Legislature(2001 - 2002)
05/02/2002 09:05 AM House RLS
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 20-MUNICIPAL DIVIDEND: AID TO MUNIS & OTHERS CHAIR KOTT announced that the first order of business would be HOUSE BILL NO. 20, "An Act relating to state aid to municipalities and certain other recipients, and for the village public safety officer program; relating to municipal dividends; relating to the public safety foundation program; and providing for an effective date." Number 0072 REPRESENTATIVE McGUIRE moved to adopt Version 22-LS0008\P, Cook, 5/1/02, as the working document. There being no objection, Version P was before the committee. Number 0058 TIM BENINTENDI, Staff to Representative Carl Moses, Alaska State Legislature, testified on behalf of the sponsor. Mr. Benintendi explained that Version P merely addresses a concern that the Department of Community & Economic Development (DCED) had regarding the provision for aide to unincorporated communities within boroughs. Basically, the qualification criteria was tightened so that nonmunicipal and nongovernmental entities couldn't access the program. He directed attention to page 3, Section 4, which specifies a list of services from which any three must provided in order to access the funding programs. The services of fire protection, emergency, and medical services were merged into one category. Therefore, an unincorporated community would have to provide more of those services in order to access capital matching grants and revenue sharing. Mr. Benintendi pointed out that the other change is in Section 3 where the language was tightened in order to ensure that the service areas are more tightly identified for funding through either the borough or directly from the program. Mr. Benintendi related his belief that the committee should have a letter from [DCED] in acceptance of these changes. Number 0276 REPRESENTATIVE JOULE related his understanding that search and rescue services are [now] included in the emergency services category. MR. BENINTENDI agreed with Representative Joule's understanding. REPRESENTATIVE BERKOWITZ inquired as to how many communities would be impacted by changing the list. MR. BENINTENDI deferred to Sally Saddler, DCED. He estimated that the number of communities impacted [under this new list] is probably around 70-80 communities. Number 0372 SALLY SADDLER, Business Development, Specialist/Legislative Liaison, Division of Community and Business Development, Department of Community & Economic Development, emphasized that there is no clear list of the number of communities that would or would not qualify. However, the best estimate is probably about 30 communities would qualify [under Version P]. REPRESENTATIVE JOULE asked whether those 30 communities that would not be able to participate currently participate in safe communities and revenue sharing. MS. SADDLER deferred to Bill Rolfzen, DCED. Number 0435 BILL ROLFZEN, State Revenue Sharing Municipal Assistance, National Forest Receipts, Fish Tax; Division of Community and Business Development; Department of Community & Economic Development; explained that [Version P] expands the program to include unincorporated communities within organized boroughs that currently don't participate in revenue sharing or capital matching grants. Therefore, there would be 30 new communities within organized boroughs that would be able to [utilize the program]. REPRESENTATIVE JOULE clarified that he had misheard. MR. ROLFZEN noted that the first year those communities would qualify would be 2004, and therefore the department would put out the applications in the next application cycle and review the applications in order to make a determination. MR. BENINTENDI, in response to Representative Berkowitz, answered that he believes [HB 20] is over and above the provisions of HB 304. CHAIR KOTT informed the committee that the effective date of HB 20 had to be changed in order to conform with HB 304. Number 0559 TAMARA COOK, Director, Legal and Research Services Division, Legislative Affairs Agency, pointed out that HB 20 and HB 304 have been evolving on separate paths. In HB 304, there was a decision made to make distributions from the permanent fund at the beginning of the fiscal year, while HB 20 has been drafted to [make distributions], per existing statutes, from the earnings reserve account on the last day of the fiscal year. If HB 304 were to pass, Ms. Cook said that she wanted to make sure that HB 20 wouldn't conflict with the change in the way the money would flow. Therefore, on page 3, line 29, of Version P the language "On or after July 1 and after all other transfers under this section" was inserted. That language was inserted because there is no knowledge as to what transfers will exist under the section. If HB 304 doesn't pass, HB 20 needs to work with the existing statutes. The existing statutes specify that money is to be transferred for the dividend payment and inflation-proofing on June 30. Therefore, she felt that the language "On or after July 1" was safe language. Furthermore, the language "and after all other transfers under this section" was inserted in case there are different transfers upon the passage of HB 304. At this point, the money paid to the municipal dividend will be paid last, whatever other money is paid, and the payment will be made some time after July 1. She clarified that the reason the language doesn't specify "on July 1" is because there is no knowledge what effective date these bills will have. She estimated that these bills probably wouldn't take effect until some time in September of the next fiscal year, assuming there are no effective dates. MS. COOK expressed her hope that [Version P] is drafted such that the municipal dividend takes effect the beginning of fiscal year 2003 and applies to that year and thereafter. This mechanism would avoid an effective date entirely. Number 0804 REPRESENTATIVE BERKOWITZ related his hope that if the [legislature] does move to a 5 percent percent of market value (POMV) payout, 50 percent to the general fund (GF) and 50 percent to dividends, then the dividend in HB 20 wouldn't come from the personal dividend side of the 50 percent payout but rather from the GF side. Representative Berkowitz said, "I don't think that we ought to be going above total expenditures of 5 percent on the market value." Under the current [language], [HB 20] seems to be a separate expenditure above, which seems fiscally imprudent. REPRESENTATIVE PORTER said he didn't disagree with Representative Berkowitz's comments. However, the problem is that no one knows the fate of either bill. If it appears that both bills will pass, then that issue can be faced. CHAIR KOTT closed public testimony. Number 0907 REPRESENTATIVE PORTER moved to report CSHB 20, Version 22- LS0008\P, Cook, 5/1/02, out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE KOHRING objected and stated his fundamental disagreement with the concept of HB 20. He noted that he didn't believe it's prudent for the legislature to move down the path of starting to spend money from the [earnings reserve of the permanent dividend] fund because it could eventually lead to spending the [permanent dividend] fund [itself]. REPRESENTATIVE McGUIRE countered with her belief that HB 20 is a great bill because municipal revenue sharing has been reduced to the point at which it is virtually nonexistent. Therefore, HB 20 provides one way in which to continue to support municipalities. She remarked that taking a small portion of the earnings reserve of the permanent fund dividend and transferring to the municipalities is fiscally prudent and responsible. A roll call vote was taken. Representatives Morgan, McGuire, Berkowitz, Joule, Porter, and Kott voted to report CSHB 20, Version 22-LS0008\P, Cook, 5/1/02, from committee. Representative Kohring voted against reporting CSHB 20 from committee. Therefore, CSHB 20(RLS) was reported out of the House Rules Standing Committee by a vote of 6:1.
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