Legislature(2015 - 2016)BARNES 124
03/21/2016 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB314 | |
| HB289 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 314 | TELECONFERENCED | |
| += | HB 337 | TELECONFERENCED | |
| *+ | HB 289 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 314-AK REG ECON ASSIST. PROGRAM; EXTEND
3:21:25 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 314, "An Act relating to the Alaska regional
economic assistance program; extending the termination date of
the Alaska regional economic assistance program; and providing
for an effective date."
3:21:38 PM
REPRESENTATIVE HUGHES, speaking as the sponsor of HB 314,
informed the committee the bill extends the sunset date for the
Alaska regional economic assistance program - which supports
Alaska Regional Development Organizations (ARDORs) - for five
years to 2021, and also subjects the reporting requirements by
ARDORs to state appropriations. She explained that this change
means that if there are no state appropriations to the program,
ARDORs are not required to submit the reporting that is required
for state funding. In addition, if the Department of Commerce,
Community & Economic Development (DCCED) receives no funding,
DCCED is not obligated to submit related reporting to the
legislature. Representative Hughes said ARDORs are important to
regions throughout the state, and their work should continue.
In the past, the state has provided funding to this program in
the amount of $700,000, which has represented a portion of their
funding; in fact, approximately 89 percent of the total funding
to ARDORs came from other sources. Representative Hughes
provided examples of economic development projects, such as
those facilitated by the Copper Valley Development Association
and the Southwest Alaska Municipal Conference (SWAMC). She
advised that HB 314 will allow ARDORs to continue their
important work.
3:24:55 PM
STUART KRUEGER, Staff to Representative Hughes, Alaska State
Legislature, paraphrased from the following sectional analysis
[original punctuation provided]:
Section 1. Lists the duties of the department in
providing assistance to new and existing ARDORs. New
language added to make duties "subject to
appropriation".
Section 2. Provides the department with the authority
to make regional development grants to ARDORs. Limits
the number of grants that the department can make, and
allows the department to set procedures for grant
applications.
Section 3. Sets reporting requirement deadline of
February 1 of each year for the department to compile
a report on the activities of ARDORs that have
received funding in the preceding fiscal year. Also
establishes requirement for ARDORs that have received
assistance or funding in the preceding fiscal year to
provide information to the department to assist in the
compiling of the department's report.
Section 4. Extends the sunset date of program to July
1, 2021
Section 5. Retroactivity clause.
Section 6. Effective date.
REPRESENTATIVE COLVER surmised that the audit requirement in the
previous law was removed.
MR. KRUEGER advised the audit is ongoing.
REPRESENTATIVE COLVER questioned why the legislature should
extend the sunset date, if the program was not going to be
funded.
3:27:43 PM
REPRESENTATIVE HUGHES pointed out the extension is lengthened
from every three years to five years.
REPRESENTATIVE COLVER said he was not suggesting that the
extension be indefinite, but "we've got other more important
things to do than renew a lot of stuff every, every five, three
years ... especially if there's, we don't have any funding
involved."
CHAIR OLSON opined the bill would not be extended again.
REPRESENTATIVE COLVER asked whether ARDORs are anticipating
additional state funding, should the state revenue situation
change, or are ARDORs ready to obtain their own funding.
REPRESENTATIVE HUGHES acknowledged that ARDORs would seek state
funding; however, the designation by the state is necessary for
their work to continue and to access federal grants.
3:30:20 PM
CHAIR OLSON opened public testimony on HB 314.
3:30:40 PM
KATHIE WASSERMAN, Executive Director, Alaska Municipal League
(AML), stated AML works closely with ARDORs. In contrast to the
activities of AML, ARDORs facilitate economic development, and
AML has worked with Southeast Conference and SWAMC especially to
further their missions. Ms. Wasserman observed that members
support ARDORs financially, and in lieu of state funding, the
state must do all it can to allow them to fund themselves.
CHAIR OLSON asked if the bill was an AML priority.
MS. WASSERMAN said no.
3:32:18 PM
ROBERT VENABLES, Energy and Transportation Coordinator,
Southeast Conference, stated that the ARDOR program has
demonstrated its value over the past 28 years while serving as
the state's contribution to the regional initiatives for
developing Alaska's economy. In 1988, the legislature
recognized that a locally-driven initiative, in partnership with
the state, is the most effective way to create a strong and
healthy economy, thus the ARDOR program was created to plan and
support economic development at the regional level. He
questioned how the program can survive without fiscal support
from the state; in fact, in some regions, the program will not
continue and in all regions ARDORs will be diminished. Some
programs will go on and for them to succeed, ARDORs need the
status and structure of the program in order to contract with
state and federal governments to perform needed tasks, such as
regional energy planning. Mr. Venables pointed out even that
without cost, HB 314 is a vital part of the continued success
for the region. Southeast Conference continues to advocate for
the Alaska Marine Highway System, and its ARDOR status is
important to its ability to contract with federal and state
governments in this regard. He provided further examples of
Southeast Conference activities related to energy education and
energy savings. Mr. Venables concluded that the ARDOR program
is more vital than ever, and ARDORs are effective mechanisms to
support regional stability and economic growth in communities.
He urged for the passage of HB 314.
3:35:35 PM
REPRESENTATIVE JOSEPHSON directed attention to fiscal note
Identifier: HB314-DCCED-DED-3-8-16, which indicated
expenditures of $774,100, and asked whether the fiscal note has
been zeroed out.
MR. VENABLES understood that each ARDOR would receive about
$70,000 to use to leverage other funds from other sources. In
further response to Representative Josephson, he said as far as
he is aware, this is the first time the state has not funded at
least some portion of the ARDOR program.
3:36:31 PM
RICK ROESKE, Executive Director, Kenai Peninsula Economic
Development District (KPEDD) paraphrased from the following
prepared statement [original punctuation provided]:
ARDORs are unique to each region of Alaska that they
represent, which is good since they are flexible and
adaptable to each region. Staff works with a variety
of issues to each region and no one approach works
best for all areas. For over 25 years ARDORs have
developed programs and techniques to expedite the
necessary processes needed to encourage and foster
growth in their individual areas of the state. We
work cooperatively as a group, sharing information and
contacts to assist each other.
ARDORs use their State of Alaska funding to leverage
Federal economic development agency monies and other
local monies and or grant opportunities. The seed
money from the State of Alaska ARDOR often exceeds
four or five time the initial base amount of state
monies, and the EDA money is an important source of
federal revenues for the State of Alaska, extending
state dollars with federal match dollars. ARDORs work
with private, public sector, local and state
government to provide many bridge services. ARDORs
act as an additional resource for people that need
information but are not always sure where to get it.
KPEDD has pivoted with new initiatives to support the
Kenai Peninsula with projects like the Situation and
Prospects report produced in 2015. This was a
borough project that was dropped in 2009. KPEDD
restored five years of data, interpreting the nine key
areas that presented SWOT, strengths, weaknesses,
opportunities and threats. The PDF of this report is
available at our website in KPEDD.ORG.
BR&E business retention and expansion is a program
that KPEDD is using with DCCED to connect with
individual businesses to identify impediments to
business with the goal of retaining and increasing
employment. Adding one additional employee increases
payroll and circulation of monies in the local
economies and has been used very effectively outside
for two decades. KPEDD has used its onsite interviews
to identify nearly six months ago rapid reduction in
private oil and gas work force in the Cook Inlet. We
communicated this to local policy makers in an effort
to show a slowing local economy.
I have worked with two nonprofits that were developed
and housed in the business incubation center in 2007-
2008 and 2009 so I know the supports needed by
businesses in the initial phase are sustained locally
and receive support needed from KPEDD staff. Several
private industry businesses that still exist in the
central Kenai Peninsula staff employees that are very
successful due to their start with KPEDD and its BIC
system. Two past Executive Directors have written
initial grant applications that have been very
effective models in their respective areas of
expertise, providing dental and medical care and
overseeing the preservation of the Cook Inlet for
transit of gas and oil shipping.
3:40:24 PM
JASON HOKE, Executive Director, Copper Valley Development
Association (CVDA), stated that ARDORs provide information,
knowledge, and a network for each region in the state, in an
effective and efficient manner. For example, for the Alaska
Energy Authority, Department of Commerce, Community & Economic
Development, CVDA received $189,000 for an energy planning
project, which was more cost-effective than "through the state."
Mr. Hoke said CVDA helps businesses get going in an area of
approximately 23,000 square miles and with a population of
2,500. Since CVDA does not receive municipal, borough, or
tribal monies, it relies on independence. Mr. Hoke said
reauthorization for five years may bring new opportunities, and
he urged for the committee to continue the ARDOR program, which
provides a statewide network that addresses many issues, and is
worth the investment.
3:43:27 PM
DOUG GRIFFIN, Executive Director, Southwest Alaska Municipal
Conference (SWAMC), said SWAMC is a distinctive ARDOR as it
represents a region composed of three Native corporations,
Kodiak, the Aleutian Islands, and the Bristol Bay area. He
provided a brief history of SWAMC, and noted that this year
SWAMC was designated by the federal government as a partner in
the Manufacturing Extension Partnership program through the
National Institute of Standards and Technology, U.S. Department
of Commerce. This arrangement will provide up to $500,000 per
year for five years to focus on manufacturing in Southwest
Alaska and throughout the state.
3:45:51 PM
JON BITTNER, Vice President, Anchorage Economic Development
Corporation (AEDC), informed the committee that the ARDOR
designation is important to AEDC as it allows AEDC to more
easily partner with foreign companies, to access certain federal
programs, and to partner with the state. He encouraged the
committee to move the bill.
REPRESENTATIVE KITO asked whether the ability of ARDORs to
obtain federal or other grants is jeopardized without $770,000
in state support proposed by the governor.
3:47:50 PM
BRITTENY CIONI-HAYWOOD, Director, Division of Economic
Development, Department of Commerce, Community & Economic
Development, advised that losing state support would have "some
impacts to that." Typically, ARDORs use state funds to meet
match requirements for the U.S. Economic Development
Administration (EDA), U. S Department of Commerce, funds and
other federal grants. She agreed with previous testimony that
the state ARDOR designation carries weight with foreign entities
and other governmental agencies. Levels of other federal
funding is normally a three-to-one match.
REPRESENTATIVE KITO asked for a general idea of what ARDORs do
to provide economic support for communities.
MS. CIONI-HAYWOOD advised that the 2015 ARDOR annual reports
that are posted on the division's web site may describe projects
that would be cut. [2015 ARDOR annual reports were provided in
the committee packet.] Ms. Cioni-Haywood was unsure as to which
programs would be cut, because it depends on what ARDORs can
raise in other funding; however, rural ARDORs will have more of
a challenge raising matching funds.
CHAIR OLSON surmised that smaller ARDORs may have access to
certain funds.
REPRESENTATIVE LEDOUX questioned why the renewal is necessary if
ARDORs are not receiving state funds.
MS. CIONI-HAYWOOD advised that ARDORs have created a network and
if funding again becomes available, keeping the program intact
would facilitate reinstating the program. She restated that the
designation carries weight with federal agencies such as EDA,
the U.S. Small Business Administration, the U.S. Department of
Agriculture, and with foreign entities. The division also uses
the ARDOR network as a line of communication between regions
related to education and collecting data.
3:52:08 PM
REPRESENTATIVE JOSEPHSON expressed his belief that the state
should always leverage money when possible. He asked Ms. Cioni-
Haywood about other sources of money regarding her statement
that "smaller more rural ARDORs may have a harder time raising
money."
MS. CIONI-HAYWOOD opined that the Anchorage Economic Development
Corporation (AEDC) will feel a cut in state support, but because
it is in Anchorage it has support from the private sector;
however, for the director of the Copper Valley Development
Association (CVDA), maintaining and finding other sources of
funding to replace $70,000 would be harder. She said she was
unsure about the availability of funding from rural development
programs.
CHAIR OLSON suggested the Rasmuson Foundation and others are
primarily rural-oriented.
REPRESENTATIVE HUGHES, in further response to Representative
LeDoux, pointed out that ARDORs could continue to exist as
nonprofit organizations, but the state recognition is important
because they are designated as a regional economic development
organization.
REPRESENTATIVE LEDOUX directed attention to page 2, line 28,
which read:
... an economic development district under 42 U.S.C.
3171 qualifies for grants under this ...
REPRESENTATIVE LEDOUX observed that the organizations are
designated by the aforementioned federal code.
3:56:20 PM
REPRESENTATIVE HUGHES expressed her understanding is "part of
that is, is working in conjunction with the state designation."
3:56:39 PM
REPRESENTATIVE LEDOUX remarked:
So ARDORs need to be reauthorized in order to
designate them? I mean it would just seem like you
could designate them without reauthorizing a program
that you're not going to give any money to.
REPRESENTATIVE KITO said:
I think the state designation provides that official
channel for the federal government, and that there are
periods of time when an ARDOR may cease to exist or
operate, and then another organization could step up.
And the reauthorization period allows for those things
to be considered in, in the state program so that
those organizations would then be eligible for federal
funding.
CHAIR OLSON added that many nonprofit and municipal
organizations are hoping that more state funding will be
available within five years.
REPRESENTATIVE HUGHES observed that there is not an ARDOR in her
region at this time; moreover, the division has informed her
that even if funding is not available, an organization can
receive the designation.
3:58:33 PM
CHAIR OLSON, after ascertaining that no one further wished to
testify, closed public testimony.
REPRESENTATIVE COLVER said he was supportive of the bill and
would like to see the extension for ten years in order to
provide a shell of government authority and support; in fact, an
extension of the sunset date would help ARDORs with long-term
planning.
3:59:54 PM
CHAIR OLSON opined ten years would mean a loss of support for
the bill, and stressed the need to keep zero fiscal note
[Identifier: HB314-DCCED-DED-3-8-16] attached to the bill.
4:00:56 PM
REPRESENTATIVE HUGHES moved to report HB 314, Version 29-
LS1381\N, out of committee with individual recommendations and
the accompanying fiscal notes. There being no opposition, HB
314 was reported from the House Labor and Commerce Standing
Committee.