenue sharing and  was not attempting to "harm"                                                                    
her constituents, but felt that  the bill struck a "balance"                                                                    
between  rural  and urban  areas.  She  stated that  SB  196                                                                    
provided  a   revenue  stream  dependent  on   earnings  and                                                                    
safeguarded  that  rural  communities were  contributing  to                                                                    
help  with  community  assistance;   the  bill  reduced  the                                                                    
state's  obligation by  $30 million.  She detailed  that the                                                                    
bills took  a $180  million program stepped  it down  to $90                                                                    
million  within   three  years,  provided  $30   million  in                                                                    
assistance  and shared  the assistance  equitably throughout                                                                    
the state.                                                                                                                      
                                                                                                                                
Representative  Wilson spoke  to a  handout titled  "SB 210:                                                                    
Community Assistance  Payments FY 16-18 with  $300,000 Base"                                                                    
(copy  on file)  and  remarked that  the  payments were  not                                                                    
based  on population.  She asked  how  the percentages  were                                                                    
formulated.  Senator  MacKinnon  answered that  the  payouts                                                                    
were based on  a mathematical equation on page 5,  line 3 of                                                                    
SB  210.  She delineated  that  the  sponsors evaluated  the                                                                    
current distribution under the  $220 thousand multiplier for                                                                    
population and developed a formula  that was included in the                                                                    
original version  of the  bill. The  Senate did  not believe                                                                    
the  proportional spread  was fair  because the  new formula                                                                    
significantly reduced the payment  to larger communities and                                                                    
actually  increased  assistance  to rural  communities.  The                                                                    
sponsors  chose  a  formula  that  spread  the  proportional                                                                    
distribution  of  the reduction  more  fairly.  Under a  $20                                                                    
million, $30 million and $50  million program, the amount of                                                                    
$300  thousand was  the "ideal"  number where  the decreases                                                                    
were spread most proportionately.                                                                                               
                                                                                                                                
9:46:27 AM                                                                                                                    
                                                                                                                                
Representative  Wilson   pointed  out   that  the   city  of                                                                    
Fairbanks received  a 66 percent  reduction while  the North                                                                    
Star Borough received  a 64 percent reduction,  and the city                                                                    
of North Pole was reduced by  44 percent and the North Slope                                                                    
Borough received a 32 percent  reduction. She indicated that                                                                    
the  North  Slope Borough  was  capable  of generating  more                                                                    
money than  the North  Pole. She  was having  trouble making                                                                    
sense of  the distribution. Senator MacKinnon  answered that                                                                    
the  sponsors did  not "mess"  with the  underlying existing                                                                    
formula that prorated the distribution  of a revenue sharing                                                                    
plan. She stated that the  $300 thousand figure created "the                                                                    
appropriate  fairness  spread  in   the  reduction"  of  the                                                                    
program  while   creating  "the   least  impact"   on  small                                                                    
communities  because they  possessed "the  least ability  to                                                                    
respond" to  the reduction in  the program. She  stated that                                                                    
the  Legislative Finance  Division (LFD)  was available  for                                                                    
questions.                                                                                                                      
                                                                                                                                
ALEXI  PAINTER,   ANALYST,  LEGISLATIVE   FINANCE  DIVISION,                                                                    
ALASKA  STATE  LEGISLATURE,  explained  that  the  community                                                                    
assistance  program  provided  two payments;  a  per  capita                                                                    
payment   and  a   basic  amount.   The  basic   amount  was                                                                    
distributed  to all  communities  regardless of  population,                                                                    
the  $300   thousand  was  the   base  amount,   cities  and                                                                    
unincorporated  municipalities received  differing fractions                                                                    
of  that  amount.  Additionally,  there  was  a  per  capita                                                                    
distribution.  The bill  reduced the  base amount  from $384                                                                    
thousand  to   $300,000  and  changed  the   manner  of  the                                                                    
proration. In  the current formula,  the base began  at $384                                                                    
thousand but if  the distribution was below  $60 million the                                                                    
base  was  reduced pro  rata  to  a  floor of  $220,000.  He                                                                    
recounted that the  bill changed the base  to $300 thousand,                                                                    
the exact  middle amount, and did  not prorate as long  as a                                                                    
sufficient amount of funding was  available to pay the basic                                                                    
amount.                                                                                                                         
                                                                                                                                
Representative Wilson did  not have a problem  with the bill                                                                    
due to  the fact that she  did not think excess  funds would                                                                    
be  available  except   in  years  experiencing  exceptional                                                                    
returns. She  asked that based  on the numbers on  the chart                                                                    
provided, what was the assumption  regarding the amount that                                                                    
was distributed into the program "first."                                                                                       
                                                                                                                                
9:50:29 AM                                                                                                                    
                                                                                                                                
Senator  Mackinnon  replied  that   in  FY  2016  the  state                                                                    
distributed $57.3  million. In SB 210,  the distribution was                                                                    
proposed  at  $38.2 million.  She  explained  that the  $300                                                                    
thousand figure  was a new  multiplier. She pointed  to page                                                                    
5, line 1  of the bill that designated deletion  of the $384                                                                    
thousand  number.  She  reiterated that  two  formulas  were                                                                    
employed.  The  "larger  communities   may  feel  like"  the                                                                    
distribution  was "unfair."  The state  did not  have enough                                                                    
revenue to  share and based  on a comparison  exclusively of                                                                    
the  changes of  the percentages  it would  be difficult  to                                                                    
find a rational reason  for the distribution. She delineated                                                                    
that  two  formulas  applied between  the  borough  and  the                                                                    
population  and a  different  spreadsheet  was necessary  to                                                                    
show how it  worked. "Larger communities were  impacted to a                                                                    
greater   degree."   The   Senate  believed   that   "larger                                                                    
communities' had a  way to react" to  reduction in revenues.                                                                    
The  Senate  wanted  to  ensure  smaller  communities  could                                                                    
retain  firefighters  or   police  officers  and  therefore,                                                                    
offered additional  assistance while transitioning  into the                                                                    
reality of state budget shortfalls.                                                                                             
                                                                                                                                
Mr. Painter elaborated that most  of the distribution larger                                                                    
communities received  were through  the per  capita payment.                                                                    
Altering the  formula reduced the  amount of the  per capita                                                                    
payment  and proportionately  increased the  payment through                                                                    
the  base amount.  A larger  community that  mostly received                                                                    
its  distribution  from the  per  capita  payout received  a                                                                    
larger  reduction  than  a  smaller  community  that  mostly                                                                    
received payments from the base amount.                                                                                         
                                                                                                                                
Representative Wilson  noted that North Pole  only had 2,100                                                                    
people.  She  pointed to  the  North  Slope Borough  with  a                                                                    
population of  2870 and "a lot  of infrastructure, business,                                                                    
oil, and gas" and compared it  to the North Pole that lost a                                                                    
big industry  but received a  higher reduction. She  did not                                                                    
believe  the   numbers  "seemed  fair."   Senator  MacKinnon                                                                    
replied that  the numbers for the  unorganized boroughs were                                                                    
"very  different."  She  relayed  that  the  Senate  Finance                                                                    
Committee discussed  that boroughs received more  money. She                                                                    
warned that the population numbers  were not actual and were                                                                    
not included  in the borough  population. She stated  that a                                                                    
percentage  of borough  money was  also  distributed to  the                                                                    
North  Pole  based  on the  formula  for  boroughs.  Another                                                                    
formula used  for boroughs shared  revenues with  its cities                                                                    
in another portion of the revenue sharing program.                                                                              
                                                                                                                                
Mr.  Painter delineated  that the  population  count in  the                                                                    
formula  did  not  double  count  citizens.  The  population                                                                    
within  the  North  Pole  city limits  was  counted  in  its                                                                    
population but not  in the borough. The  North Slope Borough                                                                    
received  its distribution  from the  full base  figure. The                                                                    
city of North  Pole received one quarter of the  base set in                                                                    
statute but also received funding from the borough formula.                                                                     
                                                                                                                                
9:56:03 AM                                                                                                                    
                                                                                                                                
Representative Wilson announced that  most of the cities had                                                                    
charters that  limited the amount  of property tax  it could                                                                    
raise and  some already  charged a  sales tax.  She wondered                                                                    
why the reduction discrepancy between  the City of Fairbanks                                                                    
and the North  Star Borough of 2 percent existed  in the new                                                                    
formula.                                                                                                                        
                                                                                                                                
Co-Chair Thompson noted that the  bill would be heard before                                                                    
the committee again.                                                                                                            
                                                                                                                                
Mr. Painter answered that a  borough received a distribution                                                                    
from the  full base  of 300 thousand  and the  city received                                                                    
one quarter of the base.  The different treatment was due to                                                                    
the  split  between  the  per capita  amount  and  the  base                                                                    
amount.                                                                                                                         
                                                                                                                                
Senator  MacKinnon  elaborated that  the  program  was at  a                                                                    
"stair step down stage." She  recounted that the legislature                                                                    
did  not  recharge the  fund  with  the yearly  $60  million                                                                    
appropriation  and  the  fund dropped  to  a  $57.3  million                                                                    
program. She  expounded that currently,  the program  was in                                                                    
the second  stair step down  headed towards  elimination and                                                                    
eventually the  cities will not receive  anything. The stair                                                                    
step had  dropped from  $57.3 million  to $38.2  million for                                                                    
the  current  fiscal  year's   budget.  The  largest  factor                                                                    
affecting   the  proration   was   the   reduction  in   the                                                                    
distribution  in  FY  16  of $57.3  million  down  to  $38.2                                                                    
million  currently. The  proration was  not the  significant                                                                    
portion of  the change  to municipalities  it was  the stair                                                                    
stepping reduction to the program.                                                                                              
                                                                                                                                
Co-Chair  Thompson  interjected   that  "otherwise"  revenue                                                                    
sharing was being eliminated.                                                                                                   
                                                                                                                                
Senator MacKinnon  agreed and  restated that  SB 196  was an                                                                    
effort  to  support  the program  outside  of  general  fund                                                                    
appropriations.                                                                                                                 
                                                                                                                                
Co-Chair  Neuman asked  how  equitably  the current  version                                                                    
distributed revenue sharing  dollars to communities. Senator                                                                    
MacKinnon answered  that the new program  gained more equity                                                                    
through  lowering  the base  amount  to  $300 thousand.  She                                                                    
indicated that  the formula would  still work  if additional                                                                    
appropriations  were   made  to  the   community  assistance                                                                    
program.  She  restated  that  the  bills  were  "a  way  to                                                                    
stabilize  a  program  in recognition"  that  there  was  no                                                                    
revenue to share.                                                                                                               
                                                                                                                                
Co-Chair Neuman  asked why the  provisions did  not allocate                                                                    
100 percent of excess PCE  funds into revenue sharing, since                                                                    
PCE  was  funded  via  general  fund  dollars,  and  further                                                                    
preserve the  draw on  GF. He  voiced that  his goal  was to                                                                    
reduce GF draws.                                                                                                                
                                                                                                                                
10:01:18 AM                                                                                                                   
                                                                                                                                
Senator  MacKinnon responded  she shared  the same  goal but                                                                    
employed a different method to  attain it. She detailed that                                                                    
LFD determined  that $17  million was  the amount  of excess                                                                    
earnings  of the  PCE fund  from  FY 2018  through FY  2022.                                                                    
Through  discussions with  Senator  Hoffman  and the  entire                                                                    
Senate in  an effort  to stimulate support  for some  of the                                                                    
programs  rural  Alaska  received,  50  percent  up  to  the                                                                    
maximum of  $30 million would support  community assistance.                                                                    
She emphasized  that $30 million  would fund  the assistance                                                                    
program  at  100 percent  and  larger  communities would  be                                                                    
receiving a profit  from the PCE receipts.  She believed the                                                                    
provisions  were "a  good  compromise."  She explained  that                                                                    
historically the PCE fund was  founded because a significant                                                                    
amount of  money was invested  in large hydro  projects that                                                                    
exclusively  benefitted urban  areas  and rural  communities                                                                    
did not  see relief  from energy  costs. She  mentioned that                                                                    
her  goal  was to  reduce  general  fund spending  with  the                                                                    
bills. She  noted that the  state was spending GF  on Alaska                                                                    
Energy Authority (AEA) programs.  She remarked that the bill                                                                    
was a  compromise and that  the initial bill did  assign all                                                                    
of  the excess  to  the  GF but  rural  Alaska's needs  were                                                                    
different than urban Alaska's needs  and the current version                                                                    
attempted to strike a balance.                                                                                                  
                                                                                                                                
Co-Chair Neuman  understood the rationale.  He spoke  to the                                                                    
population   in   the   Mat-Su   region   growing   at   "an                                                                    
extraordinary rate." He cited a  figure of 100 thousand from                                                                    
"state  economists."   He  noted  that  the   Mat-Su  school                                                                    
district  experienced an  increase of  708 students  but its                                                                    
revenue sharing was  going down "disproportionately compared                                                                    
to how other communities were  affected." He had issues with                                                                    
the bill.  His goal was to  get the excess funds  to go back                                                                    
into communities  with lowered GF.  He stated that  the bill                                                                    
did not  contain a mechanism  that adjusted  for communities                                                                    
with a high  growth rate. He felt that the  amount of people                                                                    
affected  by  the reduction  in  revenue  sharing was  "very                                                                    
disproportionate  compared  to  the   needs"  in  a  rapidly                                                                    
growing community.                                                                                                              
                                                                                                                                
10:05:15 AM                                                                                                                   
                                                                                                                                
Representative Pruitt  favored the program's name  change to                                                                    
community  assistance. He  wanted to  better understand  the                                                                    
impact  to his  community.  He asked  about  how the  change                                                                    
affected  the   individual  tax  payer.   Senator  MacKinnon                                                                    
replied that she  was uncertain. She offered  that the other                                                                    
choice eliminated  the program completely. The  result would                                                                    
be a  cost to everyone's  community and her  community would                                                                    
lose $7.8  million directly.  She said  there was  simply no                                                                    
revenue  and the  legislation's intention  was not  to shift                                                                    
costs.  In FY  18, only  $8 million  was left  to share  and                                                                    
urban  areas would  take 40  percent  to 50  percent of  the                                                                    
funds.  The sponsors  were not  attempting  to impact  local                                                                    
communities   but  wanted   to   sustain   the  program   in                                                                    
"perpetuity."  She commented  that $8.5  million out  of the                                                                    
projected $17  million of excess  PCE funds  would "standup"                                                                    
the community assistance program.  She acknowledged that the                                                                    
issue was  contentious. She reiterated that  she and Senator                                                                    
Hoffmann  had been  searching for  a  way that  some of  the                                                                    
receipts  from the  $1 billion  PCE fund  would be  utilized                                                                    
fairly while protecting the $1  billion balance in the fund.                                                                    
She stated  that once  the PCE  fund was  spent it  would be                                                                    
impossible to replenish the fund.                                                                                               
                                                                                                                                
10:09:10 AM                                                                                                                   
                                                                                                                                
Representative  Kawasaki asked  about additional  changes to                                                                    
the revenue  sharing program listed  on page 5 of  the bill.                                                                    
He noted  that the provision  that changed the base  to $300                                                                    
thousand  rounded  the  amount  off to  the  nearest  dollar                                                                    
instead  of  nearest  thousand.   He  wondered  whether  the                                                                    
provision  was the  only change  besides  the total  amount.                                                                    
Senator  MacKinnon  replied  that  was the  only  change  in                                                                    
addition to the name change of the program.                                                                                     
                                                                                                                                
LAURA CRAMER,  STAFF, SENATOR ANNA MACKINNON,  affirmed that                                                                    
they were the only changes.  She confirmed that the rounding                                                                    
was changed  to the nearest $1.00  so the fund would  not go                                                                    
negative.   Representative   Kawasaki    agreed   that   the                                                                    
distribution  formula between  rural  and urban  communities                                                                    
was  disproportionate.  He  spoke  to  the  revenue  sharing                                                                    
change to  community assistance. He  did not favor  the name                                                                    
change and thought it sounded like public assistance.                                                                           
                                                                                                                                
Representative  Edgmon stated  that  he  supported the  bill                                                                    
even  though  it   was  not  a  "perfect."   He  viewed  the                                                                    
legislation as  a measure that incorporated  urban and rural                                                                    
members of  the Senate working  together to find  a solution                                                                    
in times of  downsizing the budget. He pointed to  page 6 of                                                                    
the spreadsheet handout  and noted that after  the first six                                                                    
listed  communities the  rest of  the 59  communities had  a                                                                    
population under  10 thousand. He thought  the program saved                                                                    
the  state   money.  He  maintained  that   without  revenue                                                                    
sharing, costs would shift form  the operating budget to the                                                                    
capital budget. He  voiced that in all of  the other revenue                                                                    
measures there were disparate numbers as well.                                                                                  
                                                                                                                                
Representative Munoz  stated that Fairbanks,  Ketchikan, and                                                                    
Kodiak   were   listed   twice  on   the   spreadsheet,   as                                                                    
municipalities  and   as  parts  of  boroughs.   Juneau  and                                                                    
Wrangell  were   also  municipalities  that  were   part  of                                                                    
boroughs and were only listed  once. She wondered why Juneau                                                                    
and  Wrangell  were  only  listed  once.  Co-Chair  Thompson                                                                    
clarified  that boroughs  contain cities  inside it  such as                                                                    
the  Mat-Su borough  that contained  Palmer and  Wasilla. He                                                                    
added  that  cities  did not  exist  inside  municipalities.                                                                    
Representative   Munoz    ascertained   that    Juneau   was                                                                    
incorporated as  one municipality  with one  city government                                                                    
and  therefore,  was  only listed  once.  Co-Chair  Thompson                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Senator   MacKinnon  referenced   Representative  Kawasaki's                                                                    
concern  that some  of  the rural  payments  were very  high                                                                    
relative  to the  low population  numbers. She  reminded the                                                                    
committee  that some  of the  rural communities  were listed                                                                    
separately and  were also  part of a  borough where  some of                                                                    
its  population existed  within  a  borough. She  reiterated                                                                    
that  the  formula  did  not  double  count  population  and                                                                    
cautioned  against  using   population  numbers  to  compare                                                                    
proportionality. She offered to send  an analyst from LFD to                                                                    
member's offices  to explain the breakdown  in each member's                                                                    
district.                                                                                                                       
                                                                                                                                
Co-Chair  Thompson  noted  that  the  Fairbanks  North  Star                                                                    
Borough listed population along  with the listed populations                                                                    
of Fairbanks and  North Pole on the  spreadsheet equaled the                                                                    
actual population of the Fairbanks North Star Borough.                                                                          
                                                                                                                                
10:16:37 AM                                                                                                                   
                                                                                                                                
Representative Gara stated that  the revenue sharing program                                                                    
had  changed many  times over  the years.  He asked  why the                                                                    
current formula  was eventually stepped  down to zero  by FY                                                                    
2019.  Senator  MacKinnon  answered  that  most  likely  the                                                                    
reason  was  due  to  the   legislature's  decision  to  not                                                                    
recharge  the   fund.  She  recounted  that   the  fund  was                                                                    
originally set  up at the  full allocation of  $180 million;                                                                    
$60 million  was drawn  and paid according  to the  pro rata                                                                    
formula.                                                                                                                        
                                                                                                                                
Mr.  Painter  expounded  that   annually  one-third  of  the                                                                    
balance was  distributed which amounted to  $60 million. The                                                                    
previous year the legislature  appropriated $52 million into                                                                    
the fund;  not the  full $60  million and  distributed $57.3                                                                    
million.  Without another  appropriation, one  third of  the                                                                    
funds balance of approximately $115  million was $38 million                                                                    
and  eventually decreased  to $25  million. Current  statute                                                                    
prohibited any distribution if the  fund's balance was below                                                                    
$20   million.  Representative   Gara   asked  for   further                                                                    
clarification. Mr. Painter replied  that the legislature did                                                                    
recharge the fund during the  last fiscal year in the amount                                                                    
of   $52  million.   He  added   that   the  formula   using                                                                    
progressivity was  no longer in effect.  Representative Gara                                                                    
asked  what amount  was necessary  to  recharge the  current                                                                    
fund. Mr.  Painter answered that  the balance  was currently                                                                    
$115  million  and  an  appropriation  of  $75  million  was                                                                    
necessary.                                                                                                                      
                                                                                                                                
Co-Chair Thompson OPENED public testimony.                                                                                      
                                                                                                                                
SHIRLEY  MARQUARDT,  MAYOR,   UNALASKA,  believed  the  name                                                                    
change was  very significant and  agreed that the  state did                                                                    
not have the  revenue to share anymore. She  opined that the                                                                    
revenue  sharing  program  had  always  been  assistance  to                                                                    
communities  to "keep  the lights  on."  She referenced  the                                                                    
community  of  Atka  that literally  had  a  difficult  time                                                                    
keeping the lights on and  the money they received under the                                                                    
continuation  of  the  program   assisted  them  with  power                                                                    
generation. She  noted the difficulty in  providing services                                                                    
in rural communities. She supported the bill.                                                                                   
                                                                                                                                
KATHIE WASSERMAN, ALASKA MUNICIPAL  LEAGUE, relayed that the                                                                    
league  examined the  formula regularly  and the  inequities                                                                    
shifted between  all areas.  The previous  version contained                                                                    
larger  decreases  to  the  Fairbanks  North  Star  Borough.                                                                    
Manipulating the  formula was very difficult  and she opined                                                                    
that  at  some  point  it  had  to  become  acceptable  with                                                                    
existing inequities. Her only concern  was the absence of an                                                                    
effective date and  the league "was not certain  that the SB
210 formula  can operate" under the  $38.2 million provision                                                                    
that was effective  in July 2016. She  recommended using the                                                                    
old formula to distribute the $38.2 million in FY 18.                                                                           
10:24:22 AM                                                                                                                   
                                                                                                                                
RICK   KOCH,    CITY   MANAGER,    CITY   OF    KENAI   (via                                                                    
teleconference), voiced  that currently a variable  base was                                                                    
built into the  formula and the legislation  did not contain                                                                    
a  variable base.  He believed  eliminating the  variability                                                                    
created the  problem with the  calculation. He  deduced that                                                                    
at $30  million the base  of $300 thousand worked  but noted                                                                    
that  as   the  distribution   dropped  the   formula  "went                                                                    
completely out of whack." He  cited that at an allocation of                                                                    
$30 million with the base  of $300 thousand the distribution                                                                    
for  Fairbanks  was  roughly  $877 thousand  but  at  a  $20                                                                    
million  distribution it  would drop  to $78  thousand which                                                                    
was  a  91  percent  drop. He  added  that  Anchorage  would                                                                    
experience a  95 percent  drop from  a distribution  of $7.8                                                                    
million  to  $406 thousand  under  the  same allocations.  A                                                                    
small community  of 322  would receive  $83 thousand  or $75                                                                    
thousand  and  only  experience  slightly  less  than  a  10                                                                    
percent reduction  under the  same distribution  factors. He                                                                    
believed  the   disparity  was  too  wide   and  a  variable                                                                    
distribution provision  would resolve the issue.  He offered                                                                    
to provide a proposed plan to the committee members.                                                                            
                                                                                                                                
10:27:11 AM                                                                                                                   
                                                                                                                                
DR. JON ERICKSON, MANAGER, CITY  AND BOROUGH OF YAKUTAT (via                                                                    
teleconference), spoke in support of  SB 210. He stated that                                                                    
revenue sharing made up 16  percent of the borough's budget.                                                                    
He  reported   that  Yakutat  collected  $350   thousand  in                                                                    
property  tax and  in order  to  make up  the difference  he                                                                    
needed to increase  property tax two and one  half times. In                                                                    
addition,  Yakutat  was  funding  the  school  at  the  full                                                                    
contribution rate  at $503 thousand. Yakutat  had been using                                                                    
revenue sharing  to make up  the differences in  its various                                                                    
budgets.   He  indicated   that  if   revenue  sharing   was                                                                    
eliminated he  would be forced to  reduce the administrative                                                                    
staff from  6 to 3  employees. He understood  that "everyone                                                                    
had to pitch in and make it work somehow."                                                                                      
                                                                                                                                
Co-Chair Thompson CLOSED public testimony.                                                                                      
                                                                                                                                
CSSB  210(FIN)  am  was  HEARD and  HELD  in  committee  for                                                                    
further consideration.                                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
HB 194 CS WORKDRAFT FIN GH1060-S.pdf HFIN 4/14/2016 8:30:00 AM
HB 194
HB 81 CS WORKDRAFT vP.pdf HFIN 4/14/2016 8:30:00 AM
HB 81
House Members - SB 196ce.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
SB 196 Fin updated sectional.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
sb 196 Leg finance spread sheets.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
CSSB 210(FIN) AM - Sectional Analysis.pdf HFIN 4/14/2016 8:30:00 AM
SB 210
CSSB 210(FIN) AM E.A.PDF HFIN 4/14/2016 8:30:00 AM
SB 210
CSSB 210(FIN) AM Sponsor Statement.pdf HFIN 4/14/2016 8:30:00 AM
SB 210
CSSB210(FIN) AM - Community Assistance Distribution.pdf HFIN 4/14/2016 8:30:00 AM
SB 210
HB 81 Summary of Changes Pversion 8 March 2016.pdf HFIN 4/14/2016 8:30:00 AM
HB 81
196 new sponsor statement.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
4 14 16 SB 210 by Borough.pdf HFIN 4/14/2016 8:30:00 AM
SB 210