Legislature(1995 - 1996)
02/28/1996 01:35 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.