01/30/2001 08:05 AM House CRA
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ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
January 30, 2001
8:05 p.m.
MEMBERS PRESENT
Representative Kevin Meyer, Co-Chair
Representative Carl Morgan, Co-Chair
Representative Andrew Halcro
Representative Drew Scalzi
Representative Lisa Murkowski
Representative Gretchen Guess
Representative Beth Kerttula
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 13
"An Act relating to municipal service areas and providing for
voter approval of the formation, alteration, or abolishment of
certain service areas."
- MOVED SSHB 13 OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 13
SHORT TITLE: SERVICE AREAS:VOTER APPROVAL/TAX ZONES
SPONSOR(S): REPRESENTATIVE(S)BUNDE
Jrn-Date Jrn-Page Action
01/08/01 0027 (H) PREFILE RELEASED 12/29/00
01/08/01 0027 (H) READ THE FIRST TIME -
REFERRALS
01/08/01 0027 (H) CRA, FIN
01/10/01 0056 (H) COSPONSOR(S): KOHRING
01/12/01 0066 (H) SPONSOR SUBSTITUTE INTRODUCED
01/12/01 0066 (H) READ THE FIRST TIME -
REFERRALS
01/12/01 0066 (H) CRA, FIN
01/25/01 (H) CRA AT 8:00 AM CAPITOL 124
01/25/01 (H) Heard & Held
MINUTE(CRA)
01/30/01 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE CON BUNDE
Alaska State Legislature
Capitol Building, Room 501
Juneau, Alaska 99801
POSITION STATEMENT: Testified as sponsor of SSHB 13.
TAM COOK, Director
Legal Services
Division of Legal and Research Services
Legislative Affairs Agency
State Capitol
Juneau, Alaska 99801
POSITION STATEMENT: Reviewed the memorandums she provided to
the committee regarding SSHB 13.
JEFF BUSH, Deputy Commissioner
Office of the Commissioner
Department of Community & Economic Development
PO Box 110800
Juneau, Alaska 99811-0800
POSITION STATEMENT: Offered the department's perspective.
MARGIE VANDOR, Assistant Attorney General
Governmental Affairs Section
Civil Division (Juneau)
Department of Law
PO Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Expressed concerns with SSHB 13.
ACTION NARRATIVE
TAPE 01-6, SIDE A
Number 0001
CO-CHAIR KEVIN MEYER called the House Community and Regional
Affairs Standing Committee meeting to order at 8:05 p.m.
Representatives Morgan, Meyer, Scalzi, Murkowski, Guess, and
Kerttula were present at the call to order. Representative
Halcro arrived as the meeting was in progress.
[Please note that the recording does not begin until
approximately two minutes into the tape due to technical
difficulties. However, the recording does include the entire
meeting.]
HB 13-SERVICE AREAS:VOTER APPROVAL/TAX ZONES
CO-CHAIR MEYER announced that the only order of business before
the committee is SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 13, "An
Act relating to municipal service areas and providing for voter
approval of the formation, alteration, or abolishment of certain
service areas." He noted that the committee would be discussing
some memorandums provided by Legal Services. Co-Chair Meyer
reminded the committee that the public testimony portion of SSHB
13 had been closed at the prior hearing on SSHB 13.
Number 0324
REPRESENTATIVE CON BUNDE, Alaska State Legislature, sponsor of
SSHB 13, reminded the committee that, at one time, there were
boroughs and cities. When the Anchorage Borough and City
combined, there were some advantages for the greater Anchorage
Borough and the City of Anchorage. However, those in the more
remote areas of the borough realized that joining the combined
borough and city would mean that the area would lose some of its
autonomy. Therefore, in order to receive the majority of votes
in both the [borough and the city], a charter was created and
agreed upon. The charter provided that those in the then
borough should continue to have access to their limited
services, in particular, the limited road service. Such a
situation is not unlike what SSHB 13 proposes. He emphasized
that SSHB 13 restates that the limited road service areas have a
right to continue to exist, unless there is a majority vote of
both parties involved.
Number 0568
TAM COOK, Director, Legal Services, Division of Legal and
Research Services, Legislative Affairs Agency, confirmed that
she had provided Representative Bunde with three separate
memorandums. Ms. Cook offered to answer any questions from the
committee.
REPRESENTATIVE KERTTULA related her understanding that SSHB 13
would place limits on the home rule community, not the general
[law municipality]. She asked if her understanding was correct.
MS. COOK said she believes that Representative Kerttula's
understanding is incorrect. She explained that SSHB 13 exempts
some categories of general [law municipalities], but will impose
limits on other categories of general [law municipalities]. She
used Haines, which is a third class borough, as an example.
REPRESENTATIVE KERTTULA asked if there could be impacts on all
home rule entities.
MS. COOK said, "As far as I know, that's true."
Number 0697
REPRESENTATIVE KERTTULA turned to an opinion from the Department
of Community and Economic Development (DCED), which is dated
January 29, 2001. That opinion mentions [in a quotation from
Governor Knowles' veto of HB 133] that when a home rule
municipality is concerned with a matter of purely local concern,
the charter and not a legislative act is looked to. However,
Representative Kerttula recalled that one of Ms. Cook's
memorandums noted that law can change how a municipality
behaves. Therefore, Representative Kerttula wondered if the
legislature could constitutionally pass a law that interferes
with the behavior of the home rule municipality.
MS. COOK referred to Article X, Section 11 of the Alaska
Constitution, which reads as follows: "A home rule borough or
city may exercise all legislative powers not prohibited by law
or by charter." The legislature prohibits home rule
municipalities from doing many things. Ms. Cook maintained
that the two most significant functions of a borough are the
power of education and taxation, both of which "the legislature
has completely occupied the field." The home rule municipality
has no say as to whether it will be a school district; that is
totally dependent upon its status as either a city and a borough
or a borough. Ms. Cook said, "A home rule municipality
exercises virtually no discretion in the world of taxation and
education."
REPRESENTATIVE KERTTULA questioned [whether that would be the
case] with a matter of purely local concern.
MS. COOK answered, "I don't think the court is going to be very
willing to substitute its judgment for that of the legislature,
as to whether a matter is of purely local concern. ... It
would take ... some pretty strong facts, I think, to persuade a
court."
REPRESENTATIVE KERTTULA turned to the "special areas" level of
government and inquired as to what is the common interest of the
entire state.
MS. COOK replied that she couldn't answer that question. She
acknowledged that there may be some difficulty with SSHB 13 on
that issue because the court has said that, with regard to
special and local analysis, it decides on a case-by-case basis.
Ms. Cook noted that she didn't have a grasp of the facts that
exist with municipalities. However, she indicated that, in an
abstract view of cases that deal with local and special [areas],
the Eagle River case did have an effect that was extremely
specific to a small area. Ms. Cook said, "This bill is not that
specific; it is going to impact quite a few different
municipalities, I think."
REPRESENTATIVE KERTTULA acknowledged that the legislation had
been broadened since last year. However, she didn't find the
common interest for the whole state, which leaves her in that
special and local interest [quandary].
Number 1032
REPRESENTATIVE MURKOWSKI pointed out that DCED's letter dated
January 29, 2001, says that "the Legislature should impose no
home rule limitation, except where the Legislature could clearly
demonstrate that there is overriding state interest involved."
She asked if Ms. Cook disagreed with that statement and that, in
fact, there are many areas, such as taxation and education, in
which there are home rule limitations.
MS. COOK said that she doesn't disagree with the statement.
However, Ms. Cook related her belief that DCED's statement is a
policy statement, not a legal statement. The constitution
clearly allows the legislature to grant home rule powers as it
sees fit. Although the legislature may need to exercise caution
when interfering with home rule governments, the legislature
has, time and again, made the decision whether to limit home
rule municipalities. Ms. Cook said:
I don't have the knowledge to conclude ... that the
bill that you're considering isn't something that is a
policy matter that shows some state interest. I can't
see offhand that it necessarily follows that a court
would disagree with the legislature ... if the
legislature chooses to make the policy choice that
it's going to protect - in some fashion - the voters
of existing service areas and that's what we have
here. So ..., if you're alleging that's itself not a
... reasonable statewide goal, perhaps the court would
agree. But I certainly wouldn't think ... that would
necessarily follow.
REPRESENTATIVE MURKOWSKI surmised then that Ms. Cook would
disagree with the statement that there is the standard of
overriding state interest that must be established in order to
impose limitations on a home rule borough.
MS. COOK answered that she had never seen such a case.
REPRESENTATIVE MURKOWSKI related her understanding that Ms. Cook
is saying that this is a policy statement rather than a
statement of law.
MS. COOK reiterated that she had never seen such a case.
REPRESENTATIVE MURKOWSKI commented that perhaps she could obtain
more information from the author of the letter.
REPRESENTATIVE KERTTULA requested that the Deputy Commissioner
of DCED speak to his letter, which has been the subject of
discussion.
REPRESENTATIVE BUNDE noted that he had not received a copy of
the letter from DCED.
JEFF BUSH, Deputy Commissioner, Office of the Commissioner,
Department of Community & Economic Development, deferred to
Margie Vandor, Department of Law, in regard to Representative
Murkowski's question.
Number 1332
MARGIE VANDOR, Assistant Attorney General, Governmental Affairs
Section, Civil Division (Juneau), Department of Law (DOL),
turned to the case law regarding when home rule charters have
been viewed as controlling law versus a legislative act. There
are two cases that [DOL] believes to be the supreme court's
reading of when a home rule charter will control over a
legislative act. The first case, Lien v. City of Ketchikan,
occurred in 1963 and that case was noted in the governor's veto
message last year. The case of Lien v. City of Ketchikan
involved a legislative act that was general across the state and
dealt with how a city could lease its property. The City of
Ketchikan had its own charter provision as to how it could lease
its property. In that case the supreme court stated that when a
matter is truly of local concern, the charter rules over the
legislative act. Ms. Vandor noted that this case was cited and
expanded several times. Although the case was cited, it was
overruled -- in the sense that it didn't apply in cases of
schools -- in the McCauley v. Hildebrandt case, which determined
that a home rule couldn't determine that it had an overriding
concern as to how it would participate in certain statewide
school functions and programs.
MS. VANDOR informed the committee that the Chugach Electric
Association case refined the Lien v. City of Ketchikan rule by
developing the local activity rule. She explained that the
Chugach Electric Association case dealt with an electrical
cooperative that had a service area that it wanted to extend
into the City of Anchorage. The city didn't want to give a
permit for that extension. In this case, Chugach Electric
Association, the Alaska Supreme Court stated that this is a
matter not of local concern only because the cooperative was
created under the state law to exist and thus the progress
[extension] could not be stopped based on a permitting code.
MS. VANDOR turned to the issue at hand, local service areas.
Ms. Vandor said, "We don't see where it is a statewide interest
as to how home rule versus a general law, with less than 60,000
people is a matter of statewide concern." How local service
areas are set up is a matter for the borough assembly to
perform. She indicated that allowing the borough assemblies to
set up the local service area would mean that a minority of
people would be controlling the general, areawide, borough
assembly in this matter. However, advisory boards would be
fine. Ms. Vandor didn't see that the statewide interest would
be upheld since the legislation exempts entities with
populations of 60,000 and less. She said that she wasn't sure
why this legislation would only apply to certain classes of
boroughs and certain populations, especially when [the
legislation] impedes on a home rule borough, which has special
status in the constitution. Furthermore, the Alaska Supreme
Court has analyzed when a charter provision versus a legislative
act will control.
Number 1642
REPRESENTATIVE SCALZI inquired as to what would happen if a
borough assembly wanted to create a service area with different
taxing jurisdictions; that cannot be done under current law.
Therefore, Representative Scalzi viewed SSHB 13 as a tool
allowing more expansion of local control versus a hindrance to
local control.
MS. VANDOR indicated that it would be one thing if the bill is a
tool that is an option versus a mandate as to how a service area
must be operated. She said, "The difference here is that it's
either a limitation on their power -- they have to do it this
way -- or it's a matter of choice that they could do."
REPRESENTATIVE SCALZI commented that a [borough assembly]
doesn't have the choice now.
MS. VANDOR said it would be fine to make it a choice. She
commented that she has not taken a stand as to whether combining
service areas with one service area board doing oversight would
establish differential tax zones within a service area. "It
seems to me, it's combining several and maybe you're having
administrative oversight over the three," she said.
Number 1734
REPRESENTATIVE SCALZI related his understanding that SSHB 13
leaves it for the service area to decide rather than the
assembly.
MS. VANDOR explained that [this bill] limits how a home rule or
general borough can alter, abolish, or combine their service
areas. This reminded Ms. Vandor of Local Boundary Commission
rulings. She remarked that sometimes the local people are not
the best to decide what is really [appropriate] for the broader
good. Therefore, the Local Boundary Commission does have the
authority to review issues on a statewide level and decide
whether an area should be incorporated or annexed for the
broader good. Such a structure is no different than how borough
governments are set up with an assembly that is elected from the
general populous. Therefore, allowing a minority of the borough
to decide whether a service area could join the area or not
seems to be in opposition to what is done at the borough level.
Number 1848
REPRESENTATIVE SCALZI pointed out that the assembly would
maintain the power as to whether the service area would be
created or not and thus the assembly would maintain overall
oversight as to what and how service areas are created.
MS. VANDOR agreed that would be the case when service areas are
initially established. However, SSHB 13 addresses the situation
of altering a service area.
REPRESENTATIVE HALCRO recalled that, at a prior hearing, the
sponsor mentioned that currently the state imposes 53
restrictions, aside from their charter, on local governments.
He inquired as to why this [restriction imposed by SSHB 13]
would be any different.
MS. VANDOR said she assumed that Representative Halcro was
referring to limitations placed on home rule boroughs. Ms.
Vandor returned to her opinion on the court cases and what is a
matter that is of local concern versus a general law that will
be applied statewide and of statewide concern. Ms. Vandor said,
"It really goes back to analysis of the 'local activity rule'
and whether or not mandating how a home rule borough or other
boroughs, except for a certain class of boroughs, has to deal
with their road service areas ... [and] whether that's a matter
of general application statewide and is of statewide concern."
Ms. Vandor noted that from the case law she has read, she hasn't
heard any analysis as to why this is a statewide issue since the
road service areas are established to deal with the local
services.
REPRESENTATIVE HALCRO recalled discussion from last week's
hearing regarding the Alaska Supreme Court's ruling on the
police protection issue in Anchorage. The Alaska Supreme Court
ruled that police protection was for the greater good of the
community. However, he had difficulty believing that the courts
would rule in a similar fashion in regard to local road service
areas.
Number 2059
MS. VANDOR directed attention to the Kenai Peninsula case in
which a service area tried to sue, although a service area
[board] doesn't have any legal standing separate from the
borough. Ms. Vandor didn't see where that would change [under
SSHB 13], although she supposed that the local citizens
themselves could sue. In response to Representative Halcro, Ms.
Vandor could not recall the facts surrounding the Kenai
Peninsula case.
REPRESENTATIVE KERTTULA returned to the issue of taxes versus
service areas, which she believes are two different issues.
Under SSHB 13, the service areas would, in essence, be allowed
to decide whether or not to combine. However, the tax returns
to the assembly for the decision. She asked if that distinction
was correct.
MS. VANDOR replied, "I believe so."
REPRESENTATIVE SCALZI indicated his understanding that the
assembly has overall oversight on the taxing mill rate. If a
service area comes up, even with a differential tax mill rate,
and proposes a differential tax, that would still have to go
before the assembly for approval. He asked if his understanding
is correct.
MS. VANDOR replied, yes.
Number 2170
MR. BUSH directed the committee's attention to Ms. Cook's
opinion dated January 26, 2001, regarding local and special
legislation. Ms. Cook's opinion, in regard to the exemption of
populations 60,000 and under, says, "Upon examining the
legislative goals and the means used to advance them, the court
determines whether the legislation bears a fair and substantial
relationship to a legitimate state purpose." From the
[department's] perspective, [the department] has yet to see or
understand a state purpose in the distinctions being made
between the smaller general law boroughs versus home rule
boroughs. As Ms. Cook says, there has to be a legitimate state
purpose and the record has to reflect it.
REPRESENTATIVE BUNDE remarked that he found it amazing that
government officials say that local people are not qualified to
decide what is good for them. With regard to the overriding
statewide concern, Representative Bunde questioned, "What
greater concern could there be in this state, than empowering
local voters."
Number 2275
REPRESENTATIVE KERTTULA inquired as to why SSHB 13 shouldn't be
applied across the board, to all home rule and general law
[boroughs]. She further inquired as to the reasoning behind
having the distinctions.
REPRESENTATIVE BUNDE answered that [the bill] focuses where the
problem is. The smaller boroughs do not seem to have these
problems with local service areas.
REPRESENTATIVE MURKOWSKI asked whether there could be problems
for these smaller boroughs in the future and would it
appropriate to address that now.
REPRESENTATIVE BUNDE pointed out that the local service areas
don't exist [in the smaller boroughs] and he didn't expect them
[to develop in the smaller boroughs]. Representative Bunde
reiterated that SSHB 13 focuses on the problems that arose when
boroughs and cities combined.
Number 2365
REPRESENTATIVE SCALZI commented that he knew of areas with
populations under 60,000 that could use this statute change.
Representative Scalzi asked if Representative Bunde would be
amenable to allowing SSHB 13 to apply to areas with populations
under 60,000.
REPRESENTATIVE BUNDE indicated he was amenable to such.
However, he explained that he didn't want to create a burden for
local governments by requiring additional elections.
REPRESENTATIVE MURKOWSKI recalled that the additional expense of
elections would not be an issue because these elections would be
held at the next scheduled election; there would not be special
elections when a new subdivision was added.
REPRESENTATIVE BUNDE agreed with Representative Murkowski's
understanding. Representative Bunde clarified that his earlier
remark spoke to his concern that [a smaller area] with limited
resources would be asked to perform a broader election.
Number 2470
REPRESENTATIVE HALCRO asked if Representative Scalzi wanted to
pursue an amendment.
REPRESENTATIVE SCALZI answered that he didn't want to pursue an
amendment in this committee. However, he wanted to point out
that there are [smaller] areas that [may want to utilize the
process embodied in SSHB 13]. He noted that if other members
wanted to change [SSHB 13] so that it would apply statewide, he
would support that. Representative Scalzi announced that he
would support SSHB 13 and recommend a "Do Pass."
CO-CHAIR MEYER asked, "Are you making a motion that we move the
bill?"
REPRESENTATIVE SCALZI replied yes. Representative Scalzi
mentioned that he has experience in local governments. He
informed the committee that the City of Homer has an annexation
proposal that came about because [the city] could not have a
differential tax mill rate with Homer's fire service area. He
explained that in Homer's case the [annexed area] was large,
which made it difficult to bring everyone in under one mill
rate; it wasn't going to be a fair system. The law's limitation
as well as the assembly's inability to create a differential tax
mill rate caused the fire service area to fail. Therefore,
Representative Scalzi viewed SSHB 13 as a tool for local
government. Furthermore, he believes that the assembly
maintains control since the assembly sets the mill rate and has
ultimate influence in regard to how a service area is formed and
thus Representative Scalzi viewed SSHB 13 as providing more
local control rather than less.
Number 2605
CO-CHAIR MEYER noted that Representative Scalzi has moved that
the committee report SSHB 13 from committee with the attached
fiscal notes.
REPRESENTATIVE MURKOWSKI said that it isn't clear, in her mind,
that SSHB 13 doesn't have constitutional problems. The issue as
to whether SSHB 13 meets the local versus state test seems to
remain and thus she indicated that Representative Scalzi's
recommendation would be worth review. Therefore, she suggested
that Representative Bunde look into Representative Scalzi's
recommendation in order to avoid constitutional problems in the
future.
REPRESENTATIVE KERTTULA noted her objection to reporting SSHB 13
from committee due to the constitutional problems. Furthermore,
she noted that she had not heard any resolution to the statewide
interest issue. Representative Kerttula said she also believes
that SSHB 13 should be referred to the House Judiciary Standing
Committee in order to address the constitutional issues.
The committee took an at-ease from 8:47 a.m. to 8:48 a.m.
REPRESENTATIVE HALCRO asked if the sponsor would accept an
additional committee of referral for SSHB 13.
CO-CHAIR MEYER said that the committee should first vote on the
motion to move SSHB 13 out of committee and pending the results
of the vote, the decision will be made as to whether to add an
additional committee of referral.
REPRESENTATIVE HALCRO requested that the committee first decide
whether to give SSHB 13 an additional committee of referral
because that would determine whether or not he would sign the
bill report with a "Do Pass." Representative Halcro expressed
his concerns regarding the constitutionality of SSHB 13 and he
also expressed his desire to give SSHB 13 a referral to the
House Judiciary Standing Committee. He announced that if a
referral to the House Judiciary Standing Committee was added he
would sign the bill report with a "Do Pass."
The committee took another at-ease from 8:50 a.m. to 8:52 a.m.
Number 2832
REPRESENTATIVE SCALZI withdrew his motion to report SSHB 13 from
committee. There were no objections and thus the committee
returned to committee discussion.
REPRESENTATIVE HALCRO remarked that the opposing legal opinions
indicate the need for more time on [the constitutional
concerns]. He said he believes it to be in the best interest of
the sponsor to make the bill air tight before it is sent to the
governor.
REPRESENTATIVE KERTTULA said that it would be helpful to
determine whether there are any cases with regard to voting
rights and whether [voting rights] alone result in a statewide
interest. Representative Kerttula reiterated the need for a
House Judiciary Standing Committee referral. With such a
referral, she said that she wouldn't object to moving the bill
from committee.
CO-CHAIR MEYER announced that he and Co-Chair Morgan feel that
requesting a House Judiciary Standing Committee referral should
be a committee decision.
Number 2967
REPRESENTATIVE KERTTULA moved that the committee recommend that
SSHB 13 receive a House Judiciary Standing Committee referral.
TAPE 01-6, SIDE B
CO-CHAIR MEYER announced that there was no objection to
Representative Kerttula's motion and thus the committee
recommended that SSHB 13 receive a House Judiciary Standing
Committee referral.
The committee took an at-ease from 8:57 a.m. to 8:58 a.m.
Number 2936
REPRESENTATIVE HALCRO moved to report SSHB 13 out of committee
with individual recommendations, the accompanying zero fiscal
note, and the recommendation for a House Judiciary Standing
Committee referral.
REPRESENTATIVE SCALZI suggested that [the request for the
referral] to the House Judiciary Standing Committee include some
language regarding the specific [judicial concerns] of the House
Community and Regional Affairs Standing Committee.
CO-CHAIR MEYER announced that the committee aides would draft a
memorandum to that effect. Co-Chair Meyer also announced that
hearing no objections, SSHB 13 would be reported from the House
Community and Regional Affairs Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:58 a.m.
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