Legislature(2005 - 2006)CAPITOL 124

03/21/2006 08:00 AM House COMMUNITY & REGIONAL AFFAIRS


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08:04:29 AM Start
08:05:16 AM HB429
09:42:20 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 429 RESTORE DCRA AND DCED TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
    HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                   
                         March 21, 2006                                                                                         
                           8:04 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kurt Olson, Co-Chair                                                                                             
Representative Bill Thomas, Co-Chair                                                                                            
Representative Gabrielle LeDoux                                                                                                 
Representative Mark Neuman                                                                                                      
Representative Sharon Cissna                                                                                                    
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Pete Kott                                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 429                                                                                                              
"An Act  reestablishing the Department of  Community and Regional                                                               
Affairs; relating  to the Department of  Commerce, Community, and                                                               
Economic Development and to the  membership of various boards and                                                               
commissions; and providing for an effective date."                                                                              
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 429                                                                                                                  
SHORT TITLE: RESTORE DCRA AND DCED                                                                                              
SPONSOR(s): REPRESENTATIVE(s) CROFT                                                                                             
                                                                                                                                
02/06/06       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/06/06       (H)       CRA, L&C, FIN                                                                                          
03/21/06       (H)       CRA AT 8:00 AM CAPITOL 124                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE ERIC CROFT                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Spoke as the sponsor of HB 429.                                                                            
                                                                                                                                
JOHN GLIVA                                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Speaking as a former employee of DCRA and                                                                  
DCCED, testified that the former DCRA doesn't fit well in DCCED.                                                                
                                                                                                                                
ROY ECKERT, Manager                                                                                                             
Ketchikan Gateway Borough                                                                                                       
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  During hearing of HB 429, testified that he                                                                
would like DCCED [and DCRA] to separate.                                                                                        
                                                                                                                                
DAVID HOFFMAN, President                                                                                                        
Alaska Growth Capital                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Urged the passage of HB 429                                                                                
                                                                                                                                
ROSS SCHAFFER, Mayor                                                                                                            
Northwest Arctic Borough                                                                                                        
Kotzebue, Alaska                                                                                                                
POSITION STATEMENT:  During hearing of HB 429, urged the                                                                        
committee to reinstate DCRA.                                                                                                    
                                                                                                                                
PERCY FRISBY                                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During hearing of HB 429, testified in                                                                     
support of the re-creation of DCRA.                                                                                             
                                                                                                                                
JULIE KITKA, President                                                                                                          
Alaska Federation of Natives (AFN)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During hearing of HB 429, related AFN's                                                                    
support of the re-creation of DCRA.                                                                                             
                                                                                                                                
MIKE IRWIN, Executive Vice President                                                                                            
Alaska Federation of Natives (AFN)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified on HB 429.                                                                                       
                                                                                                                                
KATHIE WASSERMAN                                                                                                                
Alaska Municipal League (AML)                                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Advocated for HB 429.                                                                                      
                                                                                                                                
GORDAN JACKSON, Director of Business and Economic Development                                                                   
Tlingit and Haida Central Council                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified in support of HB 429.                                                                            
                                                                                                                                
SALLY SADDLER, Legislative Liaison                                                                                              
Office of the Commissioner                                                                                                      
Department of Commerce, Community, & Economic Development                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Relayed that DCCED believes  that the state                                                               
and its  communities are  best served by  putting the  money [for                                                               
seven new  staff positions,  as necessitated  under HB  429] into                                                               
direct provision of services to communities.                                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
                                                                                                                                
CO-CHAIR  BILL THOMAS  called the  House  Community and  Regional                                                             
Affairs  Standing  Committee  meeting  to order  at  8:04:29  AM.                                                             
Representatives Thomas,  Olson, LeDoux,  and Neuman  were present                                                               
at the call to order.   Representatives Cissna and Salmon arrived                                                               
as the meeting was in progress.                                                                                                 
                                                                                                                                
HB 429-RESTORE DCRA AND DCED                                                                                                  
                                                                                                                                
8:05:16 AM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMAS announced  that the only order  of business would                                                               
be HOUSE BILL  NO. 429, "An Act reestablishing  the Department of                                                               
Community  and Regional  Affairs; relating  to the  Department of                                                               
Commerce,  Community,   and  Economic  Development  and   to  the                                                               
membership of  various boards and commissions;  and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
8:05:25 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ERIC CROFT,  Alaska  State Legislature,  sponsor,                                                               
recalled when  the Department of Commerce  & Economic Development                                                               
(DCED)  and  the Department  of  Community  and Regional  Affairs                                                               
(DCRA) were  combined.  The original  justification, he recalled,                                                               
was cost savings  in the amount of $1 million  from combining the                                                               
upper  level administrators.   He  further recalled  that at  the                                                               
time  it  was a  difficult  choice  because there  were  specific                                                               
duties of each department, and  the hope was that the combination                                                               
would work well.  However, he  opined that the merger didn't work                                                               
well and  now more than  ever it is important  for there to  be a                                                               
specific agency dedicated to the communities across the state.                                                                  
                                                                                                                                
REPRESENTATIVE  CROFT highlighted  that  an  agency dedicated  to                                                               
helping  city   governments  is  the  only   agency  specifically                                                               
mentioned in the Alaska State  Constitution in Article X, Section                                                               
14.   He related  his belief that  the constitution  intended for                                                               
there to  be a separate and  distinct agency for rural  and local                                                               
governments to seek assistance.   Therefore, he expressed concern                                                               
regarding whether  the current  combined structure  complies with                                                               
the constitution.   Aside  from the  constitution, Representative                                                               
Croft opined  that now  more than ever  it's very  important that                                                               
rural  governments of  all kinds  have a  specific, identifiable,                                                               
and  comfortable  agency  from  which to  seek  assistance.    He                                                               
attributed the need  for a separate agency for  communities to be                                                               
supported  by   the  following:     the  tremendous   impacts  on                                                               
communities, the  increasing complexity of requirements,  and the                                                               
recent  emphasis  on  areas  to   incorporate.    In  conclusion,                                                               
Representative Croft urged  the committee to have  a fair hearing                                                               
and pass out HB 429.                                                                                                            
                                                                                                                                
8:11:36 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  questioned why it's necessary  to have one                                                               
department  that  works  specifically with  rural  or  "regional"                                                               
Alaska.  He opined that there is already a rural/urban divide.                                                                  
                                                                                                                                
REPRESENTATIVE CROFT  explained that  larger communities  can, to                                                               
some   extent,  defend   themselves.     Although  the   proposed                                                               
Department  of  Community  & Regional  Affairs  would  serve  all                                                               
communities, the impact of losing  such a department is felt most                                                               
by smaller communities with few resources.                                                                                      
                                                                                                                                
REPRESENTATIVE NEUMAN  related his  understanding that  there's a                                                               
division or  agency within the  current DCCED that  addresses the                                                               
aforementioned.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  CROFT answered  that for  many communities,  they                                                               
know that there is a place  somewhere in state government that is                                                               
supposed to  help them.   However, prior to the  consolidation of                                                               
the   departments,  it   was  an   identifiable  location.     He                                                               
highlighted that the constitution  specifies that such "an agency                                                               
shall be  established".  The constitution  further highlights the                                                               
importance  of having  such an  agency at  the department  level.                                                               
Representative  Croft   opined  that   it's  difficult   for  any                                                               
community, but  particularly smaller  communities, to  face state                                                               
government.    Therefore,  there  should  be  a  department  with                                                               
community-level   staff   who   recognize  and   understand   the                                                               
communities' problems.                                                                                                          
                                                                                                                                
8:15:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  said that  she agreed  with Representative                                                               
Croft in regard  to the need for there to  be a comfortable place                                                               
for cities  and villages to go.   However, she opined  that would                                                               
be the  function of the  staff.  She  questioned the need  to re-                                                               
create  an entire  department versus  having a  large advertising                                                               
campaign  to educate  the public  as  to where  the services  for                                                               
communities exist.                                                                                                              
                                                                                                                                
REPRESENTATIVE  CROFT said  that he  agreed that  the staff  does                                                               
matter the  most.   However, he maintained  that a  department is                                                               
necessary  in this  case because  it acknowledges  the importance                                                               
[of community issues] and allows the  handling of the issues in a                                                               
more  standard  and  uniform  manner  rather  than  a  fragmented                                                               
fashion.    With  regard  to   Co-Chair  Thomas'  legislation  to                                                               
encourage local  governments, Representative Croft said  that's a                                                               
good course.   He  reiterated the need  for a  cabinet-level post                                                               
dedicated to [community and regional].                                                                                          
                                                                                                                                
8:19:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX inquired  as  to the  number of  positions                                                               
this proposed department would require.                                                                                         
                                                                                                                                
REPRESENTATIVE CROFT recalled the $1  million in savings when the                                                               
departments were merged  in 1999, and the fiscal  notes "here are                                                               
about $1.8 [million] so it's  somewhere between those."  He added                                                               
that the  legislation would  establish the  office and  people to                                                               
refer, help, and guide [communities].                                                                                           
                                                                                                                                
REPRESENTATIVE LEDOUX  opined that  rather than  creating another                                                               
department  with  a high  paid  commissioner,  it would  be  more                                                               
appropriate  to  "beef  up"  the   division  in  which  the  work                                                               
currently occurs.                                                                                                               
                                                                                                                                
REPRESENTATIVE CROFT  explained that commissioners  are important                                                               
in regard to  defending the mission.  He suggested  that if there                                                               
had been a commissioner, an  advocate, when revenue sharing began                                                               
to decline, [the legislature]  wouldn't have eliminated municipal                                                               
assistance and revenue sharing.                                                                                                 
                                                                                                                                
8:21:39 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA recalled 1999  when the merger occurred and                                                               
the  rural  communities related  that  they  felt best  with  the                                                               
separate  department.     She  characterized  the   merger  as  a                                                               
demonstration project,  and inquired as  to how rural  Alaska was                                                               
changed and made better under that structure.                                                                                   
                                                                                                                                
REPRESENTATIVE   CROFT   said   that  as   an   experiment,   the                                                               
departmental  merger  was a  failure  with  some fairly  dramatic                                                               
negative impacts to rural Alaska,  such as lack of incorporation.                                                               
Although  he  said  that  he  didn't  know  how  significant  the                                                               
elimination of DCRA  is to the negative impacts  in rural Alaska,                                                               
he said  that there have  been negative  impacts that need  to be                                                               
addressed with the funds available today.                                                                                       
                                                                                                                                
REPRESENTATIVE CISSNA  related her  belief that  there must  be a                                                               
way  to   obtain  an  analysis   of  the  effects  of   the  1999                                                               
departmental merger.  She related  the [increase] in camps in the                                                               
Chesterfield  area in  Anchorage  and the  serious problems  with                                                               
[increases]  in homeless  populations.   She  related her  belief                                                               
that  urban  Alaska  is  being  impacted  by  the  aforementioned                                                               
problems.                                                                                                                       
                                                                                                                                
8:28:12 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SALMON opined  that  HB 429  would probably  help                                                               
with the urban/rural divide that  currently exists.  There has to                                                               
be  a connection  between the  cities  that are  created and  the                                                               
appropriate  state agency.   He  noted that  many of  the village                                                               
government   officials   aren't    familiar   with   the   entire                                                               
governmental  process,  and  some assistance  [from  departmental                                                               
staff] is necessary to continue the village government.                                                                         
                                                                                                                                
8:29:42 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN noted  his  agreement with  Representative                                                               
Salmon, but related  that there is a division  that provides such                                                               
services  already  within  DCCED.   He  questioned  whether  it's                                                               
appropriate  to create  a separate  department to  accomplish the                                                               
same purpose.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  CROFT  opined  that  making  the  former  DCRA  a                                                               
division   within   a   larger   department   places   the   only                                                               
constitutionally mandated  department in a subsidiary  role.  The                                                               
aforementioned, he further opined,  results in the division never                                                               
getting the attention it deserves.                                                                                              
                                                                                                                                
8:30:54 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  THOMAS  referred  to   the  Articles  included  in  the                                                               
legislation and  asked if those  are services that  DCRA provided                                                               
in the past.                                                                                                                    
                                                                                                                                
REPRESENTATIVE CROFT said that the  legislation proposes a fairly                                                               
small  and  bare  bones  DCRA and  the  Articles  specified  were                                                               
provided  under  the  former  DCRA.    Other  programs,  such  as                                                               
Headstart and  Rural Energy, haven't  been included.   Therefore,                                                               
he characterized his proposal as  a fairly limited reconstitution                                                               
of DCRA.  In further  response to Co-Chair Thomas, Representative                                                               
Croft  clarified  that the  legislation  doesn't  create any  new                                                               
programs as  those programs are  in the current division  and the                                                               
former DCRA.                                                                                                                    
                                                                                                                                
8:33:04 AM                                                                                                                    
                                                                                                                                
JOHN  GLIVA, speaking  as a  former employee  of DCRA  and DCCED,                                                               
related that DCRA served as  a clearing house for information for                                                               
rural local  governments and  individuals.   The entire  staff of                                                               
DCRA  had  a  good  working   knowledge  of  the  issues  in  the                                                               
communities, rural  or urban.   He  opined that  DCRA did  a good                                                               
job.   However,  some of  the interest  in contacting  people has                                                               
been  lost due  to  the  way the  programs  and  the issues  have                                                               
evolved, he  further opined.   Mr. Gliva related his  belief that                                                               
the former DCRA  doesn't fit well in DCCED  with its commissioner                                                               
that would likely have more of  a worldwide and national focus of                                                               
promoting  commerce within  the state.    With such  a focus,  he                                                               
opined that [DCRA] isn't receiving  the attention it should, even                                                               
as  a division  within DCCED.   Due  to the  merger of  1999, the                                                               
state  lost  the  place  where rural  communities  could  go  for                                                               
attention, which  seemed to attribute to  the rural/urban divide.                                                               
He reminded the committee that  DCRA was the smallest department,                                                               
which meant  that budget  cuts by the  state were  strongly felt.                                                               
Therefore, he  suggested that if  the legislation passes,  then a                                                               
department  that  can  sustain  itself  and  compete  with  other                                                               
departments within the  state should be built.   He recalled that                                                               
when  revenue  sharing  was   disappearing  and  the  departments                                                               
merged, tribal governments seemed to  step to the forefront.  The                                                               
aforementioned  has  created  conflict  in  some  communities  in                                                               
relation  to   which  form   of  government   is  best   for  the                                                               
communities.                                                                                                                    
                                                                                                                                
8:39:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SALMON  asked if  tribal governments  are stronger                                                               
throughout the state.                                                                                                           
                                                                                                                                
MR.  GLIVA said  he  wasn't sure  whether  the tribal  government                                                               
presence is  present throughout the  state, although  he recalled                                                               
that it  was the case in  the Yukon Kuskokwim Delta.   He related                                                               
that there  were three  influencing factors  [that led  to tribal                                                               
governments stepping to the forefront],  as follows:  the loss of                                                               
revenue sharing;  the loss  of DCRA; and  an increase  in federal                                                               
funds  for tribal  entities.   The largest  difficulty for  rural                                                               
communities was the loss of revenue sharing, he opined.                                                                         
                                                                                                                                
8:40:11 AM                                                                                                                    
                                                                                                                                
MR. GLIVA,  in response to  Representative Cissna,  recalled that                                                               
after the transition of DCRA  to the Department of Commerce there                                                               
was also an  internal transition with regard to the  focus of the                                                               
remaining  staff  providing  daily local  government  assistance.                                                               
The aforementioned  staff were transferred  to the  Rural Utility                                                               
Business Assistance  (RUBA) and they continue  to provide day-to-                                                               
day  government   operation  support,   although  it's   a  lower                                                               
priority.   The  main  focus of  RUBA, which  receives  a lot  of                                                               
federal  money, is  to help  communities better  handle utilities                                                               
that are put  in the cities.  Moreover, the  planning arm of DCRA                                                               
was redirected into other activities and the staff decreased.                                                                   
                                                                                                                                
8:43:24 AM                                                                                                                    
                                                                                                                                
ROY  ECKERT, Manager,  Ketchikan  Gateway Borough,  said that  he                                                               
found  the   discussion  regarding  the  urban/rural   divide  as                                                               
interesting because as  compared to [the Lower 48]  all of Alaska                                                               
is  considered to  be rural.   Mr.  Eckert, drawing  upon his  28                                                               
years  of municipal  management  experience, said  that he  would                                                               
like DCCED  to separate.   He likened the combined  department to                                                               
merging the police  and fire departments under  one entity, which                                                               
usually doesn't work  due to the entirely  different criteria and                                                               
standards.  He  said it's critical for areas to  be classified as                                                               
rural because  of the  ability to have  lower interest  rates for                                                               
homes, which  becomes a  critical piece  to consider  when cities                                                               
and boroughs contemplate consolidation.                                                                                         
                                                                                                                                
MR.  ECKERT  commented  that [DCCED]  doesn't  care  about  rural                                                               
issues and it shouldn't because  it deals with providing jobs and                                                               
bringing commerce and  industry to a community,  while DCRA deals                                                               
with the  political side.   He recalled  his three  years working                                                               
with  the  University of  Tennessee  in  the Municipal  Technical                                                               
Advisory Service (MTAS), which was  a streamlined department that                                                               
provided municipal technical  assistance to all 400  or so cities                                                               
in Tennessee.  The MTAS  was successful because it didn't address                                                               
personnel issues,  although it did  planning, zoning,  water, and                                                               
sewer.   The program was funded  from a portion of  a state sales                                                               
tax.   The point  was to  help those  cities without  a full-time                                                               
manager, engineer,  certified public accountant, sewer  and water                                                               
manager, et  cetera by providing technical  expertise rather than                                                               
revenue sharing.                                                                                                                
                                                                                                                                
MR.  ECKERT  opined  that  he   doesn't  like  a  large  combined                                                               
department  because it  quickly  losses its  vision and  purpose.                                                               
Often,  such  a  large  department   hires  unqualified  or  less                                                               
qualified  people   over  time  and  devolves   into  a  faceless                                                               
government the sole  purpose of which is to  keep people employed                                                               
while the  service aspect  falls to the  wayside.   Therefore, he                                                               
suggested that Alaska needs to  provide true economic development                                                               
and  commerce  services in  [one  department]  and community  and                                                               
regional  affairs matters,  such as  planning and  incorporations                                                               
[in another department].   With regard to  staff, he acknowledged                                                               
that staff  may be helpful  or they may  be rude.   However, when                                                               
speaking  with staff  in a  combined department,  one may  not be                                                               
knowledgeable  or  have  expertise  with regard  to  a  political                                                               
issue.   In conclusion, Mr. Eckert  said that he would  like [for                                                               
HB 429  to pass]  because rural Alaska  is hard  hit economically                                                               
and  has political  and  economic issues  that  are addressed  by                                                               
entirely separate groups of people.                                                                                             
                                                                                                                                
8:51:39 AM                                                                                                                    
                                                                                                                                
DAVID  HOFFMAN, President,  Alaska Growth  Capital, informed  the                                                               
committee that prior to running  Alaska Growth Capital he was the                                                               
chief operating  officer of UIC,  the chief executive  officer of                                                               
Sitnasuak  Native Corporation  in Nome,  and the  commissioner of                                                               
DCRA from 1987-1990.  He  explained that Alaska Growth Capital is                                                               
a company  that provides business  loans and  consulting services                                                               
to  businesses   that  don't  typically   have  access   to  bank                                                               
financing.   The  company is  budgeted  to do  about $50  million                                                               
worth of loans this year and  the primary target is rural Alaska.                                                               
He  urged the  passage of  HB 429  because since  Alaska achieved                                                               
statehood,  local  government  and rural  development  have  been                                                               
critical issues for  the state.  The need today  is even greater,                                                               
especially since  the long-term funding for  rural communities is                                                               
probably  decreasing, which  means  the  problems will  increase.                                                               
Traditionally, DCRA  was a problem solving  agency that addressed                                                               
the problems in local communities.                                                                                              
                                                                                                                                
MR.  HOFFMAN  identified  the  following  issues  that  could  be                                                               
addressed   more   successfully   by   a   separate   department:                                                               
development and  promotion of a  private sector in  rural Alaska;                                                               
local governance  and organization of boroughs;  and coordination                                                               
of federal and state services.   He then expressed the importance                                                               
of  the  state finding  local  level  mechanisms to  promote  the                                                               
coordination   of  tribal   and   municipal   governments.     He                                                               
highlighted that expertise is necessary  to solve those problems.                                                               
He then recalled  his time as the commissioner of  DCRA, which he                                                               
likened to the  office of the ombudsman in that  there was an on-                                                               
the-ground problem solving.  He  opined that when DCRA was merged                                                               
with  the  Department  of Commerce,  the  aforementioned  problem                                                               
solving was  diminished.  The  DCRA, he further opined,  was very                                                               
successful  with the  coordination  of programs.   Again,  what's                                                               
been  lost is  the  entrepreneurial  problem-solving approach  of                                                               
DCRA.   Mr. Hoffman related  his belief that having  two separate                                                               
departments provides  a greater  value because services  are more                                                               
effective when an organization has a singular focus.                                                                            
                                                                                                                                
8:57:55 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA   inquired  as  to  what   might  make  it                                                               
reasonable  to have  a separate  and new  administrative expense.                                                               
She inquired  as to  the financial advantage  for the  state that                                                               
would compensate  for the administrative  expenses of  a separate                                                               
department.                                                                                                                     
                                                                                                                                
MR.  HOFFMAN, as  a business  person, suggested  that one  should                                                               
review  the  value  for  the  services.   He  recalled  his  past                                                               
experience  and his  belief  in the  development  of the  private                                                               
sector,  which  is difficult  in  the  smaller communities.    He                                                               
recalled  a conversation  with  a Galena  resident  who sold  his                                                               
smoked fish  for years and  needed a way  to work legally  with a                                                               
loan.  The aforementioned was  accomplished and the agreement was                                                               
that   the  intellectual   property  was   available  for   those                                                               
interested.   The aforementioned  was valuable and  could've been                                                               
replicated had the salmon run  not crashed.  However, the problem                                                               
is  that  it's  difficult  for  a department  to  focus  on  such                                                               
projects  when   it's  also  charged  with   the  larger,  global                                                               
projects.                                                                                                                       
                                                                                                                                
9:03:23 AM                                                                                                                    
                                                                                                                                
ROSS SCHAFFER,  Mayor, Northwest Arctic Borough,  opined that the                                                               
villages are broke  and many don't have an adequate  tax base due                                                               
to low  population.  He cited  Kobuk and Ambler as  examples.  He                                                               
related  that Kotzebue  does the  paperwork for  communities that                                                               
can't afford  to hire someone to  do so.  He  further opined that                                                               
rural communities don't have any  voice in the government, as far                                                               
as at  the cabinet  level.   He then  turned attention  to global                                                               
warming and the lack of an  agency to review this and its impacts                                                               
on rural  communities.   The current focus  of DCCED  is resource                                                               
and  international trade  development,  while  rural issues  have                                                               
taken a back seat.  Although  he said he respected the governor's                                                               
intent to save  money through the single department  of DCCED, he                                                               
said that  a healthy  urban Alaska  has to  have a  healthy rural                                                               
Alaska.  Therefore, he urged the committee to reinstate DCRA.                                                                   
                                                                                                                                
9:08:12 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   NEUMAN  focused   on  the   charge  that   rural                                                               
communities don't have a voice  in state government, and inquired                                                               
as  to  who  isn't  doing   his/her  job  in  representing  rural                                                               
communities.   With regard to  the charge that DCCED  is focusing                                                               
mainly   on    economic   development,    Representative   Neuman                                                               
highlighted the importance  of the Red Dog  Mine and development,                                                               
in general.                                                                                                                     
                                                                                                                                
MAYOR SCHAFFER said that DCCED doesn't  have the time to spend on                                                               
rural  issues  when the  focus  is  on resource  development  and                                                               
international development.  Mayor  Schaffer acknowledged that the                                                               
Red  Dog  Mine  was  developed such  that  the  Northwest  Arctic                                                               
Borough was  formed.   He further  acknowledged that  the borough                                                               
receives quite a bit of funding  from the Red Dog Mine.  However,                                                               
he  echoed   earlier  testimony   that  the   rural  communities,                                                               
particularly the  smaller communities, have very  little voice in                                                               
the governor's cabinet.                                                                                                         
                                                                                                                                
REPRESENTATIVE NEUMAN surmised  then that DCCED is  doing what it                                                               
can with what it has.                                                                                                           
                                                                                                                                
MR. SCHAFFER explained that without  a commissioner for DCRA, the                                                               
rural  communities   don't  have  a  voice   [in  the  governor's                                                               
cabinet].                                                                                                                       
                                                                                                                                
9:11:31 AM                                                                                                                    
                                                                                                                                
PERCY FRISBY,  speaking as  the 1994-2000  director of  energy of                                                               
DCRA, pointed  out that DCCED has  very little to do  with energy                                                               
issues  because  those  issues   were  placed  under  the  Alaska                                                               
Industrial Development  and Export Authority (AIDEA),  which is a                                                               
lending institute  under DCCED.   However, under DCRA  energy was                                                               
addressed and was  a large portion of the focus.   With regard to                                                               
the  comment that  tribal  governments are  becoming  more of  an                                                               
influence, he  opined that when  DCRA was eliminated,  the tribal                                                               
governments began  working with  federal agencies to  address the                                                               
losses  experienced  after  losing   DCRA.    He  echoed  earlier                                                               
comments that rural  Alaska doesn't have an  agency or department                                                               
to advocate on its behalf.   He pointed out that today more small                                                               
communities face  bankruptcy than ever.   He concluded  by noting                                                               
his support of the re-creation of DCRA.                                                                                         
                                                                                                                                
9:15:39 AM                                                                                                                    
                                                                                                                                
JULIE  KITKA,  President,  Alaska Federation  of  Natives  (AFN),                                                               
related  AFN's  support   of  the  re-creation  of   DCRA.    She                                                               
highlighted  the geographic  issues  and  diverse communities  in                                                               
Alaska  that  require  different   models  to  appropriately  and                                                               
successfully  address   the  needs  of  the   communities.    She                                                               
expressed the  need to take the  best of what is  in communities,                                                               
build on it, share the successes,  and replicate them.  Ms. Kitka                                                               
acknowledged   that  the   economic  development   is  of   vital                                                               
importance to  the state and  an important mission of  DCCED, but                                                               
governance  in  small communities  is  not  a mission  of  DCCED.                                                               
Furthermore,  the rural  governance  commission report  of a  few                                                               
years  ago characterizes  DCCED  as a  significant  step back  in                                                               
state government models in regard  to the inclusion of people all                                                               
over the state.  In conclusion,  Ms. Kitka urged the committee to                                                               
look at  re-creating DCRA  and focusing  it on  successful models                                                               
for small  communities and  implementing good  governance because                                                               
without it economic development can't occur.                                                                                    
                                                                                                                                
9:20:23 AM                                                                                                                    
                                                                                                                                
MIKE  IRWIN,  Executive  Vice  President,  Alaska  Federation  of                                                               
Natives (AFN), began  by reminding the committee that  he was the                                                               
last  commissioner   of  DCRA.    He   highlighted  the  advocacy                                                               
component of  DCRA and its  commissioner, who provided  a comfort                                                               
level for people from rural  Alaska looking for [help] from state                                                               
government.  Recalling  his time sitting in the  cabinet room, he                                                               
related that  there is limited  time for 15 commissioners  to get                                                               
the  attention  of  the  entire body,  let  alone  the  governor.                                                               
Therefore, the commissioners have to  choose what issues to bring                                                               
forward.   With regard to  Representative Neuman's  earlier query                                                               
regarding who  isn't doing  their job, Mr.  Irwin said  that it's                                                               
not a matter of who isn't  doing their job but rather the mission                                                               
of  DCRA has  been lost  within DCCED.   Furthermore,  the single                                                               
commissioner  for  DCCED  with  a  limited  amount  of  time  and                                                               
resources  has  to  determine  the   real  issues,  mission,  and                                                               
objective  of the  department.   Although Mr.  Irwin acknowledged                                                               
the  importance  of  the macro  economic  and  commerce  function                                                               
within state government,  it has come to be  the dominant mission                                                               
of DCCED.   Therefore, it's not surprising that  the commerce and                                                               
macro economic side is the  choice to present.  Regarding whether                                                               
it's discriminatory  to have  an agency  focused on  the specific                                                               
needs and requirements  of rural Alaska, he said  he hoped people                                                               
would  not   view  it   that  way   because  DCRA   served  every                                                               
municipality in  the state  based on the  varying needs  of each.                                                               
Mr. Irwin  concluded by emphasizing  that nothing  can substitute                                                               
for having a seat at the cabinet table.                                                                                         
                                                                                                                                
9:25:29 AM                                                                                                                    
                                                                                                                                
MR. IRWIN,  in response  to Co-Chair  Thomas, related  that Edgar                                                               
Blatchford   served  as   the  commissioner   of  DCRA   and  the                                                               
commissioner of DCCED during its first years.                                                                                   
                                                                                                                                
9:25:58 AM                                                                                                                    
                                                                                                                                
KATHIE  WASSERMAN, Alaska  Municipal  League  (AML), thanked  the                                                               
sponsor  and the  staff  of the  Division  of Community  Advocacy                                                               
within DCCED  who have picked  up what an entire  department once                                                               
did and have done a good job  doing so.  However, as the problems                                                               
of  the  communities  have  grown,   the  amount  of  people  and                                                               
resources to  help have  decreased.   She recalled  attending two                                                               
committee   hearings  in   which  the   commissioner  or   deputy                                                               
commissioner testified  in support of commerce  issues, which was                                                               
actually   in  conflict   with  what's   good  for   communities.                                                               
Furthermore,  a couple  of  weeks of  ago  a legislative  staffer                                                               
inquired as  to who in the  state would help with  communities in                                                               
need.   As a former mayor,  Ms. Wasserman recalled the  ties with                                                               
those in  DCRA and  pointed out  that now  there are  fewer local                                                               
government specialists and it's difficult  to find out where they                                                               
are  and if  they have  the time.   Furthermore,  the DCRA  staff                                                               
served as  the staff that  local governments couldn't  hire, such                                                               
as attorneys.  Ms. Wasserman advocated  for HB 429 and noted that                                                               
there seems to  be a direct relation between high  oil prices and                                                               
difficulties in rural communities.                                                                                              
                                                                                                                                
9:29:26 AM                                                                                                                    
                                                                                                                                
GORDAN JACKSON,  Director of  Business and  Economic Development,                                                               
Tlingit and  Haida Central Council,  informed the  committee that                                                               
he was one  of the original staff  of DCRA in 1973.   He recalled                                                               
that DCRA  was a  small department,  but a  committed group.   He                                                               
reviewed  the various  divisions in  DCRA and  the services  they                                                               
provided.  He then echoed  Ms. Wasserman's comments regarding the                                                               
high oil prices  and the difficulties in rural  communities.  Mr.                                                               
Jackson  recalled   references  to  DCRA  as   a  problem-solving                                                               
division,  with  which  he  agreed.   Therefore,  when  DCRA  was                                                               
eliminated, many  looked to the  federal government  for answers.                                                               
The  aforementioned has  led to  the current  situation in  which                                                               
communities  are  going directly  to  the  federal government  to                                                               
solve  their   problems  and   bypassing  the   state  government                                                               
altogether.   Therefore,  re-establishing  DCRA  is important  in                                                               
providing  an opportunity  to shrink  the urban/rural  divide, he                                                               
opined.  He wholeheartedly endorsed re-creation of DCRA.                                                                        
                                                                                                                                
9:33:55 AM                                                                                                                    
                                                                                                                                
SALLY SADDLER,  Legislative Liaison, Office of  the Commissioner,                                                               
Department  of  Commerce,   Community,  &  Economic  Development,                                                               
assured  the committee  that she  is taking  the concerns  to the                                                               
department to address.  She  then reviewed DCCED's mission, which                                                               
is  to   promote  healthy   economies  and   strong  communities.                                                               
Furthermore,  [the   department]  believes  the   integration  of                                                               
economic  development and  community development  is inextricably                                                               
linked,  logical,  and economical.    From  today's comments  she                                                               
surmised that  the department is  busy in the  trenches providing                                                               
the  services and  doing the  work, but  not getting  the message                                                               
out.   Therefore, she assured  the committee that  the department                                                               
would work on  getting the message out to the  people.  There are                                                               
several programs,  such as the fisheries  revitalization program,                                                               
on  which the  department has  been working.   The  hope is  that                                                               
DCCED  is providing  communities  with the  skills and  abilities                                                               
they need to be successful in  maximum self governance.  In fact,                                                               
the   administration  has   introduced  the   community  dividend                                                               
legislation.     In  closing,  Ms.   Saddler  related   that  the                                                               
department  has conservatively  estimated  that  seven new  staff                                                               
positions  would   be  necessary   if  HB   429  were   to  pass.                                                               
Essentially,   an   administrative    services   office   and   a                                                               
commissioner's  office would  be created  around the  Division of                                                               
Community  Advocacy.   Ms. Saddler  relayed  that DCCED  believes                                                               
that the  state and  the communities are  best served  by putting                                                               
the money [necessary  for seven new staff  positions] into direct                                                               
provision of services to communities.                                                                                           
                                                                                                                                
9:36:37 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  recalled   the  witnesses  who  expressed                                                               
concerns, and said  they need to be contacted.   He also recalled                                                               
the  testimony expressing  that  [rural  communities] don't  feel                                                               
they have a voice "at the table."                                                                                               
                                                                                                                                
MS. SADDLER  opined that the  department does a good  job working                                                               
with  the  entities  and  organizations  to  leverage  expertise,                                                               
talent,  and resources.   In  fact, when  the commissioner  meets                                                               
with the  governor, he often  presents community issues.   To the                                                               
extent  to which  that  can  be improved,  Ms.  Saddler said  the                                                               
department looks forward to doing so.                                                                                           
                                                                                                                                
9:38:23 AM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMAS closed public testimony.                                                                                        
                                                                                                                                
9:38:26 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CISSNA commented that  she has been impressed with                                                               
the  staff of  all  the departments,  including  those of  DCCED.                                                               
However, there is a crisis and HB 429 is one way to address it.                                                                 
                                                                                                                                
9:39:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SALMON  commented that  Alaska  has  a bridge  to                                                               
build  in relation  to the  rural/urban  divide and  DCRA is  one                                                               
portion  of it.    He expressed  the need  to  balance money  and                                                               
services,  which he  said can't  be achieved  when there  is only                                                               
interest in  money.   In rural  communities, the  governments are                                                               
small and  have limited expertise.   This legislation would  be a                                                               
good  instrument  for the  state  and  the  rural areas  to  come                                                               
together.                                                                                                                       
                                                                                                                                
9:41:28 AM                                                                                                                    
                                                                                                                                
CO-CHAIR THOMAS  announced that HB  429 would  be held over.   He                                                               
also  noted  that there  have  been  no  complaints from  the  48                                                               
communities he  represents.  He also  noted that if HB  429 moves                                                               
forward, the  tribal organizations  will have  to scale  back and                                                               
work with the state.                                                                                                            
                                                                                                                                
9:42:20 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Community  and Regional  Affairs Standing  Committee meeting  was                                                               
adjourned at 9:42 a.m.                                                                                                          

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