Legislature(2003 - 2004)
03/18/2004 03:31 PM Senate STA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SJR 31-FEDERAL FUNDING FOR EDUCATION
CHAIR GARY STEVENS announced SJR 31 to be up for consideration.
He asked for a motion to adopt the committee substitute (CS) as
the working document.
SENATOR JOHN COWDERY made a motion to adopt CSSJR 31 \Q version
as the working document. There being no objection, it was so
ordered.
SENATOR GENE THERRIAULT, sponsor of SJR 31, stated that he would
reference a series of charts as he explained the resolution. He
read the following into the record:
SJR 31 relates to urging the United States Congress to
compensate the State of Alaska for the effect of
federal land ownership on the state's ability to fund
public education.
This legislation stems from a resolution adopted in
July of 2002 by the Executive Committee of the Council
of State Governments-WEST urging its membership of
thirteen states to support and pass joint resolutions
expressing how federal land ownership hinders western
states' ability to fund education.
The CS adds a whereas paragraph to page 2, lines 27,
which ties this resolution to the overall effort of
CSG-WEST. Since this effort began, all 13 states have
introduced similar resolutions and all but four (CA,
WA, CO, AK) have passed them.
The resolution is the result of years of research and
preparation by the legislators from the State of Utah
and their legislative staff who have developed the
statistics and dollar amounts you see in this
resolution.
The Western Governors' Association has also endorsed
this resolution, which is termed "APPLE" for Action
Plan for Public Land and Education.
Western states as a group are falling behind in
education funding when measured in growth of real per
pupil expenditures during the period of 1979-1998.
Eleven of the twelve states with the lowest real
growth in pupil expenditures are western states. The
growth rate of real per pupil expenditures in the
thirteen western states is less than half (28 percent
versus 57 percent) of that in the thirty-seven other
states [graph 1]. On average, enrollment in western
states is projected to increase dramatically while the
growth rate in other states is actually projected to
decrease (2002-2011 western states 7.1 percent versus
2.6 percent). If you look at graphs 2 & 3 you can see
that in the eastern part of the country the actual
student populations are projected to decrease while
the western states are experiencing growth.
Yet, western states' state and local taxes as a
percentage of income are as high or higher than other
states (1998-1999 western states 11.1 percent versus
10.9 percent). You can see on handout page 4 how we
compare to the other states across the nation as far
as percentage of personal income that is contributed
to education efforts. That's pages 4 & 5. Western
states' commitment to education as a percentage of
state budget is equal to that of other states. That is
spelled out in handout page 6 and page 7.
I think it's interesting to note that the State of
Alaska shows 20 percent going to education and I think
that's because they looked at total expenditures and
of course we have inflation proofing of the permanent
fund and the dividend itself. [It] all gets counted as
spending so that actually suppresses our numbers
slightly.
The problem lies with the federal government and the
enormous amount of land it owns in western states. If
an imaginary line were drawn from Montana to New
Mexico, no state east of that line has more than 14
percent of its land owned by the federal government.
No state west of that line has less than 27 percent of
their land federally owned (with the exception of
Hawaii). Four western states have more than 62 percent
of their land federally owned. If you look at handout
pages 8, 9, 10 & 11 it graphically shows the
difference between the eastern half of the United
States and the western half of the United States with
regards to the percentage of land that is controlled
by the federal government.
The primary way that federal land ownership impacts
the funding of education in western states is through
enabling acts and property taxes. Most enabling acts
for western states, including Alaska, promised to give
five percent of the proceeds from the sale of federal
land for the benefit of public education. In 1977 the
federal government abandoned its original policy to
dispose of public lands depriving the states of public
education funding estimated to be over $14 billion.
This resolution does not recommend that federally
owned lands be sold, only that states be compensated
as promised.
States are not allowed to assess property tax on
federal lands, impacting western states in an amount
over $4 billion annually. The federal government does
provide "payment in lieu of taxes" (PILT) since states
cannot tax federal lands, but the amount of PILT
payments coming to the states in 2001 was only abut
four percent of the annual property tax revenue lost
by western states.
This resolution proposes to: create legislative
awareness, educate the public, build a western states
coalition to petition Congress to compensate
adequately the western states in the United States.
In summary, western states are financially harmed in a
significant way by the amount of federal land
ownership. The conclusion is that federal land
ownership hinders western states' ability to fund
public education.
CSG-WEST has formed this APPLE initiative with a
steering committee, which is chaired by Speaker Martin
Stevens in the Utah House of Representatives and I, as
Senate President, also sit as a member of that
steering committee. The steering committee will work
like a strategic planning group who will press the
case to Congress and the Judiciary. The first meeting
of the steering committee will be in the CSG-WEST
annual meeting in Anchorage on September 25th of this
year.
CHAIR GARY STEVENS asked how PILT money comes into the different
districts.
SENATOR THERRIAULT replied the money that is available to the
state is supposed to be considered a payment in lieu of property
taxes, but the actual amount that states receive is very small
compared to the amount that could be assessed if the land were
all privately owned.
SENATOR JOHN COWDERY asked if there is a definition of "just
compensation."
SENATOR THERRIAULT said it would be optimistic to expect $4
billion per year from the federal government, but "I guess just
compensation would be as much as we could get." He established
that he preferred the broad language to a specific dollar
amount.
SENATOR GRETCHEN GUESS referred to page 2, line 12 and asked for
clarification of the $4 billion amount as it relates to property
tax.
SENATOR THERRIAULT thought it was the estimated annual impact if
property tax could be levied against federal land.
SENATOR GUESS asked if that was the federal land the state was
supposed to get and didn't.
SENATOR THERRIAULT thought it was all the federal land.
SENATOR GUESS asked what would happen to impact aid if this were
to happen.
SENATOR THERRIAULT said this wouldn't necessarily be a lump sum
payment. The federal government would likely increase the PILT
payments because you can't levy tax on federal land.
SENATOR GUESS noted that she didn't have anything in her packet
explaining how impact aid is calculated and asked if that
information was available.
SENATOR THERRIAULT acknowledged that information wasn't in the
packets.
SENATOR GUESS asked whether there were Alaska specific numbers
rather than western state numbers.
KENT BRIGGS from Sacramento interjected to say that based on
computations of the Utah policy office, Alaska would receive a
total of $8 billion.
BRIAN ALLRED from Salt Lake City spoke via teleconference to
clarify that they would receive one-time revenue of about $5.6
billion or ongoing revenue of approximately $2.25 billion. With
regard to an earlier question about property taxes, he explained
that the $4 billion was computed with the following assumptions:
The 4.1 percent federal land ownership is an average of the non-
western states and assumes that the western states have the same
percentage of federal land ownership. Then it assumes that the
effective tax rate for each state is applied and the land is
valued at $525 per acre. Those were the figures used to compute
the approximate $4 billion figure on property taxes.
SENATOR GUESS admitted to being confused about the argument for
the request. She questioned whether it was the 1977 change in
federal policy regarding disposal of public lands or were the
PILT payments simply not keeping pace.
MR. BRIGGS replied it is both. When states entered the union,
the Enabling Act promised the new states 5 percent of all lands
for public education. But when the Federal Lands Policy
Management Act of 1977 was passed, the Organic Act on BLM lands
essentially did away with those sales. He asked Mr. Allred to
verify that assessment, which he did.
He continued to say that PILT money doesn't amount to a great
deal and described the payment as acknowledgement and
compensation for the burden that public lands place on western
states.
SENATOR GUESS noted that PILT goes to all states.
MR. BRIGGS clarified that PILT goes to all public lands states.
SENATOR GUESS asked whether PILT and impact aid were synonymous.
MR. BRIGGS told her that when PILT was adopted it was largely a
western initiative then asked Mr. Allred to verify.
MR. ALLRED didn't hear the question.
SENATOR GUESS asked if PILT makes up for military bases and
other non-tax land that the federal government has in all
states.
MR. ALLRED explained that impact aid is compensation for
military base lands, "but PILT payments apply to not just
military base, but to, as Kent mentioned, payment in lieu of
taxes recognizing the burden that federal land ownership places
on the states in general, not just with military bases."
CHAIR GARY STEVENS asked Senator Therriault to remain in the
room in case there were more questions then asked Mr. Briggs and
Allred whether they had testimony to present.
MR. ALLRED replied he did not have testimony, but he was
available to answer questions.
MR. BRIGGS replied the information he wanted to impart is that
Alaska is critical because it is the home of Senator Ted
Stevens. Senator Stevens is Chairman of Appropriations and a
member of the Labor and Education Subcommittees. "If we had to
pick a person in the United States Senate who is absolutely
essential, it would be Senator Stevens." He expressed sincere
appreciation for Senator Therriault's support.
CHAIR GARY STEVENS confirmed that Alaska is very proud of
Senator Ted Stevens.
SENATOR COWDERY made a motion to move CSSJR 31(STA) from
committee. There being no objection, it was so ordered.
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