Legislature(2005 - 2006)BELTZ 211

03/06/2006 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+= SB 193 DEFERRAL OF MUNICIPAL PROPERTY TAXES TELECONFERENCED
Heard & Held
*+ SB 291 MUNICIPAL HARBOR FACILITY GRANTS TELECONFERENCED
Heard & Held
+= SB 247 REVENUE SHARING PROGRAM TELECONFERENCED
Heard & Held
+= SB 246 APPROP TO REVENUE SHARING FUND TELECONFERENCED
Heard & Held
                 SB 247-REVENUE SHARING PROGRAM                                                                             
                                                                                                                                
2:56:44 PM                                                                                                                    
                                                                                                                                
CHAIR STEDMAN  announced SB  247 to be  up for  consideration. He                                                               
asked Senator Gary Stevens to provide introduction.                                                                             
                                                                                                                                
SENATOR GARY STEVENS  explained that SB 247 stems  from work done                                                               
by  the Advisory  Commission  on Local  Government  and comes  in                                                               
response to local governments requesting  that revenue sharing be                                                               
reinstated. The bill creates the  Revenue Sharing Program to help                                                               
local  governments  and  unincorporated  communities  meet  their                                                               
financial   obligations.  It   authorizes   the  Legislature   to                                                               
appropriate money from the Alaska  Capital Fund [Amerada Hess] to                                                               
the Revenue Sharing Fund established by SB 246.                                                                                 
                                                                                                                                
Revenue  sharing will  be appropriated  as follows:  $300,000 for                                                               
each unified municipality; $150,00  for each borough; $75,000 for                                                               
each  city;  and  $25,000  for  each  community.  If  the  amount                                                               
appropriated exceeds  that which  is needed, the  remaining funds                                                               
will be distributed to municipalities on a per capita basis.                                                                    
                                                                                                                                
Revenue sharing in  Alaska began in 1969 and at  that time it was                                                               
a  larger  part  of  the state  budget  than  community  PERS/TRS                                                               
assistance  and community  energy  assistance was  last year.  In                                                               
1979 the municipal assistance program  was created to replace the                                                               
municipal share  of the Gross  Business Receipts Tax.  Until that                                                               
time the  state shared 20  percent of the business  tax generated                                                               
in each municipality. When the  state repealed the tax on January                                                               
1,  1979 there  was an  implied  obligation to  replace the  lost                                                               
revenue. Revenues  were distributed  with a  hold-harmless amount                                                               
based on the  amount each municipality had received  in 1978 plus                                                               
a  per  capita  distribution.  In 1980  the  per  capita  revenue                                                               
sharing program  was repealed and  replaced with  an equalization                                                               
revenue  sharing  program.  In   1997  the  municipal  assistance                                                               
program was changed to the  Safe Communities Program. In 2004 all                                                               
revenue  sharing programs  were  eliminated and  since then  many                                                               
communities  have  had  to  reduce  or  eliminate  key  municipal                                                               
services.  According to  the Alaska  Municipal League,  ten small                                                               
communities  closed their  doors  last year.  He  noted that  the                                                               
packets  held examples  of letters  of support  for some  sort of                                                               
revenue sharing.                                                                                                                
                                                                                                                                
3:00:46 PM                                                                                                                    
                                                                                                                                
CHAIR STEDMAN remarked he could  attest to the statewide interest                                                               
in revenue sharing.                                                                                                             
                                                                                                                                
3:01:21 PM                                                                                                                    
                                                                                                                                
KEVIN RITCHIE, Executive Director  of the Alaska Municipal League                                                               
(AML) testified in  support of SB 247. He said  he had two points                                                               
to make. First, the allocations  per city, community, and borough                                                               
are  critical if  small communities  are to  remain viable.  Many                                                               
have no property  tax base and sales tax does  little in terms of                                                               
generating  revenue.  Because  small communities  purchase  goods                                                               
from the  larger urban areas,  much of the economic  benefit they                                                               
generate  goes to  those large  communities. A  point in  fact is                                                               
that   the  Anchorage   Economic   Development  Corporation   has                                                               
indicated that  small communities fund  about one in  every eight                                                               
jobs in the urban areas.                                                                                                        
                                                                                                                                
The second  point is  to suggest adding  to the  proposed funding                                                               
amount.  Although  $28 million  will  help  small communities  it                                                               
won't have  a significant impact  on tax relief or  helping large                                                               
communities with their particular issues.                                                                                       
                                                                                                                                
3:03:39 PM                                                                                                                    
                                                                                                                                
WAYNE STEVENS,  Alaska State Chamber of  Commerce, stated support                                                               
for the  legislative effort to implement  a sustainable community                                                               
dividend  program through  an  endowment  management scheme.  The                                                               
need is critical  statewide and if relief doesn't  come this year                                                               
it will be too late for some communities.                                                                                       
                                                                                                                                
3:04:34 PM                                                                                                                    
                                                                                                                                
LEO RASMUSSEN  testified as  a private  citizen from  Nome. After                                                               
reviewing  his long  and illustrious  public career  he suggested                                                               
looking back 50  years to when the Alaska  State Constitution was                                                               
created. A sort of partnership  growth between municipalities and                                                               
the  state  government  was  envisioned and  a  division  of  the                                                               
state's resource income  was mandated for the  purpose of running                                                               
municipal governments. That used to  be one of the most important                                                               
parts of government in our  state, Mr. Rasmussen emphasized. With                                                               
that  in  mind, he  suggested  the  committee seriously  consider                                                               
going back  to a simple  distribution of natural  resource income                                                               
to  municipal governments  rather than  the proposed  $75,000 per                                                               
municipality.                                                                                                                   
                                                                                                                                
Mr.  Rasmussen  endorsed  both  bills  and  concluded  that  this                                                               
program could turn the state around.                                                                                            
                                                                                                                                
3:09:45 PM                                                                                                                    
                                                                                                                                
JOHN COMBS,  Mayor for the  City of Palmer, testified  in support                                                               
of using  Amerada Hess funds  for municipal sharing.  He informed                                                               
members that  the City of  Palmer has  a population of  5,400 and                                                               
encompasses just 5.4  square miles, but it services  an area that                                                               
has  about 21,000  people  so some  sort  of sustained  municipal                                                               
[revenue] sharing would be most welcome.                                                                                        
                                                                                                                                
3:11:10 PM                                                                                                                    
                                                                                                                                
DAVE TALERICO, Mayor  of the Denali Borough and  President of the                                                               
Alaska Municipal League, testified in  support of both SB 246 and                                                               
SB 247. He thanked the advisory  commission for its work and said                                                               
he  particularly likes  the minimum  provision  to support  small                                                               
municipalities because their health and  welfare are vital to the                                                               
state.  He  described  the  bill as  a  confident  and  important                                                               
municipal investment.                                                                                                           
                                                                                                                                
3:11:59 PM                                                                                                                    
                                                                                                                                
JEFF  CURRIER, Lake  and Peninsula  Borough, testified  in strong                                                               
support of  SB 247. In  the last  several years people  have been                                                               
leaving the  area because of  the lack  of an economic  base. The                                                               
borough  shares  fish   and  bed  tax  revenue   with  its  small                                                               
communities, but  because of fuel  and other emergencies  some of                                                               
communities have  had to draw  down next year's  revenue sharing.                                                               
"Let's get this thing going," he said.                                                                                          
                                                                                                                                
3:13:22 PM                                                                                                                    
                                                                                                                                
MITCH CHOCKNOK, City Administrator for  the City of New Stuyahok,                                                               
testified  in support  of SB  247. The  city is  on the  verge of                                                               
shutting down  due to  high fuel, insurance,  and other  costs so                                                               
the money  would keep New Stuyahok  alive. This is vital  to this                                                               
community and others like it across the state, he said.                                                                         
                                                                                                                                
3:14:38 PM                                                                                                                    
                                                                                                                                
KARL  SHORT,  Finance  Director of  the  Kodiak  Island  Borough,                                                               
stated that he previously testified in  support of SB 246, but he                                                               
wanted to emphasize the importance  of having a way to distribute                                                               
state income to  the communities to keep them viable  so they can                                                               
continue to perform essential community services.                                                                               
                                                                                                                                
Responding to  Chair Stedman, he  added that boroughs  around the                                                               
state are taking on a larger  share of school expenditures and at                                                               
the  same  time they  aren't  getting  state revenue  sharing  or                                                               
funding for  senior citizen  taxes. This is  to the  detriment of                                                               
other borough services such as health, planning, and assessing.                                                                 
                                                                                                                                
3:16:09 PM                                                                                                                    
                                                                                                                                
ELAINE  PRICE, Projects  Manager for  the City  of Coffman  Cove,                                                               
stated support  for the package to  keep city doors open  and the                                                               
community viable.                                                                                                               
                                                                                                                                
3:16:37 PM                                                                                                                    
                                                                                                                                
DAVE TRANTHAN,  JR., Alaska  Municipal League  Representative for                                                               
District 9, stated  support for SB 246 and SB  247. Anything that                                                               
can  be  done  to  reinstate revenue  sharing  would  be  greatly                                                               
appreciated by all communities.                                                                                                 
                                                                                                                                
3:17:54 PM                                                                                                                    
                                                                                                                                
DORIS BAILEY, Assembly Member for  the City and Borough of Sitka,                                                               
stated  unequivocal support  for  revenue  sharing and  therefore                                                               
both SB 246 and SB 247.  The assembly passed a resolution to that                                                               
effect.                                                                                                                         
                                                                                                                                
3:18:36 PM                                                                                                                    
                                                                                                                                
SENATOR  GARY STEVENS  advised that  there are  other bills  that                                                               
deal  with revenue  sharing that  draw from  other fund  sources.                                                               
Although he'd like  to see more money going  to communities, this                                                               
bill proposes  using funds from  the Amerada Hess account  and in                                                               
his view it's  a bottom line minimum amount.  It's more difficult                                                               
to  get money  from other  sources such  as the  Earnings Reserve                                                               
because  it affects  the dividend  and the  Constitutional Budget                                                               
Reserve  because of  the high  standards for  using those  funds.                                                               
Amerada Hess  is a  good beginning,  he said,  and I  hope people                                                               
support it.                                                                                                                     
                                                                                                                                
CHAIR STEDMAN held  SB 247 in committee and  recessed the meeting                                                               
to the call of Chair at 3:19:43 PM.                                                                                           

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