Legislature(1999 - 2000)
02/17/2000 08:05 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 137-MUNICIPAL DIVIDEND PROGRAM Number 2957 CHAIR JAMES announced the next order of business is HOUSE BILL NO. 137, "An Act relating to the municipal dividend program; and providing for an effective date." REPRESENTATIVE MOSES spoke about the sponsor statement for HB 137. He said HB 137 is a simple, noncontroversial bill for a municipal dividend-sharing program. He explained that one way to reduce the state budget would be to pass services back to local government. For example, the state maintains roads; perhaps that service could be passed back to local government. He believes that the legislature should take some of the permanent fund earnings and give them to local government because, in his opinion, that gives government back to the people. He envisions increasing municipal sharing for local education under HB 137. However, he acknowledged that many people in the state want their permanent fund dividend to grow, whereas HB 137 would slow its growth rate. He emphasized that HB 137 would encourage communities to incorporate so that they could collect the tax. Nevertheless, he realizes it is difficult to arrive at a fair formula for HB 137. Number 2739 CHAIR JAMES indicated she agrees with the general concept of HB 137. She remarked that the famous [permanent fund advisory] vote of September 14, 1999, is the driving motivator behind some of the proposed tax legislation. She emphasized that everyone seems to have a different idea of what the September vote meant. Personally, she had voted "yes" because she is a "constitutionalist" and the Alaska State Constitution specifically says that the legislature has control over how the permanent fund earnings are spent. She acknowledged that without having a spending plan, however, government grows naturally and would soon have spent all of the permanent fund earnings. She does believe that Alaska should have a dividend program because it protects the corpus of the fund, she added. She believes the public might support the expenditure of permanent fund earnings by the legislature if the public could see that it benefited their local communities. CHAIR JAMES noted that some public services - such as infrastructure, police protection and public health - might be better administered at the local level. She said she is willing to consider HB 137 as an aid in designing a use of the permanent fund earnings in a way that the public would accept. She acknowledged that the higher the dividend amount, the more danger results to the public mentality in regard to productive effort. However, she is not in favor of a cap, and before the legislature touches one cent of the permanent fund earnings, the legislature needs to design a dividend program that will work for the long term. She said the permanent fund dividend (PFD) program now in place does not function properly because it is based on a five- year average. The legislature should design a system to provide a dividend that allows the public to buy the things they need and, at the same time, gives the legislature authority from the constituency to protect the permanent fund. This will take much effort on the part of the legislature, and the legislature should start now. Number 2502 REPRESENTATIVE MOSES commented that the September 14, 1999, election was flawed and really did not tell the legislature anything. He emphasized that the legislature is a policy-making body and knows what should be done and what the state needs. He expanded on that subject by saying that as leaders, legislators need to work to change the public mind set of "cut the budget." CHAIR JAMES said that the legislature has raised taxes anyway, despite the September vote, by imposing user fees on many state services. She reminded the committee that when the legislature cut municipal assistance and revenue sharing, the legislature automatically caused people in local communities to pay more for the same services that they had been receiving. She added that, in her opinion, a government service for which an individual pays is a tax; therefore, she does not see any difference between user fees and taxes. Number 2349 FRANK KELTY, Mayor, City of Unalaska, testified via teleconference from Unalaska in support of HB 137, which he said is very important legislation. Noting that his community had experienced cuts to municipal revenue sharing, he said Unalaska subsidizes the state jail contract at a cost of $250,000 per year. Furthermore, two years ago the water quality employee was laid off, and last year the food safety inspector was laid off and the office was completely closed; consequently, he envisioned that HB 138 would help Unalaska offset some of those costs. He said that the City of Unalaska takes care of all of its own road maintenance, ports and harbors. He indicated that he believes HB 137 is a program that communities could use to address their needs. He explained that Unalaska is not looking for a handout but already has a 3 percent sales tax, an 11.75 percent mil rate, and a 2 percent local landing tax on all fish delivered; they also fund their school at the maximum amount allowed. He emphasized that Unalaska does take pride in its community. He urged the committee to move HB 138 forward. Number 2219 CHAIR JAMES asked Mayor Kelty how the statewide initiative to limit property tax will affect Unalaska. MR. KELTY replied that Unalaska would feel the impact in personal property tax revenues. Right now, Unalaska realizes about $2.7 million each year from real property tax. He emphasized that Unalaska will definitely oppose the initiative. CHAIR JAMES noted that HB 137 needs some more drafting; it says Alaska needs a municipal dividend program but does not say how that will be accomplished. She agreed with Representative Moses' statement that government closest to the people is the most effective. She emphasized that decision making needs to return to the local level where every individual has a right to contact his or her borough assembly members and attend borough assembly meetings. She offered her opinion that Alaskans want the state to stop spending money, which is a psychology that the legislature can overcome by putting government closer to the people. [HB 137 was held.]
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