Legislature(2007 - 2008)SENATE FINANCE 532

03/26/2008 09:00 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 303 Out of Committee
Moved CSSB 185(STA) Out of Committee
SENATE BILL NO. 303                                                                                                           
     "An Act relating to certain grants awarded by the                                                                          
     Department of Environmental Conservation."                                                                                 
Co-Chair Stedman  presented the opening remarks  and overview                                                                   
for the meeting.                                                                                                                
9:13:30 AM                                                                                                                    
GINGER BLAISDELL,  STAFF, SENATOR GREEN provided  a technical                                                                   
overview  of SB  303. She  noted  that the  bill reflected  a                                                                   
population change from 5,000 to  10,000 persons (Page 1, line                                                                   
13  and Page  2,  line 1-2).  She  referred  to a  "community                                                                   
listing" with the current population  of each city in Alaska.                                                                   
She remarked that Legal Services  indicated that changing the                                                                   
population  under this  program  would not  impact any  other                                                                   
program in the state (copy on  file). Ms. Blaisdell presented                                                                   
a final note showing a three year  listing of water and sewer                                                                   
projects  and   the  cities   awarded  these  projects.   She                                                                   
maintained  that  although  the listing  reflected  FY  07-09                                                                   
projects, this bill would only deal with FY 09.                                                                                 
Co-Chair Stedman  requested an  explanation of the  bill. Ms.                                                                   
Blaisdell  responded that  the  bill changes  the  population                                                                   
criteria for the rates of community  matching water and sewer                                                                   
grants.  She  noted  that the  bill  changes  the  population                                                                   
criteria from a city of 5,000  to a city of up to 10,000. Ms.                                                                   
Blaisdell cited  that cites of  1000 or less  can participate                                                                   
in the  program with a matching  rate of eighty  five percent                                                                   
state funding  to fifteen  percent municipality funding.  She                                                                   
continued that cities between  1,001 and 5,000 have a funding                                                                   
rate of seventy percent state  to thirty percent municipality                                                                   
participation and  cities of 5,001  or higher was on  a fifty                                                                   
percent to  fifty percent matching  rate. She  indicated that                                                                   
the  rational is  that cities  beginning to  grow beyond  the                                                                   
5,000 population mark are experiencing  a significant rise in                                                                   
costs for  their expanding system  of piped water  and sewer.                                                                   
This has  pushed a higher tax  burden on the citizens  to pay                                                                   
for the rising costs of steel and construction.                                                                                 
9:16:42 AM                                                                                                                    
Senator Dyson  questioned the  genesis of  the bill.  He also                                                                   
asked if  this involved an expansion  of the sewer  and water                                                                   
system or  the intensity  in the treatment  of the  water and                                                                   
9:17:07 AM                                                                                                                    
Ms. Blaisdell responded that the  requests came from multiple                                                                   
communities. She specified that  the bill does not change the                                                                   
program  at all  or  the type  of sewer  system  used in  the                                                                   
communities, but just helps newly growing communities.                                                                          
9:17:48 AM                                                                                                                    
Senator  Olson  remarked that  it  would change  the  funding                                                                   
structure  for these communities  and  he wondered about  the                                                                   
size of the  projects being considered. Ms.  Blaisdell showed                                                                   
that some of  projects reflected a wide funding  range from a                                                                   
few hundred thousand to several  million. She remarked that a                                                                   
community  has  to   follow  a  process  by   turning  in  an                                                                   
application to the Department  of Environmental Conservation.                                                                   
This application  is scored  and ranked  and then a  decision                                                                   
made on  how much in  general funds will  be provided  to pay                                                                   
for the  project. If  the project costs  more than  the state                                                                   
agrees to pay,  the Legislature would decide how  much of the                                                                   
General Fund would be made available.                                                                                           
Senator Olson remarked that he  does not see reflected in the                                                                   
fiscal note  what it  will cost the  state when the  matching                                                                   
fund  rate changes  from a  fifty/fifty  to a  seventy/thirty                                                                   
Co-Chair  Stedman answered  that  the Fiscal  Note  reflected                                                                   
$3.72 million for one year.                                                                                                     
9:19:32 AM                                                                                                                    
Ms. Blaisdell  remarked  that the Fiscal  Note only  reflects                                                                   
one  year because  the number  or type  of applications  that                                                                   
will  be received  from  the  communities  next year  is  not                                                                   
known.  She  noted  that  the   $3.72  million  reflects  the                                                                   
projects  that it  is  anticipated will  be  approved in  the                                                                   
9:20:08 AM                                                                                                                    
Senator  Elton questioned  why  the grants  are  made at  the                                                                   
municipal  rather  than  the  borough  level.  Ms.  Blaisdell                                                                   
remarked  that   boroughs,  and  municipalities   within  the                                                                   
boroughs, may have different powers.  Senator Elton seemed to                                                                   
see  a   significant  difference   between  a  borough   with                                                                   
incorporated municipalities, like  the Kenai Borough, and the                                                                   
boroughs, such as, the Northwest  Arctic Borough. He believed                                                                   
it might  create an  incentive for  organized boroughs,  with                                                                   
municipalities   within  them,  to   switch  their   mode  of                                                                   
operations to access these funds.                                                                                               
9:22:18 AM                                                                                                                    
Ms.  Blaisdell  reported  that   she  had  never  heard  this                                                                   
suggestion  from any  of  the cities  impacted  by the  bill.                                                                   
Senator Elton  mentioned that  he understood the  impacts for                                                                   
the next fiscal  year and how  there is only a change  in the                                                                   
definition of population size  but he wondered if there would                                                                   
be  a  realistic  way for  the  larger  communities  to  grow                                                                   
without  the money growing.  Ms. Blaisdell  agreed that  more                                                                   
money would be  needed. She stressed that if  the fiscal note                                                                   
for $3.72  million was not passed,  then many of  the planned                                                                   
projects for FY 09 would have to be removed.                                                                                    
9:25:32 AM                                                                                                                    
KATHIE  WASSERMAN,   EXECUTIVE  DIRECTOR,   ALASKA  MUNICIPAL                                                                   
LEAGUE  supported  SB  303  because  it  would  help  growing                                                                   
communities  boost  local  water   and  sewer  projects.  She                                                                   
indicated that  the 5,000 population number was  an arbitrary                                                                   
number in  1994, but  since that time,  costs have  risen for                                                                   
water and  sewer projects  so the  intent of  the bill  is to                                                                   
raise  that arbitrary  number  to 10,000.  She explained  the                                                                   
population  number change  would  help eight  communities  in                                                                   
dealing  with  aging  water  and   sewer  projects:  Wasilla,                                                                   
Ketchikan, Kenai,  Sitka, Kodiak,  Bethel, Palmer  and Homer.                                                                   
Ms.  Wasserman answered  the earlier  question about  borough                                                                   
management by  saying that boroughs  usually do not  have the                                                                   
water and sewer  rights unless it is a unified  borough, like                                                                   
Sitka, Juneau,  and Yakatat. She advised that  other boroughs                                                                   
do not provide borough-wide water and sewer projects.                                                                           
BILL ALLEN,  CITY MANAGER, CITY  OF PALMER supported  SB 303.                                                                   
He related  that the smaller city  of Palmer is  dealing with                                                                   
an aging infrastructure  that contains lengths  of steel wall                                                                   
construction pipe  with a forty percent leakage  in the water                                                                   
system. Mr. Allen pointed out  that Palmer is very aggressive                                                                   
in economic development however  the city is only five square                                                                   
miles which leaves  the city trying to expand  its boundaries                                                                   
through  annexation. Mr.  Allen related  that when trying  to                                                                   
annex  outlying  communities   the  benefits  are  important.                                                                   
Palmer  wants to  be able  provide city-wide  safe water  and                                                                   
sanitation. Mr.  Allen remarked  that the local  savings from                                                                   
fifty  percent   to  thirty  percent  makes   a  considerable                                                                   
difference to the small tax base  of Palmer. He remarked that                                                                   
Palmer is  also experiencing a  migration into the  city from                                                                   
rural Alaska that is impacting the city's infrastructure.                                                                       
9:33:29 AM                                                                                                                    
BILL GRIFFITH,  FACILITY PROGRAMS MANGER, DIVISION  OF WATER,                                                                   
DEPARTMENT  OF  ENVIRONMENTAL   CONSERVATION,  testified  via                                                                   
teleconference,  and  advised  that  the  department  is  not                                                                   
opposed  to this  statutory  change  but it  is  viewed as  a                                                                   
policy decision  by the Legislature  to establish  what share                                                                   
of project  costs should  be born by  both the state  and the                                                                   
local  municipalities.  He affirmed  that  for  FY 09,  under                                                                   
these proposed  changes and in  order to provide  funding for                                                                   
the  same  number  of projects,  it  would  be  necessary  to                                                                   
increase  the  Department  of   Environmental  Conservation's                                                                   
Capital Budget request. Or, he  advised, the department could                                                                   
fund fewer projects with the same  amount of funding that has                                                                   
already been  requested. He indicated  that in  future years,                                                                   
the  department would  incorporate  the  new matching  ratios                                                                   
into the department's budget request.                                                                                           
Senator Huggins  questioned how many of the  existing twenty-                                                                   
six  projects  would be  affected  by this  legislation.  Mr.                                                                   
Griffith responded  that nine  projects would be  affected by                                                                   
this change.                                                                                                                    
9:35:52 AM                                                                                                                    
Senator Elton remarked that nine  communities would receive a                                                                   
beneficial  effect but  there would be  a potential  negative                                                                   
affect on  smaller communities  or larger communities  unless                                                                   
the amount  of money grew.  Mr. Griffith responded  that most                                                                   
communities  of  less  than  1000  people  are  eligible  for                                                                   
village  safe-water  funding  which  is  a  separate  funding                                                                   
request the department makes every year.                                                                                        
Senator Elton  remarked on the  potential negative  affect of                                                                   
communities between  1,000 and 5,000 and the  other potential                                                                   
negative  affect on  those communities  above 10,000,  unless                                                                   
the money  grows by  Legislative action.  Mr. Griffin  agreed                                                                   
that either the  money must grow in order to  provide funding                                                                   
for the  same number of  projects or  the choice could  be to                                                                   
fund fewer projects.                                                                                                            
9:38:15 AM                                                                                                                    
Co-Chair  Stedman clarified  that in  the fiscal note,  eight                                                                   
projects are listed for FY 09:                                                                                                  
     Homer Water Treatment Plant Upgrade                                                                                        
     Kenai New Water Transmission Main Phase Wellhouse                                                                          
     Kodiak Aleutian Homes Water & Sewer Replacement Ph 4                                                                       
     Palmer Steel Water Main Replacement Phase 6                                                                                
     Palmer Wastewater Treatment Plant Improvement Design                                                                       
     Palmer Southwest Utility Extension Phase II                                                                                
     Wasilla Mission Hills Water Extension                                                                                      
Senator  Huggins observed  that Mr.  Griffith clarified  that                                                                   
there are only eight, not nine, community projects.                                                                             
9:39:59 AM                                                                                                                    
ARCHIE  GIDDINGS, PUBLIC  WORKS  DIRECTOR,  CITY OF  WASILLA,                                                                   
testified via teleconference in  support of this legislation.                                                                   
He mentioned  that projects are  scored on a  priority basis,                                                                   
not necessarily  the size  of the  project. He expressed  the                                                                   
ongoing difficulty  in getting  federal funding  and stressed                                                                   
that  the  increase  in the  state  contribution  would  help                                                                   
communities achieve the needed matching funds.                                                                                  
9:41:45 AM                                                                                                                    
Ms. Blaisdell  referred to the population list  and indicated                                                                   
that most of  the benefiting communities had  a population of                                                                   
approximately  3,000   in  1994.  She  remarked   that  these                                                                   
communities are now  in the 6,000 to 7,000  population range.                                                                   
She  described  a large  population  gap until  reaching  the                                                                   
higher  population communities  of  Juneau  and Fairbanks  at                                                                   
30,000. She explained  that 10,000 was a good  base number as                                                                   
she  is confident  that neither  Juneau  nor Fairbanks  would                                                                   
fall below the 10,000 population mark.                                                                                          
9:43:25 AM                                                                                                                    
Co-Chair  Hoffman MOVED  to REPORT  SB 303  out of  Committee                                                                   
with individual  recommendation  and the accompanying  fiscal                                                                   
note. There being NO OBJECTION, it was so ordered.                                                                              
SB  303  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  an  accompanying   previously  published                                                                   
fiscal   note   from   the   Department    of   Environmental                                                                   
AT EASE:       9:44:15 AM                                                                                                     
RECONVENED:    9:44:35 AM                                                                                                     

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