Legislature(2005 - 2006)CAPITOL 106

04/07/2005 08:00 AM House STATE AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 86 OMBUDSMAN HOTLINE TELECONFERENCED
Heard & Held
+= HB 144 ADVISORY VOTE ON COMMUNITY DIVIDEND TELECONFERENCED
Moved CSHB 144(STA) Out of Committee
+= HB 177 STATE EMPLOYEE RETIREMENT CONTRIBUTIONS TELECONFERENCED
Moved Out of Committee
+= HB 191 PUBLIC EMPLOYEE/TEACHER RETIREMENT TELECONFERENCED
Scheduled But Not Heard
+= HB 238 PUBLIC EMPLOYEE/TEACHER RETIREMENT TELECONFERENCED
Scheduled But Not Heard
Bills Previously Heard/Scheduled
= HB 201 PERM. FUND DIVIDEND APPS OF MILITARY
Moved CSHB 201(STA) Out of Committee
HB 144-ADVISORY VOTE ON COMMUNITY DIVIDEND                                                                                    
                                                                                                                                
8:31:52 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON announced that the  next order of business was HOUSE                                                               
BILL NO.  144, "An  Act authorizing an  advisory vote  on whether                                                               
income  of the  Alaska  permanent fund  in  the earnings  reserve                                                               
account should be used for a community dividend program."                                                                       
                                                                                                                                
REPRESENTATIVE  GATTO moved  to  adopt  the committee  substitute                                                               
(CS) for  HB 144,  Version 24-LS0517\F, Cook,  4/6/05, as  a work                                                               
draft.   There  being  no  objection, Version  F  was before  the                                                               
committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE BILL THOMAS, Alaska  State Legislature, as sponsor                                                               
of  HB 144,  noted the  changes incorporated  into Version  F, as                                                               
follows:   On page 1,  line 13, the  words "up to"  were inserted                                                               
before  "$150,000,000";  and  language  was added  to  define  an                                                               
unorganized borough as a borough  "where 25 or more people reside                                                               
as a  social unit."  He  referred to an amendment  [that had been                                                               
moved by  Representative Lynn at  the previous hearing of  HB 144                                                               
on March 8 and was left  pending], and said that he would support                                                               
that amendment today.                                                                                                           
                                                                                                                                
8:34:36 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON  asked if a  change had been  incorporated regarding                                                               
local tax relief.                                                                                                               
                                                                                                                                
8:34:46 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMAS indicated  that that  would be  covered by                                                               
Representative Lynn's "conceptual amendment."                                                                                   
                                                                                                                                
8:34:59 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON asked, "But do we have that on page 2, line 4?"                                                                    
                                                                                                                                
REPRESENTATIVE THOMAS replied, "Part of  it, yeah."  He clarified                                                               
that "Representative Lynn wanted it a little more firm."                                                                        
                                                                                                                                
8:35:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO, regarding the issue  of a social unit, said                                                               
any group of  25 people could get together and  call themselves a                                                               
social unit to get money.                                                                                                       
                                                                                                                                
REPRESENTATIVE THOMAS offered his  belief that the terminology is                                                               
the same as was used before, "during revenue sharing."                                                                          
                                                                                                                                
REPRESENTATIVE  GATTO   reiterated  his  concern   regarding  the                                                               
potential for fraud.                                                                                                            
                                                                                                                                
REPRESENTATIVE THOMAS  said he does  not know if  fraud "happened                                                               
last time."                                                                                                                     
                                                                                                                                
8:37:16 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN recollected that  his amendment had addressed                                                               
sales tax as well as property tax.                                                                                              
                                                                                                                                
REPRESENTATIVE  THOMAS offered  his belief  that "the  main thing                                                               
was tax relief."                                                                                                                
                                                                                                                                
8:38:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ELKINS, [regarding  the issue  of social  units],                                                               
noted that outside  his own district there  are service districts                                                               
that  have  already banded  together  and  have their  own  water                                                               
system.  He said, "When I  first read this, I thought that that's                                                               
what  Representative Thomas  was  talking about."   He  suggested                                                               
that perhaps the  language should be spelled out  to specify that                                                               
the group must be organized and  recognized by the state in order                                                               
to apply for money.                                                                                                             
                                                                                                                                
REPRESENTATIVE THOMAS pointed  out that if an area  has water, it                                                               
is probably  within a  borough or  municipality, and  the borough                                                               
would receive the  funds for the service area.   In response to a                                                               
clarification  from  Representative  Elkins   that  he  had  been                                                               
referring  to Hollis,  Representative Thomas  offered his  belief                                                               
that "we'd have them on the unorganized municipality."                                                                          
                                                                                                                                
CHAIR  SEATON  said  someone from  the  Department  of  Commerce,                                                               
Community, &  Economic Development (DCCED) would  be available to                                                               
address the concerns and statements made thus far.                                                                              
                                                                                                                                
REPRESENTATIVE   THOMAS,  in   response   to   a  question   from                                                               
Representative  Gruenberg,  reiterated the  changes  incorporated                                                               
into Version F, and confirmed  that the language regarding "local                                                               
tax relief" on page 2, line 4 is also a change.                                                                                 
                                                                                                                                
8:41:48 AM                                                                                                                    
                                                                                                                                
BILL ROLFZEN, Local  Government Specialist; Municipal Assistance,                                                               
National  Forest  Receipts,  Fish  Tax,  PILT  -  Juneau  Office;                                                               
Division   of  Community   Advocacy;   Department  of   Commerce,                                                               
Community, & Economic Development  (DCCED), said "social unit" is                                                               
defined in the regulations that  govern the state revenue sharing                                                               
program, and  those regulations have been  used for approximately                                                               
25 years.   He said,  "My recollection is  we look at:   business                                                               
establishments; density  of the population; [and]  the ability of                                                               
residents  to move  in and  out  of the  community freely,  which                                                               
eliminates communities  that might be like  religious communes or                                                               
military bases, and so on."  He continued as follows:                                                                           
                                                                                                                                
     Through the years ... we have had new communities ...                                                                      
       apply.  They have to have either a Native village                                                                        
     council   or   an  incorporated   nonprofit   community                                                                    
     association incorporated  under state law, in  order to                                                                    
     receive  that money;  and  that  money funnels  through                                                                    
     those  two   organizations  for  the  benefit   of  the                                                                    
     community.                                                                                                                 
                                                                                                                                
     And for  a new community,  when they apply we  ... send                                                                    
     out a survey, they have  to answer our questions, [and]                                                                    
     we do  an investigation.  A  lot of times we  have them                                                                    
     do a population  head count census, where  they have to                                                                    
     document every  resident in the  community.  So,  we do                                                                    
     have procedures in place.                                                                                                  
                                                                                                                                
MR.  ROLFZEN,  in  response  to a  question  from  Chair  Seaton,                                                               
confirmed  that "this  is the  same standard  that has  been used                                                               
through past revenue sharing programs."                                                                                         
                                                                                                                                
8:43:27 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO asked  how the  department would  address a                                                               
situation  where 5  families  live  on a  remote  lake, each  not                                                               
involved in  any way with the  others, but all united  in calling                                                               
themselves a social unit in order to collect money.                                                                             
                                                                                                                                
8:43:46 AM                                                                                                                    
                                                                                                                                
MR. ROLFZEN answered as follows:                                                                                                
                                                                                                                                
     Again, we'd  look at:   How  are they  dispersed around                                                                    
     the lake;  what's the density;  are there  any business                                                                    
     establishments  there;  [and]  do   they  look  like  a                                                                    
     community [and] act  like a community?   They'd have to                                                                    
     form  a   nonprofit  community   association,  although                                                                    
     that's a fairly simple process.                                                                                            
                                                                                                                                
MR. ROLFZEN spoke of areas that grow over time.                                                                                 
                                                                                                                                
8:44:50 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  requested  a copy  of  the  regulation                                                               
being discussed.                                                                                                                
                                                                                                                                
8:45:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER asked  if there  would be  anything wrong                                                               
with  25  individuals coming  together  and  deciding to  form  a                                                               
community.    She  suggested  that   as  long  as  they  met  the                                                               
requirements, it would not necessarily be fraudulent.                                                                           
                                                                                                                                
MR. ROLFZEN  said that's correct.   He added for the  record that                                                               
the  definition  of  a  social  unit  is  very  similar,  if  not                                                               
identical, to  the definition that the  local boundary commission                                                               
uses when it determines "whether or not there's a community."                                                                   
                                                                                                                                
8:46:20 AM                                                                                                                    
                                                                                                                                
MR.  ROLFZEN,  in  response to  a  question  from  Representative                                                               
Gruenberg, said  he would  provide a copy  of the  local boundary                                                               
commission's  definition  of social  unit,  which  is defined  in                                                               
another regulation.                                                                                                             
                                                                                                                                
REPRESENTATIVE GRUENBERG  said he would  like to be  certain that                                                               
the  legislative history  is  clear as  to  which definition  the                                                               
committee may decide to use.                                                                                                    
                                                                                                                                
8:47:57 AM                                                                                                                    
                                                                                                                                
MR.  ROLFZEN, in  response to  Representative Gatto's  reiterated                                                               
concern about fraud, said there  is a public purpose provision in                                                               
the [Alaska  State] Constitution and  in statute.  When  money is                                                               
received, it has to be for the  good of the community as a whole.                                                               
He  indicated that  the  department would  frown  on providing  a                                                               
community  dividend  with  that  money.     He  added  that  that                                                               
basically  would not  be allowed.   He  noted that  the 25-person                                                               
threshold  has  been   in  law  since  1980,  and   he  said  the                                                               
legislature has the right to increase that number.                                                                              
                                                                                                                                
8:48:57 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAMRAS  said, "I'm warm  to your bill."   He noted                                                               
that former  Governor Walter Hickel  has written  about community                                                               
dividends.   He stated his  concern that  if the bill  is passed,                                                               
the  communities would  absorb  the money  distributed and  still                                                               
come back and ask the  legislature to solve the problem regarding                                                               
the Public Employees' Retirement  System (PERS) and the Teachers'                                                               
Retirement System  (TRS).  He  asked the  sponsor if he  would be                                                               
support amending  the bill  to require  that communities  use the                                                               
money that would be distributed  to solve their PERS/TRS problems                                                               
first.                                                                                                                          
                                                                                                                                
8:51:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMAS directed  attention  to  [the sentence  on                                                               
page 2, lines  4-5, which read]:  "The community  dividend may be                                                               
used for local tax relief or  for any other public purpose by the                                                               
municipality or  community."  He  suggested, "Maybe  somewhere in                                                               
the intent language we could put that in there."                                                                                
                                                                                                                                
REPRESENTATIVE  RAMRAS   asked  Representative  Thomas   and  the                                                               
committee  to "consider  ... [looking]  at  this as  a tool  that                                                               
would  be  used  as  a  primary  tool  to  cure  each  individual                                                               
community's PERS/TRS problem."  As  a result, he continued, those                                                               
communities that have a lesser  problem would only use a fraction                                                               
of the  community dividend to  solve their problems,  while those                                                               
with larger problems,  such as the City of  Fairbanks, would have                                                               
to use almost all their dividend money.                                                                                         
                                                                                                                                
REPRESENTATIVE  THOMAS responded  that he  thinks [Representative                                                               
Ramras' suggestion] would be fine, as  long as it is not put into                                                               
or complicates the  actual ballot question.  He  revealed that he                                                               
has been speaking  with former Governor Walter  Hickel about this                                                               
issue.    He said  it  will  be at  least  two  years before  the                                                               
communities can get well.                                                                                                       
                                                                                                                                
8:54:29 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON  indicated that he  thinks it's correct to  say that                                                               
the money  may be used for  tax relief or other  public purposes,                                                               
including fixing  "holes" in the  retirement system;  however, he                                                               
stated  that he  doesn't want  to leave  the impression  that the                                                               
intent  is to  tell  citizens  they can  no  longer  come to  the                                                               
legislature and ask for help with problems.                                                                                     
                                                                                                                                
8:55:54 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RAMRAS  indicated  that  he  concurs  with  Chair                                                               
Seaton,  who, he  added, knows  better than  anyone at  the table                                                               
that  the PERS/TRS  issue  represents a  unique  problem for  the                                                               
State of  Alaska for "the  foreseeable horizon."   He said  he is                                                               
just  considering [HB  144] as  a vehicle  "to perhaps  cure this                                                               
proportionally."  He observed that  some communities have handled                                                               
their PERS problem  more responsibly [than others].   He said his                                                               
own  community   of  Fairbanks  has  handled   the  problem  less                                                               
responsibly.                                                                                                                    
                                                                                                                                
8:56:31 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ELKINS  stated  that he  thinks  the  legislature                                                               
would be wrong to take the  ability of the local governing bodies                                                               
away from "saying  how to spend this money."   He said, "You want                                                               
the local  governments to  be in  favor of  this issue."   Having                                                               
served on  a local municipality,  he said it's important  to give                                                               
the municipalities  flexibility, or  "this may not  be sellable."                                                               
He added, "And I for one want to see this sell."                                                                                
                                                                                                                                
8:57:34 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON said  he thinks it's good to get  on record that the                                                               
contributions  related to  PERS/TRS  would  be considered  "other                                                               
public purpose".                                                                                                                
                                                                                                                                
8:57:52 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  stated his hope  that the bill  be kept                                                               
clean, to  allow the local government  to make the decision.   To                                                               
Mr. Rolfzen, he  said the definitions provided  are technical and                                                               
the  two  regulations  look  different.     He  opined  that  the                                                               
committee should  hear more testimony  on the issue, to  get some                                                               
specific legislative history before  deciding which definition to                                                               
use.   He noted that in  some Native villages there  may be "some                                                               
access  that is  restricted."   He emphasized  the importance  of                                                               
being careful before possibly denying  some small Native villages                                                               
access to "these funds."                                                                                                        
                                                                                                                                
9:01:00 AM                                                                                                                    
                                                                                                                                
KEVIN RITCHIE, Alaska Municipal League  (AML), said AML urges the                                                               
committee to  move the  bill out  of committee.   He  thanked the                                                               
sponsor of the  bill and reiterated that the  original concept of                                                               
this  issue  belonged to  former  Governor  Walter Hickel.    Mr.                                                               
Ritchie opined that  Governor Hickel is a  community advocate who                                                               
reflects the spirit of the  [Alaska State] Constitution.  Much of                                                               
the  focus  of the  constitution  is  on strong  communities  and                                                               
making decisions.  In that regard,  he said, the sharing of funds                                                               
that  belong to  everybody  in the  state really  is  one of  the                                                               
higher purposes  of state government.   He said one of  the basic                                                               
principals of the constitution is  allowing people in communities                                                               
to make  their own  decisions regarding how  to provide  the best                                                               
services and meet situations as they arise.                                                                                     
                                                                                                                                
MR. RITCHIE said,  "This doesn't say, 'Here's some  free money to                                                               
go do something  with'; this is part of the  overall structure of                                                               
state  government,  which  would   allow  municipalities  to  ...                                                               
communicate with the state about needs  and issues."  He said the                                                               
state would rightly  decide, "We think you can get  by with this;                                                               
we're not  going to deal with  a particular issue."   He said the                                                               
issue of  PERS/TRS might  be one  of the  negotiation discussions                                                               
with local government.  He continued as follows:                                                                                
                                                                                                                                
     Obviously we've not been  totally successful in getting                                                                    
     state government to do everything  we've ever asked.  I                                                                    
     think there's a very  strong bargaining tool there, and                                                                    
     that in  the future  what happens with  communities and                                                                    
     the  community  dividend  will  depend  still  on  that                                                                    
     relationship  between the  state  and its  communities.                                                                    
     However,  communities  will  be   more  ...  active  in                                                                    
     solving their own  problems, and I think  that can only                                                                    
     be a good thing for the state of Alaska.                                                                                   
                                                                                                                                
MR. RITCHIE  said one of the  reasons that AML has  supported the                                                               
community dividend concept  for so long is because  of its belief                                                               
in  strong communities  and  moving some  more  of the  decision-                                                               
making ability back down to the community level.                                                                                
                                                                                                                                
MR.  RITCHIE  recognized  Representative Carl  Moses  for  having                                                               
introduced  a similar  bill for  many  years and  being a  strong                                                               
advocate "for  this concept."   He said  one of the  reasons this                                                               
year or next may be an  opportune time to bring this issue before                                                               
the public is that local  taxes are becoming a significant issue.                                                               
At this point, he noted, because  there are no state taxes, there                                                               
are low  overall taxes  in Alaska,  but in  many cases  there are                                                               
some of  the highest property  taxes in the  U.S.  He  added, "In                                                               
some cases [Alaska  ranks] seventeenth in the U.S.  in our larger                                                               
communities."  He  said he thinks the public  is probably willing                                                               
to  consider a  plan  that  could, for  the  long  term, make  it                                                               
possible to  provide good schools  and local  services, [without]                                                               
increasing  property  or  sales  tax.   Mr.  Ritchie  noted  that                                                               
although Alaska  is competitive with  the rest of the  world, the                                                               
state's cost are higher.                                                                                                        
                                                                                                                                
MR.  RITCHIE  advocated for  HB  49  to  create a  small  revenue                                                               
sharing program.  He revealed,  "This year you've lost 10 percent                                                               
of the  cities in rural Alaska;  they just don't work  any more -                                                               
they don't have meetings [and]  they don't provide services."  In                                                               
some cases, he  continued, those services are being  picked up by                                                               
tribal organizations or nonprofit groups,  but in some cases they                                                               
don't exist  any more.   He said public  safety has taken  a nose                                                               
dive.  During medical emergencies,  sometimes people can't get to                                                               
the airport because of bad roads,  or the airport isn't open.  He                                                               
added, "So, we're really seeing  suffering in rural Alaska."  Mr.                                                               
Ritchie  surmised that  by  this  time next  year,  if a  revenue                                                               
sharing bill  doesn't pass,  half of the  cities in  rural Alaska                                                               
will be  lost.   He reported  that 10 percent  have been  lost so                                                               
far.     The  Department  of   Commerce,  Community   &  Economic                                                               
Development has  a list  of 17  communities so  far in  debt that                                                               
it's  unlikely  they'll  be  able  to  survive,  and  another  39                                                               
communities that have  made serious cuts in  their local services                                                               
that affect the public.                                                                                                         
                                                                                                                                
MR. RITCHIE  reminded the committee  that "this is  an election,"                                                               
and he  asked them to  consider what the  public would want.   He                                                               
noted that in  1999 an election was held  regarding the permanent                                                               
fund, and that  election was a disaster.  He  said, "If that were                                                               
to happen to this issue, of  course, that would be a disaster for                                                               
communities."   However, he  mentioned an  election held  in 2002                                                               
regarding the  tax cap.  He  said, "The tax cap  election sort of                                                               
gets at some  of the heart of what we're  really talking about in                                                               
a community dividend."  He said  it was about being able to build                                                               
schools,  provide good  education  and good  roads,  and to  keep                                                               
taxes  as low  as possible.   When  that election  initiative was                                                               
originally  put on  the  ballot, polling  was  conducted, and  70                                                               
percent of the people polled  thought that limiting taxes through                                                               
a statewide  tax cap was  a pretty good  idea.  After  a yearlong                                                               
campaign,  the final  election  showed  a flip  in  numbers -  70                                                               
percent of  Alaskans thought  it was  a bad idea  - and  [the tax                                                               
cap] failed in every precinct in  the state.  He said, "What that                                                               
required  was a  huge  effort,  and we  have  yet  to bring  that                                                               
nucleus together for our communities."                                                                                          
                                                                                                                                
MR.  RITCHIE  emphasized  that  that  work  must  be  done.    He                                                               
clarified, "If  we can't  get the communities  to buy  into that,                                                               
including schools,  business organizations, and so  on, then this                                                               
may not be the  right time to bring this forward.   And so, we're                                                               
going  to  continue  working  on  that  and  get  back  to  you."                                                               
Notwithstanding that,  he reiterated  his recommendation  that HB
144  be  moved  out  of  committee.   Mr.  Ritchie  reminded  the                                                               
committee  that, in  a  campaign,  the public  will  look to  the                                                               
legislature  and the  governor for  some guidance;  therefore, he                                                               
said he hopes  that if the bill passes, it  will be with "general                                                               
support, or at least not active advocacy against it."                                                                           
                                                                                                                                
9:10:35 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON said he thinks  the language regarding adjusting for                                                               
inflation may "raise a huge  target for opposition," because some                                                               
people  may  say  that  all  the earnings  of  the  fund  may  be                                                               
consumed.  He asked Mr. Ritchie to comment.                                                                                     
                                                                                                                                
9:11:47 AM                                                                                                                    
                                                                                                                                
MR.  RITCHIE responded  that at  this  point he  doesn't have  an                                                               
opinion to  share [from  AML], because  the organization  has not                                                               
"run the  language."   He added, "We  will be,  hopefully, giving                                                               
that kind of testimony in the future if it continues forward."                                                                  
                                                                                                                                
9:12:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  he  would like  to  see the  bill                                                               
move; however,  he wants  to ensure "this  thing is  done right."                                                               
He stated  his concern about  how the  money will really  be used                                                               
and who decides how  it will be used.  He said  he hopes that the                                                               
committee will keep the bill clean.                                                                                             
                                                                                                                                
9:14:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO  said  Mr.  Ritchie hit  a  nerve  when  he                                                               
brought  up the  statewide  tax  cap.   He  said  he thinks  what                                                               
defeated  the tax  cap  was  that the  people  in Anchorage,  who                                                               
comprise the  largest section  of the  population, were  going to                                                               
determine how much any other community  would be able to tax.  He                                                               
said  the issue  before the  committee is  about wanting  to give                                                               
[communities] money  and telling them  what to do with  it, which                                                               
he  said is  the same  issue [as  the tax  cap].   He said  he is                                                               
hesitant to  put something  out to  the general  population where                                                               
everyone  gets  a  vote,  "even  though  it  determines  how  any                                                               
individual community  might want to  use something that  was part                                                               
of their resources."                                                                                                            
                                                                                                                                
9:16:24 AM                                                                                                                    
                                                                                                                                
MR. RITCHIE  concurred with Representative  Gatto that  the issue                                                               
during the  2000 tax cap election  was one of local  control.  He                                                               
said there  really is  a strong local  control feeling  in Alaska                                                               
communities,  called  independence  and  pioneer  spirit.    That                                                               
spirit is what  killed the tax cap election.   He agreed that the                                                               
way to kill an idea is to make it too complex.                                                                                  
                                                                                                                                
9:17:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  said, "It  stems from  this concept  of the                                                               
permanent  fund   dividend.     He  asked  everyone   to  imagine                                                               
distributing  the   permanent  fund   dividend  (PFD)   and  then                                                               
specifying on what people can and cannot spend it.                                                                              
                                                                                                                                
9:18:00 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON  pointed out that  the only  place in the  bill that                                                               
specifies how the  money can be spent occurs on  page 2, lines 4-                                                               
5.  He  asked Representative Gatto, "Is  your interpretation that                                                               
it may be  used for any public purpose?"   He also asked, "You're                                                               
not  saying that  you would  want these  to be  used for  private                                                               
purposes, are you?"                                                                                                             
                                                                                                                                
9:18:22 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GATTO explained  that  his concern  is that  that                                                               
language  can be  used by  individuals who  are good  at defining                                                               
what a public purpose is.                                                                                                       
                                                                                                                                
9:20:28 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO  voiced a concern  that the 25  people could                                                               
all belong  to one family, and  he suggested that it  is possible                                                               
that the state may  be handing out $25,000 a year  to a family of                                                               
25 living in a remote location.                                                                                                 
                                                                                                                                
MR. ROLFZEN concurred that that  scenario could take place; there                                                               
is nothing in the  bill saying that group of 25  people has to be                                                               
comprised of separate families.                                                                                                 
                                                                                                                                
9:22:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG reiterated  his  concern regarding  the                                                               
definitions of  phrases in the bill.   In response to  a question                                                               
from Chair Seaton, he emphasized that  he has no desire to change                                                               
a word of the related regulations.                                                                                              
                                                                                                                                
CHAIR SEATON suggested including a  letter of intent, which would                                                               
state  the  committee's  intent to  maintain  the  definition  of                                                               
revenue sharing currently used [by DCCED].                                                                                      
                                                                                                                                
9:24:29 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG clarified  that he  wants to  determine                                                               
what  the committee  means  in  the bill  by  the phrase  "social                                                               
unit".   He said he wants  Mr. Ralston to "walk  us through these                                                               
two  regulations and  point up  any  differences."   He said  the                                                               
committee must determine "which one  we want to reference," which                                                               
will take time.                                                                                                                 
                                                                                                                                
CHAIR SEATON responded that the  committee could do that after it                                                               
considers amendments.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GRUENBERG  asked  Mr.   Ralston  to  provide  the                                                               
committee with a "side by side" analysis.                                                                                       
                                                                                                                                
CHAIR SEATON said  that a committee vote may be  necessary to see                                                               
"if we want to  go there."  He said currently  there are a number                                                               
of  programs  that  are  administered  by  the  state  addressing                                                               
revenue  sharing, community  dividends,  and fish  taxes, and  he                                                               
does not want to get into revamping  what a social unit is in the                                                               
state.  He stated his preference  is for the committee to use the                                                               
definition that has  been used for years for  the revenue sharing                                                               
program.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  the people  voting on  this issue                                                               
will need to know what it means.                                                                                                
                                                                                                                                
CHAIR  SEATON indicated  that simplifying  the regulation  beyond                                                               
what's adopted  in regulation  is beyond the  scope of  the bill.                                                               
He said  he would accept a  motion from the committee  to "either                                                               
look at changing that or adopting those."                                                                                       
                                                                                                                                
9:28:41 AM                                                                                                                    
                                                                                                                                
MR.  ROLFZEN, in  response to  Chair Seaton,  confirmed that  the                                                               
regulation  found   in  3AC.130.093  is  used   for  the  funding                                                               
programs,  including  revenue sharing,  capital-matching  grants,                                                               
and  financial  aide  programs.    He  said  the  Local  Boundary                                                               
Commission  (LBC)]   regulation  is  used   infrequently,  almost                                                               
exclusively in  conjunction with forming  a borough, where  it is                                                               
necessary to have two bonafide communities within an area.                                                                      
                                                                                                                                
CHAIR SEATON closed public testimony.                                                                                           
                                                                                                                                
9:29:44 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO moved Conceptual Amendment 1 as follows:                                                                   
                                                                                                                                
     On page 1, line 13:                                                                                                        
     Delete "adjusted for inflation"                                                                                            
                                                                                                                                
     On page 2, lines 12-13:                                                                                                    
     Delete "adjusted for inflation"                                                                                            
                                                                                                                                
CHAIR  SEATON asked  if  there was  any  objection to  Conceptual                                                               
Amendment  1.   There  being  none,  Conceptual Amendment  1  was                                                               
adopted.                                                                                                                        
                                                                                                                                
9:30:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN moved  to adopt  Conceptual  Amendment 2  as                                                               
follows   [original   punctuation    provided,   including   some                                                               
handwritten changes]:                                                                                                           
                                                                                                                                
     Page 2,  Line 4 [sic] at  the end of sentence  ad [sic]                                                                    
     the sentence:                                                                                                              
                                                                                                                                
     "however  a  municipality  that levies  property  taxes                                                                  
     shall use  no less than  20% of the  Community Dividend                                                                  
     proceeds  to  lower property  taxes  or  for sales  tax                                                                  
     relief.                                                                                                                  
                                                                                                                                
     TEXT TO READ:                                                                                                            
                                                                                                                                
     The  community  dividend  may be  used  for  local  tax                                                                    
     relief  or   for  any  other  public   purpose  by  the                                                                    
     municipality or community,  however a municipality that                                                                  
     levies property  taxes shall  use no  less than  20% of                                                                  
     the  Community  Dividend  proceeds  to  lower  property                                                                  
     taxes and or for sales tax relief.                                                                                       
                                                                                                                                
REPRESENTATIVE  ELKINS objected  to Conceptual  Amendment 2.   He                                                               
said  he  likes  the  overall  amendment,  but  he  has  problems                                                               
"telling the  local unit how  to spend this  money."  He  said he                                                               
thinks the 20 percent ties the  hand of the local municipality to                                                               
use its judgment.                                                                                                               
                                                                                                                                
REPRESENTATIVE  LYNN responded  that  he thinks  "it" serves  the                                                               
public purpose of  not taxing homeowners out of their  homes.  He                                                               
said the earnings  from the permanent fund belong  to everyone in                                                               
Alaska, not just to the municipalities.   He said he thinks there                                                               
ought  to  be sideboards  that  would  ensure  that at  least  20                                                               
percent of  the fund  would go into  helping Alaskans  keep their                                                               
homes.  He said people can understand property and sales taxes.                                                                 
                                                                                                                                
CHAIR SEATON  noted that there  are a number of  communities that                                                               
get property tax from the pipeline  or a pump station.  He asked,                                                               
"Does this  mean that 20 percent  of this money would  have to go                                                               
back to reimbursing  the oil company for the property  tax on the                                                               
pipeline,  since  the  pipeline   is  the  predominate  piece  of                                                               
property that flows through those communities?"                                                                                 
                                                                                                                                
REPRESENTATIVE  LYNN  said he  doesn't  have  an answer  to  that                                                               
question.                                                                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG  said:   "This would  get money  to only                                                               
some  people   in  the  state:     those  people  who   dwell  in                                                               
municipalities that have  local taxes.  It doesn't  get any money                                                               
to  the  people in  the  bush  who  don't  have local  taxes  and                                                               
probably need  the money even  more than a  lot of people  in our                                                               
districts ...."                                                                                                                 
                                                                                                                                
REPRESENTATIVE GATTO remarked that if  a property tax is zero and                                                               
20  percent  is  applied  to  that, "then  you  can't  do  what's                                                               
required in the amendment."                                                                                                     
                                                                                                                                
REPRESENTATIVE LYNN  moved an  amendment to  Conceptual Amendment                                                               
2, so that  if there is no  property or sales tax  in place, then                                                               
the entire amount would go to the municipality.                                                                                 
                                                                                                                                
CHAIR SEATON  objected to the  amendment to  Conceptual Amendment                                                               
2.   He said Conceptual Amendment  2 seems to read  that it would                                                               
only be for those communities that  have a sales tax or municipal                                                               
tax already.                                                                                                                    
                                                                                                                                
9:36:57 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ELKINS said  he thinks  the local  municipalities                                                               
know when they need to fix  the potholes that affect everybody in                                                               
the community, or  give property tax relief.   The sideboards, he                                                               
said, will  limit [the municipality's]  ability to function  as a                                                               
free unit.                                                                                                                      
                                                                                                                                
9:38:03 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   LYNN  withdrew   the  amendment   to  Conceptual                                                               
Amendment 2.                                                                                                                    
                                                                                                                                
9:38:31 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said  Version  F  would  require  that                                                               
community dividends go to two  types of locations: municipalities                                                               
that are incorporated  in some manner, and social  units that are                                                               
not.   Under Conceptual  Amendment 2, the  only people  who would                                                               
get cash  back or  relief are  those in  incorporated areas.   He                                                               
observed  that [Conceptual  Amendment  2] is  saying, "We're  not                                                               
giving you  cash, but  we're reducing your  taxes so  you'll have                                                               
more cash in your pockets."   The individuals would get the money                                                               
if  they live  in a  municipality; however,  there is  no similar                                                               
mechanism for people who live in a social unit.                                                                                 
                                                                                                                                
9:40:50 AM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.  Representative Lynn  voted in favor                                                               
of Conceptual  Amendment 2.  Representatives  Gardner, Gruenberg,                                                               
Elkins, and Seaton voted against  it.  [Representatives Gatto and                                                               
Ramras  said   "pass"  and  were   not  asked  to   vote  again.]                                                               
Therefore, Conceptual Amendment 2 failed.                                                                                       
                                                                                                                                
CHAIR SEATON offered his understanding  that there was a question                                                               
before the committee regarding  [his previously suggested] letter                                                               
of  intent, which  he  said would  specify  that the  legislature                                                               
intends for  the definitions  that have  been used  for municipal                                                               
revenue  sharing  and  other  tax  sharing  purposes  to  be  the                                                               
definitions that will be used  for "this dividend."  He clarified                                                               
that that language  would not be put into the  proposition to the                                                               
voters, but  it would be  a clear indication of  which definition                                                               
the legislature is using.                                                                                                       
                                                                                                                                
9:41:57 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  reiterated  that  he  would  like  Mr.                                                               
Rolfzen to briefly discuss the difference in regulations.                                                                       
                                                                                                                                
9:42:24 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON, as a matter of  procedure, moved to send the letter                                                               
of intent as previously outlined.                                                                                               
                                                                                                                                
9:42:58 AM                                                                                                                    
                                                                                                                                
CHAIR  SEATON,  in response  to  a  question from  Representative                                                               
Gruenberg, clarified  that the letter  of intent would  note that                                                               
the definition to be used would be  that of DCCED, which is 3 AAC                                                               
130.093, rather than LBC's definition from 3 AAC 110.920.                                                                       
                                                                                                                                
GRUENBERG  objected  [to the  motion  to  include the  letter  of                                                               
intent], for purposes of discussion.                                                                                            
                                                                                                                                
9:43:25 AM                                                                                                                    
                                                                                                                                
MR.  ROLFZEN said  he  does  not deal  with  the LBC  definition.                                                               
Regarding   the    revenue-sharing   distribution,    he   listed                                                               
considerations  as  follows:     density  of  population,  school                                                               
enrollment,  voter  enrollment,  and   issues  to  indicate  that                                                               
families are acting on a  community level versus on an individual                                                               
level.   He  indicated  that another  section  of the  regulation                                                               
addresses whether  an area  is accessible by  the public  and for                                                               
what  purpose  the area  is  used.    For  example, it  would  be                                                               
determined  if the  people  are there  strictly  for purposes  of                                                               
their employment, such as in a  cannery or logging camp.  Another                                                               
question would  be whether  the community  is exclusive  and only                                                               
admits those of a certain  religion.  Mr. Rolfzen concluded, "So,                                                               
these are  all factors we  look at very carefully  in determining                                                               
whether or not they're eligible."                                                                                               
                                                                                                                                
CHAIR SEATON illustrated  an example whereby a  piece of property                                                               
is owned by  someone and used as  a ranch, and no  one else could                                                               
buy  property  there.   He  surmised  that that  ranch  "wouldn't                                                               
qualify under these definitions,"  because it is entirely private                                                               
property.                                                                                                                       
                                                                                                                                
MR. ROLFZEN answered that's correct.                                                                                            
                                                                                                                                
REPRESENTATIVE GRUENBERG said he  can foresee public access being                                                               
restricted  for  at least  two  reasons:   One,  because  legally                                                               
nobody had the right to get  on the property; or two, because the                                                               
property is physically  isolated, surrounded by a  refuge, or has                                                               
"an unworkable  air field."   He offered examples  whereby access                                                               
would be restricted at least part  of the year.  He asked, "Would                                                               
that be restricted within the meaning of this regulation?"                                                                      
                                                                                                                                
9:47:28 AM                                                                                                                    
                                                                                                                                
MR. ROLFZEN answered,  "I would say, 'Absolutely not,'  if it's a                                                               
temporary restriction based on natural  circumstances and so on."                                                               
In  response  to a  question  from  Representative Gruenberg,  he                                                               
confirmed he is talking about a legal restriction.                                                                              
                                                                                                                                
9:47:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG  asked   questions  pertaining  to  the                                                               
difference in language between the  LBC and DCCED definitions and                                                               
made a suggestion to consider a change in phrasing.                                                                             
                                                                                                                                
9:48:28 AM                                                                                                                    
                                                                                                                                
CHAIR SEATON interjected that Mr.  Rolfzen does not represent the                                                               
LBC, and he  stated his intent to "go to  the question" regarding                                                               
the motion to include the letter of intent.                                                                                     
                                                                                                                                
9:48:55 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER, regarding  the [DCCED]  definition of  a                                                               
social  unit,  noted that  it  does  not  address the  number  of                                                               
people.   She said, "So, our  bill that says '25  or more people'                                                               
would be '25 or more people' in a community as defined in this."                                                                
                                                                                                                                
MR.  ROLFZEN answered  that's correct.   He  said the  population                                                               
threshold is  set in statute,  so "they would absolutely  have to                                                               
have at  least 25  year-round residents  in order  to get  to the                                                               
point  where we  would  actually  even look  at  the social  unit                                                               
definition."                                                                                                                    
                                                                                                                                
9:49:37 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  clarified that he wanted  to know which                                                               
of the two regulations the committee would "look at."                                                                           
                                                                                                                                
CHAIR SEATON stated that what the  committee has before it is the                                                               
[DCCED]  regulations that  are  used for  all  tax and  municipal                                                               
revenue  sharing.   He  said the  letter of  intent  that he  has                                                               
proposed would  go forward and  say:  "Those are  the regulations                                                               
we are  going to  use."  He  said Representative  Gruenberg could                                                               
[uphold his objection].                                                                                                         
                                                                                                                                
REPRESENTATIVE GRUENBERG responded, "No, I'm not."                                                                              
                                                                                                                                
CHAIR  SEATON asked  if there  was any  further objection  to the                                                               
letter of  intent.   [No further objections  were stated  and the                                                               
letter of intent was treated as adopted.]                                                                                       
                                                                                                                                
9:50:20 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO moved Amendment 3 as follows:                                                                              
                                                                                                                                
     On page 2, line 1:                                                                                                         
     Delete "25"                                                                                                                
     Insert "50"                                                                                                                
                                                                                                                                
REPRESENTATIVE GATTO  explained that he  wanted the number  to be                                                               
higher in order  to avoid "some amount of abuse"  that he said he                                                               
suspects would occur.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GRUENBERG  objected.   He  asked  the sponsor  if                                                               
there  were any  groups that  would be  excluded as  a result  of                                                               
[Amendment 3].                                                                                                                  
                                                                                                                                
9:51:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMAS  said  there   is  a  list  of  population                                                               
included in  the committee packet.   He  stated that he  does not                                                               
know of any  families with 25 people in them.   He indicated that                                                               
he could  trust [DCCED] to  implement the regulations.   He said,                                                               
"In fear  of losing ... some  of the smaller villages,  I guess I                                                               
would oppose the amendment."                                                                                                    
                                                                                                                                
9:51:50 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  THOMAS,  in response  to  a  question from  Chair                                                               
Seaton,  clarified that  he does  not have  a list  of population                                                               
bases for the unorganized [communities].                                                                                        
                                                                                                                                
9:53:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE    THOMAS,   in    response    to   comments    by                                                               
Representatives  Gardner   and  Gruenberg,  reiterated   that  he                                                               
opposes [Amendment 3].                                                                                                          
                                                                                                                                
9:53:57 AM                                                                                                                    
                                                                                                                                
A  roll call  vote was  taken.   Representatives  Gatto and  Lynn                                                               
voted  in  favor  of Amendment  3.    Representatives  Gruenberg,                                                               
Elkins,  Ramras, and  Seaton voted  against it.   [Representative                                                               
Gardner  said,  "pass"   and  was  not  asked   to  vote  again.]                                                               
Therefore, Amendment 3 failed by a vote of 2-4.                                                                                 
                                                                                                                                
9:54:05 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG  moved to  report CSHB 144,  Version 24-                                                               
LS0517\F,  Cook,  4/6/05,  as  amended,  out  of  committee  with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being no  objection, CSHB 144(STA) was reported  out of the                                                               
House State Affairs Standing Committee.                                                                                         
                                                                                                                                

Document Name Date/Time Subjects