Legislature(1995 - 1996)

02/28/1996 01:35 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
          SB 280 MANDATORY INCORP OF CERTAIN BOROUGHS                         
 SENATOR TORGERSON, Prime Sponsor, introduced  SB 280  as the next             
 order of business before the committee.  He said that he intended             
 to have the committee look at adopting a CS which would place a               
 time line in the bill.  The time line would provide better                    
 direction to Community & Regional Affairs as well as to the Local             
 Boundary Commission; the original bill said that everything must              
 occur by 1998.  That probably cannot be accomplished.  He and the             
 committee staff had been in contact with the Local Boundary                   
 Commission staff and others in order to place the time line in the            
 bill. Senator Torgerson invited the committee staff to come to the            
 table for an explanation of the CS.                                           
 Number 040                                                                    
 SENATOR RANDY PHILLIPS moved that CSSB 280(CRA) be adopted for                
 purposes of discussion.  Hearing no objection, the CS was adopted.            
 DEB DAVIDSON, Staff for the Senate Community & Regional Affairs               
 Committee, explained that the bill directs the Department of                  
 Community & Regional Affairs to submit second-class borough                   
 incorporation proposals for all areas of the unorganized borough.             
 The proposals are to be based upon the 1995 "Model Borough                    
 Boundaries" report.  Once the Local Boundary Commission accepts the           
 proposals, elections will be held in order to elect assembly                  
 members and to determine which of the non-areawide borough powers             
 are wanted.  Boroughs would automatically be formed upon the                  
 certification of the election.  In addition to those directives,              
 the CS would direct the state assessor to estimate the true value             
 of the property in the unorganized borough.  Then a guideline is              
 established for the department to submit the proposals to the Local           
 Boundary Commission.  Borough proposals for those areas with a full           
 and true value of at least $550 million should be submitted to the            
 commission by July 1, 1997.  Ms. Davidson pointed out the                     
 restrictions for the following years which as listed on page 2,               
 lines 24-29 of the CS.  The Local Boundary Commission has six                 
 months from the time each proposal is submitted to determine if the           
 borough was feasible and could work.  She informed the committee              
 that there is a copy of the Model Boundary Report as well as                  
 information illustrating which new boroughs would be formed and               
 those that could be expanded if the commission deemed it so and               
 submitted it to the legislature.  There is also information                   
 indicating which boroughs would most likely be proposed each year,            
 as based on the 1994 value.   The department does not believe those           
 would change with the 1997 estimate.                                          
 Number 090                                                                    
 In response to Senator Torgerson, DEB DAVIDSON said that no letter            
 of support had been received from the Administration.   The                   
 Administration appears to be neutral.  Ms. Davidson said that the             
 department has expressed a willingness to work with the committee             
 on this matter.                                                               
 SENATOR TORGERSON asked if there was any discussion on the adoption           
 of the CS.  Hearing none, the CS was before the committee.  Senator           
 Torgerson explained that he had intended to adopt the CS and then             
 distribute it across the state.  The bill would be heard again in             
 about two weeks.                                                              
 SENATOR ZHAROFF inquired as to how these boundaries come into play.           
 SENATOR TORGERSON explained that the Local Boundary Commission                
 began a Model Boundary in 1989 and was completed in 1992.                     
 According to the commission, each model borough boundary can                  
 sustain a local government.  DEB DAVIDSON interjected that there              
 would be 19 new boroughs including Annette Island.                            
 Number 142                                                                    
 SENATOR HOFFMAN pointed out that most of those boundaries follow              
 the last election districts; many of those boundaries have changed            
 as a result of the 1990 reapportionment.                                      
 SENATOR TORGERSON believed that the commission, or whoever did the            
 report, took into account the social, cultural, and economic                  
 activities of each region in order to ensure their compatibility.             
 The report stated that it basically followed the existing REAA                
 boundaries of that time.  Perhaps, some REAA districts have changed           
 since that time.                                                              
 SENATOR HOFFMAN mentioned that many of the same requirements for              
 the election districts are the same as those for reapportionment.             
 SENATOR TORGERSON noted that if there are adjustments to be made,             
 the Local Boundary Commission would do so per the commission's                
 constitutional responsibility.  In Senator Torgerson's opinion,               
 this should have been before the committee years ago.                         
 SENATOR KELLY asked if mandatory boroughs were established, would             
 that obviate the need for the REAAs?                                          
 SENATOR TORGERSON assumed so.  Currently, there are 54 school                 
 districts in Alaska and this would consolidate the school districts           
 to one per borough as is the case in organized areas.  SB  280 does           
 not address that, SB 280 provides the means for the equalization              
 between organized and unorganized areas.                                      
 SENATOR HOFFMAN noted that the unorganized areas encompass the                
 districts represented by Senator Zharoff, Senator Adams, Senator              
 Lincoln, and himself; who have travelled extensively through those            
 areas.  One of the primary reasons for not organizing these areas             
 is that these areas feel uncomfortable with local government.  To             
 place another layer of government on an ill-functioning existing              
 government seems to indicate that the next layer of government                
 would be even more ill-functioning.  Many of these communities have           
 unique needs and their local governments are struggling to                    
 determine whether second-class city status would be preferable over           
 organization under tribal organizations.  He informed the committee           
 that many of these communities are choosing tribal organizations              
 like Metlakatla.  Senator Hoffman expressed concern that SB 280               
 would not allow boroughs to function well and create divisiveness.            
 Number 218                                                                    
 SENATOR TORGERSON believed that Alaskan communities should start              
 out equal, especially before taking revenues from tax based                   
 communities to provide services for unorganized communities or                
 communities that are not tax based.   Recognizing 226 other nations           
 within Alaska is an entirely different subject.  Senator Torgerson            
 hoped that Alaska did not recognize these nations nor that the                
 tribal status would drive Alaska to eliminate Native lands and                
 create areas that are no longer called Alaska.                                
 SENATOR HOFFMAN pointed out that only one percent of Alaska's lands           
 are held privately, those holdings are in urban Alaska.  In rural             
 Alaska, the largest land holding is held in trust with Native lands           
 which encompasses more than 20 percent of Alaska's land.  Those               
 lands held in trust cannot be taxed.                                          
 SENATOR TORGERSON interjected that those lands are only in trust              
 until they are developed.  Once the area is developed, the area               
 becomes taxable if in a tax based area.  This is almost a different           
 subject than whether or not Alaska should have an equalization of             
 services across the state.                                                    
 SENATOR RANDY PHILLIPS stated that all the legislators are the                
 local government for the unorganized areas: does the legislature              
 have the power to tax for schools in the unorganized areas?                   
 SENATOR TORGERSON had asked that question of legal services who               
 indicated that the legislature cannot dedicate the funds for                  
 schools, but the legislature has the authority to tax and place it            
 in the General Fund and distribute as seen fit.  A tax could not be           
 instituted and dedicated to education, but the legislature can                
 place a mill rate with or without the mandatory borough act.                  
 SENATOR ZHAROFF mentioned that much of the undeveloped land does              
 generate a significant amount of revenue through PL874 monies of              
 which a good portion is placed in education.  If the entire borough           
 boundary system is to be restructured, then the notion that                   
 everything should be erased and started over should be considered.            
 SENATOR TORGERSON agreed that could be considered, however, that is           
 not before the committee.  SB 280 adopts a plan by the Local                  
 Boundary Commission which is their responsibility under Alaska's              
 constitution.  The bill merely establishes a few guidelines                   
 regarding when the report should be presented to the legislature.             
 Senator Torgerson emphasized that the legislature does have the               
 authority to mandate the incorporation of a borough, but not                  
 annexation.  With regards to revenue that may be lost or gained due           
 to federal money, the fiscal notes will have to be reviewed                   
 carefully.  Certainly, there will be a transfer of revenue in the             
 portions of unorganized areas which have the pipeline or oil and              
 gas properties.  Those are currently taxed at the maximum rate of             
 20 mills, local governments can tax up to the 20 mill rate.  If the           
 unorganized areas choose to form a borough, that money would shift            
 from the state to the local government.  The amendment which                  
 establishes a time line would encourage agencies to produce their             
 fiscal notes in order to determine the actual shift of monies.                
 SENATOR ZHAROFF asked if there are any requests before the                    
 commission regarding the formation of boroughs.  SENATOR TORGERSON            
 specified that there are some requests for annexation, but not for            
 the formation of boroughs.                                                    
 SENATOR TORGERSON held SB 280 in order that all the pertinent                 
 information could be distributed across the state.                            

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