Legislature(1993 - 1994)
02/23/1994 01:40 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATOR TAYLOR introduced SB 164 (MUNICIPAL INCORPORATION- RECLASSIFICATION-DISSOLUTION), sponsored by the Senate Community & Regional Affairs Committee chaired by SENATOR RANDY PHILLIPS, and invited him to testify. SENATOR PHILLIPS deferred to DARROLL HARGRAVES, Chairman of the Local Boundary Commission. SENATOR TAYLOR announced there was a work draft for a committee substitute for SB 164, and he called on MR. HARGRAVES, who introduced two members and a staff person present from the Local Boundary Commission: TONI SALMEIER from Anchorage, FRANCES HALLGREN from Sitka, and Commission Staff, DAN BOCKHORST. MR. HARGRAVES began by urging the legislature to pass the bill this year, and he praised the hard work by sponsors and staff. He explained the bill makes some technical amendments to the law that are needed by the boundary commission and are detailed on pages 38 and 39 of this year's report from the commission. Number 058 MR. HARGRAVES reviewed the main provisions in the bill beginning with (1) Establishes mechanism for first class and home rule cities to reclassify as second class cities. (2) Provides State oversight concerning all municipal reclassification. He gave some examples of the need for this provision. (3) Permits direct incorporation of home rule cities and unified municipalities, and confirms that home rule cities and home rule boroughs may be created through merger and consolidation. (4) Confirms the discretion of the Local Boundary Commission in approving, denying or amending petitions. (5) Confirms that the Local Boundary Commission has legislative authority to adopt regulations for incorporation and dissolution. MR. HARGRAVES explained it was vital to have the legislation because of events that will be coming forth in the next few months. He called attention to the work draft, Section 22 on page 8, to suggest a change to Sec. 29.06.520 by deleting TO ASSETS AND LIABILITIES. and leave the title as SUCCESSION. He explained the e section dealt with quite a few "rights, powers, and duties." SENATOR TAYLOR asked for a motion to adopt for discussion purposes the proposed committee substitute prepared by the Judiciary Committee. Number 104 SENATOR DONLEY asked for an assessment of the differences in the work draft with the original SB 164. MR. HARGRAVES asked that MR. BOCKHORST from the boundary commission staff reference the changes. MR. BOCKHORST explained the difference between the Judiciary work draft and the CS FOR SENATE BILL NO. 164(CRA) is the addition of Section 22 on page 8. He further explained Section 22 restores some language that was in the statute in 1988, prior to a change in the law that was to make it easier for certain dissolutions to occur. MR. BOCKHORST continued to explain the powers, duties, rights had d been eliminated from the section, which, he thought created some unintended circumstances, where the state or successor municipality could be burdened with the responsibility of paying off debts, but may not have the power, the right, or the duty to collect revenues to pay those debts. SENATOR DONLEY questioned the difference between the powers and duties when a municipality down grades from a first class to a second class. He asked if the municipality down grades, do they keep the same powers, duties, and rights, and why would they down grade? MR. BOCKHORST explained Section 22 deals only with dissolution and has nothing to do with reclassification from first to second class status. SENATOR DONLEY suggested a municipality could dissolve and be recreated as a second class entity. He thought the municipality would be recreated with all of the rights, powers, and duties as when they were a first class. Number 156 MR. BOCKHORST continued to explain Section 22 only applies to a dissolution, and he reiterated the state of Alaska or another municipal government is going to be burdened with the assets and liabilities. MR. BOCKHORST claimed the language suggests, that if the State or another municipal government is going to be burdened with the liabilities of a dissolved government, then the successor needs to have the powers, duties, and rights owned by the former municipal government in order to collect revenues and pay off the debts. MR. BOCKHORST said reclassification was a separate issue, and under current law, if a first class city wanted to reclassify to second class status, there is no direct way to do so. He used the cities of Dillingham and Galena as an example of first class cities in an unorganized borough, both operate school districts. He said there was an interest, because of the financial burden faced by the communities to provide schools, or to dissolve or reclassify into second class status. If they dissolved under the present system the responsibility for education would be transferred to the State of Alaska to be operated as a school district under the regional education attendance area system. SENATOR LITTLE said the city of Seldovia has been used as an example in the backup material, and she posed the hypothetical that Seldovia has petitioned to dissolve. If the Kenai Peninsula Borough refused to establish a service area to take care of the services previously accepted by the city of Seldovia, she asked how the bill would influence that situation. Number 202 MR. BOCKHORST explained if, under Section 22, the Kenai Peninsula Borough refused to act as a successor to a dissolved city of Seldovia, the law as it currently exists says all those assets and liabilities will be transferred from Seldovia to the State of Alaska. Without the language in Section 22, he further explained the state gets saddled with debt without the assets to collect taxes to pay for Seldovia's obligation bonds. SENATOR LITTLE clarified that Section 22 would allow the state to assume the rights, powers, and duties for Seldovia. MR. BOCKHORST said she was correct, and he further explained what happened when these powers were eliminated in the 1988 law. He said Section 22 was restorative language in the statute that existed previously. In a discussion with MR. BOCKHORST, SENATOR LITTLE received some historical information on the proposed changes and on the expressed statutory authority for the state to continue to levy taxes previously levied by Seldovia. SENATOR TAYLOR picked up on the hypothetical of Seldovia where the borough succeeded to Seldovia's assets, and added the factors of the borough having limited powers and Seldovia being a home rule city with general powers. He quoted SENATOR DONLEY'S question if the borough would inherit through Section 22 those powers which it doesn't otherwise have, or would it only be to the extent that it impacts rights, powers, and duties needed regarding liabilities. He gave the example of a police department in Seldovia and no police authority in the Kenai Peninsula Borough. There was a short discussion among the committee members with MR. BOCKHORST on what Section 22 really says. MR. BOCKHORST explained in the dissolution process there would have to be a transition plan prepared, and the borough would be required to establish a service area to assume the powers and duties of Seldovia. Number 255 SENATOR LITTLE said she was hopeful Seldovia would not dissolve itself. SENATOR DONLEY asked SENATOR PHILLIPS whether he thought Section 22 was a good amendment, and SENATOR PHILLIPS said it was done in a draft after leaving his committee. SENATOR DONLEY also asked why the provisions in Section 22 were taken out in 1988. MR. BOCKHORST thought it was because the Local boundary Commission denied the petition for the dissolution of the city of Akiachak using the law as written prior to the 1988 amendments. He said, at that time, REPRESENTATIVE LYMAN HOFFMAN prepared a series of amendments to eliminate what was perceived as road blocks causing the commission to deny the petition for the dissolution of Akiachak. MR. BOCKHORST explained that Section 5 of the bill adopted by the legislature in 1988 was intended to eliminate any question that a successor to a dissolved municipal government would allow the State of Alaska to contract with an Indian Reorganization Act village or traditional council, but doing so would not grant any recognition of governmental powers in the course of entering into a contract between the State of Alaska and a village council. He indicated a copy of the text of the 1988 amendment was in the bill packet. SENATOR DONLEY asked how the amendment addressed that concern, which he considered a legitimate one. MR. BOCKHORST thought the intention was to insure, for a native village council, it would not be recognized as a governmental entity with governmental powers. He explained Section 22 clearly says the powers, right, and duties of a former municipal government would only succeed to another municipality or to the State. He thought the intent by REPRESENTATIVE HOFFMAN was retained. SENATOR DONLEY now felt the legislation was acceptable, but asked MR. BOCKHORST if he had talked to REPRESENTATIVE HOFFMAN. He suggested, out of curtesy, it should have been done, since MR. BOCKHORST was attempting to amend a bill written by a current legislator. Number 305 MR. HARGRAVES said he would pay close attention to SENATOR DONLEY'S advice and would be visiting REPRESENTATIVE HOFFMAN'S office. SENATOR TAYLOR restated the amendment to delete on page 8, line 22 the words TO ASSETS AND LIABILITIES. Without objections, so ordered. SENATOR JACKO moved to pass CS FOR SENATE BILL NO. 164(JUD) as amended (MUNICIPAL INCORPORATION/RECLASSIFICATION/DISSOLUTION) from committee with individual recommendations. Without objections, so ordered.
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