Legislature(2001 - 2002)

05/09/2002 09:37 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     SENATE CS FOR CS FOR HOUSE BILL NO. 296(JUD)                                                                               
     "An Act relating to mergers and consolidations of                                                                          
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
LORI  BACKES,  Staff to  Representative  Jim  Whitaker,  the  bill's                                                            
sponsor, informed the Committee  that this bill contains language to                                                            
correct  "perceived  unfairnesses   in  statute  in  regard  to  the                                                            
consolidation petition  process as well as the election process" for                                                            
AT EASE 6:02 PM / 6:03 PM                                                                                                       
Ms.  Backes commented  that  some  municipalities  have experienced                                                             
difficulties  in following  current  State statute  procedures.  She                                                            
exampled  that currently  there  is no  time limit  imposed for  the                                                            
gathering of  signatures on a consolidation  petition and  that this                                                            
bill imposes  a limit of 365 days.  She stated that this  time frame                                                            
is necessary because  some petitions have circulated  for up to five                                                            
years, and at the time  the petition was verified, it was found that                                                            
many of the signers no longer resided in the municipality.                                                                      
Ms.  Backes  explained  that   Sections  2  and  3  specify  that  a                                                            
consolidation  question "must be approved  by the voters  within the                                                            
borough  but outside  the cities  when it  is a  consolidation  of a                                                            
borough  with  one  or more  cities  within  it,  and must  also  be                                                            
approved  by  the  voters  in  at least  one  of  the  cities."  She                                                            
furthered that  these two sections  provide for a city "to  opt out"                                                            
of the  consolidation process  when there are  more than two  cities                                                            
within the  borough identified  on the  consolidation petition.  She                                                            
stressed  that "this  opt  out language"  must  be included  in  the                                                            
petition. She  stated that the process of consolidating  two or more                                                            
cities  within a  borough also  must be  approved by  a vote of  the                                                            
Ms Backes summarized  that the goal  of this bill is "to  allow each                                                            
individual  city, the voters  within each  individual city,  and the                                                            
voters outside of the city  but within the borough to have their own                                                            
vote  of  self-determination  as  to  whether  they  want  to  be  a                                                            
consolidated community or not."                                                                                                 
Ms. Backes  noted that Section 4 exempts  the new petition  language                                                            
from applying  to a petition  or a vote on  a petition filed  before                                                            
the effective date of the bill.                                                                                                 
Senator Green  asked why  the language changes  in Sections  2 and 3                                                            
are necessary.                                                                                                                  
Ms. Backes responded that  current statute specifies that a petition                                                            
for consolidation  must  be approved  by  a majority  of the  voters                                                            
within both the  city and the borough. She noted that  currently the                                                            
entire petition  for consolation  would fail  in the instance  where                                                            
the voters  outside of the city but  within the borough approve  the                                                            
consolidation  but one of  two cities proposed  to consolidate  does                                                            
not approve  of  the merger.  She continued  that  the new  language                                                            
would permit the one city  to remain unconsolidated, but would allow                                                            
the  other  parties  to  continue  the  consolidation  process.  She                                                            
reiterated that this "opt  out option" language must be specified in                                                            
the petition.                                                                                                                   
Senator  Hoffman  opined  that  this  "self-determination  opt  out"                                                            
language should  also be considered  for communities that  might not                                                            
want to become part of a "mandatory borough."                                                                                   
DAN BOCKHORST, Local Boundary  Commission, Division of Community and                                                            
Business   Development,  Department   of   Community  and   Economic                                                            
Development, testified  offnet to voice opposition  to components of                                                            
the bill that  would alter the outcome of a consolidation  election.                                                            
He stated  that current law  specifies that  a simple majority  vote                                                            
would  determine the  outcome  of a merger,  and  that the  proposed                                                            
legislation  would establish  "de facto voting  districts"  for each                                                            
city and  for voters within  the borough but  outside of a  city. He                                                            
stated that the  proposed process "weights the vote  of residents of                                                            
small districts more heavily  than the vote of residents of populace                                                            
districts." He exampled  that a vote by the City of Kupreanof with a                                                            
population  of  "less  than  one-half-of-one-percent  of  the  total                                                            
voters" of  the City of Petersburg,  in opposition to the  merger of                                                            
these two adjoining cities  in Southeast could block a consolidation                                                            
or  merger  even  if  99-percent  of  the  voters  in  the  City  of                                                            
Petersburg support  it. He stated that the Department's  position is                                                            
that this bill's language  "would disregard the will of the majority                                                            
of the voters about their preferred form of local government."                                                                  
Mr. Bockhorst  identified contradictory  elements within  the bill's                                                            
components,  particularly Section  3, lines 26 and 27. He  furthered                                                            
"that the provisions of  the bill are intended to be consistent with                                                            
the   voting   requirements   for   annexation   specified   in   AS                                                            
29.06.040(c)(1);   however,  there  is  absolutely  nothing  in  the                                                            
reference statute  that provides for de facto voting  districts." He                                                            
stated that, "the statute  provides for the exact opposite: approval                                                            
of a local  option annexation by a  simple majority of the  votes in                                                            
the affected  area." He exampled various  de facto voting  scenarios                                                            
whereby   the  proposed   language  would   incur  a  contradictory                                                             
Mr. Bockhorst  continued  that the  proposed bill  "would reflect  a                                                            
major  departure  from  constitutional  principles  and established                                                             
legislative policy"  in which State statute "specifies  a minimum of                                                            
local government units  and encourages the prevention of duplication                                                            
of tax  levying  jurisdictions."  He stated  that  this bill  "would                                                            
perpetuate   inefficient,   inequitable,   and   ineffective   local                                                            
government structures  resulting in duplication of  government units                                                            
and  tax  levying  jurisdictions  regardless  of  the  will  of  the                                                            
majority  of  the   local  voters."  He  stated  that   the  current                                                            
legislation  has,  for 30  years,  allowed  for "harmony"  with  the                                                            
principles  of the  State Constitution  as well  as "efficiency  and                                                            
fiscal accountability in  the local governments." He stated that the                                                            
proposed  bill would hinder  that forward  progression and  notified                                                            
the  Committee  that the  Local  Boundary  Commission  has issued  a                                                            
formal statement,  dated May  1, 2002, [copy  on file] that  opposes                                                            
the proposed legislation.                                                                                                       
Ms. Backes  expressed awareness of  the Local Boundary Commission's                                                             
concerns;  however, she stressed  that the  bill's sponsor  strongly                                                            
supports  the  people's   right  to  self-determine   what  type  of                                                            
community  they  wish to  live in.  She  elaborated  that this  bill                                                            
essentially  prohibits  "a hostile  takeover"  of one  community  by                                                            
another. She presented examples of this scenario.                                                                               
Senator  Hoffman   concurred  with  the  sponsor's  reasoning,   and                                                            
asserted, "that self-determination  should the most important factor                                                            
in self-government."                                                                                                            
Senator Green  noted that  within a relatively  short distance  from                                                            
the  Mat-Su  area  where  she  resides,   there  are  four  separate                                                            
communities,   each  with  their   own  governmental  offices.   She                                                            
questioned  whether the original  intent of  the current  regulation                                                            
was  to eliminate  or  discourage duplication  of  local  government                                                            
services in the same or similar areas.                                                                                          
Ms. Backes responded that  the original intent of the regulation was                                                            
not to  prevent duplication;  however, she  clarified, "that  is the                                                            
intent of consolidation or unification."                                                                                        
Senator Green opined that  the reason for establishment of the Local                                                            
Boundary Commission  was to prevent  duplication. She surmised  that                                                            
the proposed legislation would "do away" with that directive.                                                                   
Ms. Backes  clarified  that rather  than blocking  consolidation  or                                                            
mergers or  encouraging the duplication  of services, the  intent of                                                            
the proposed legislation  is "to merely make the voting and petition                                                            
process more  fair." She asserted  that Alaska's Constitution  calls                                                            
"for the  maximum local  self-government with  the minimum  of local                                                            
government units,"  and mandates that the Local Boundary  Commission                                                            
consider  the  consolidation  of  these  governments.  However,  she                                                            
insisted, this  should not be "forced  over the will of a  residents                                                            
of that area."                                                                                                                  
AT EASE 6:18 PM / 6:19 PM                                                                                                       
Co-Chair Donley  commented that at  the time of Statehood,  the goal                                                            
"was that all  of Alaska would be organized into some  form of local                                                            
government;" however, some  people have resisted because they do not                                                            
want to pay local taxes.  He reminded the Committee that a few years                                                            
prior at  public hearings  regarding education,  many people  voiced                                                            
that  they did  not want  to contribute  "a penny  to educate  their                                                            
children"  or  to support  local  services.  He asserted  that  this                                                            
position  is not  fair to  the people  of  Alaska who  do pay  local                                                            
taxes,  and it  is "clearly"  not  attuned with  the  vision of  the                                                            
drafters  of Alaska's  Constitution.  He stated that  Alaska is  the                                                            
only State that does not  have widespread governmental organization.                                                            
He noted  that some  communities do  not provide  funds to employ  a                                                            
local  police staffer,  and  that local  services  are not  provided                                                            
without some  sort of outside  assistance.  He voiced concern  about                                                            
any  proposal  that   discourages  inclusion  of  people   in  local                                                            
governments  because,  he  opined,  in the  long  run, this  is  the                                                            
direction the State must go.                                                                                                    
Senator Wilken  voiced uncertainty as to how to establish  a balance                                                            
in this  legislation, as "it  is a one size  fits all" type  of bill                                                            
that,  while  addressing  the  needs  of one,  harms  the  needs  of                                                            
Senator  Olson characterized  this legislation  as "setting  another                                                            
layer  of government  out  there." He  contended  that multiple  and                                                            
overlaying State, federal and local governments result in non-                                                                  
productivity,  and he stressed that  the costs associated  with this                                                            
duplication  usually  "fall   onto  the  shoulders  of  the  private                                                            
sector."  He voiced  that the possibility  of  a larger community's                                                             
"hostile   takeover"   of   a   smaller   community   is   "somewhat                                                            
JAN WRENTMORE,  Resident,  City of Skagway,  informed the  Committee                                                            
that this is an  important bill for Skagway because  it supports the                                                            
issue  of  self-determination.   She  informed  the  Committee  that                                                            
Skagway, the oldest incorporated city in the State, is self-                                                                    
sufficient, has real estate,  tourism and sales taxes, and funds 52-                                                            
percent  of  the  community's  education   needs.  She  stated  that                                                            
townspeople  were disturbed to receive  a Local Boundary  Commission                                                            
determination  stating  that Skagway  is viewed  as  not being  self                                                            
sufficient,  that the  community's  government  is inefficient,  and                                                            
that  the  residents  do  not make  sufficient   contributions.  She                                                            
contended  that this legislation  would allow  residents to  vote on                                                            
whether they desire  to merge with another community.  She continued                                                            
that  in  some  situations,  mergers  or  consolidations  might  not                                                            
increase  efficiencies in  government as  differing communities  may                                                            
have  different  lifestyles,   distance  might  be  an  obstacle  to                                                            
efficiencies,   and  communities  might  become  polarized   due  to                                                            
differing "ethics"  regarding major industries such  as tourism. She                                                            
urged the Committee  to consider the  affect this legislation  would                                                            
have on communities.                                                                                                            
Senator  Green stated  that, as part  of the  petition process,  the                                                            
Local   Boundary  Commission   grants   the  authorization   for   a                                                            
consolidation  or  merger  petition  to  be  circulated.  She  asked                                                            
whether permission to petition  could be granted without the express                                                            
approval from  the affected communities, which she  characterized as                                                            
a "hostile consolidation" situation.                                                                                            
Mr. Bockhurst  replied, "that a petition may be initiated  by a host                                                            
of  different  parties;  some of  which  might  be construed  to  be                                                            
hostile and some not be  construed to be hostile." He continued that                                                            
in most  situations, it is  impossible to  have 100 percent  support                                                            
for a  consolidation  or merger  proposal; however,  the  Commission                                                            
endeavors to consider  the broad public interest as  intended in its                                                            
Constitutional creation.                                                                                                        
AT EASE 6:31 PM / 6:34 PM                                                                                                       
Senator Olson asked Mr.  Bockhorst how this legislation would affect                                                            
new boroughs.                                                                                                                   
Mr.  Bockhurst  stated  that "this  legislation  directly  does  not                                                            
affect  the incorporation  of new  boroughs from  an area within  an                                                            
organized borough,  but technically, a consolidation  of a city in a                                                            
borough results  in the incorporation  of a  new borough so  in that                                                            
sense, it would affect  the creation of boroughs." He explained that                                                            
State law specifies that  "the incorporation of a borough government                                                            
is subject  to area-wide  voter  approval, and  this bill  certainly                                                            
would represent  a significant  departure from  that practice  if it                                                            
were applied  to an organization of  a borough from the unorganized                                                             
territory of  Alaska;" however, it  "would not affect a new  borough                                                            
from an unincorporated area of the State."                                                                                      
Senator Olson voiced that  perhaps an amendment should be considered                                                            
"so that it is applicable to the new boroughs."                                                                                 
Senator Austerman  moved to  report "Senate  CS for House Bill  296,                                                            
Judiciary, from  Committee with individual recommendations  and zero                                                            
fiscal note."                                                                                                                   
Co-Chair Donley objected.                                                                                                       
A roll call was taken on the motion.                                                                                            
IN  FAVOR:  Senator Leman,  Senator  Olson,  Senator  Ward,  Senator                                                            
Wilken, Senator Austerman, Senator Green, Co-Chair Kelly                                                                        
OPPOSED: Co-Chair Donley                                                                                                        
ABSENT: Senator Hoffman                                                                                                         
The motion PASSED (7-1-1)                                                                                                       
SCS CS  HB 296 (JUD)  was REPORTED  from Committee  with a  previous                                                            
zero fiscal  note, dated  February 28, 2002  from the Department  of                                                            
Community and Economic Development.                                                                                             

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