Legislature(2007 - 2008)BARNES 124
02/27/2007 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| Presentation of the Local Boundary Commission | |
| Adjourn |
* first hearing in first committee of referral
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+ teleconferenced
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ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 27, 2007
8:02 a.m.
MEMBERS PRESENT
Representative Anna Fairclough, Co-Chair
Representative Gabrielle LeDoux, Co-Chair
Representative Nancy Dahlstrom
Representative Mark Neuman
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
Representative Kurt Olson
COMMITTEE CALENDAR
PRESENTATION OF THE LOCAL BOUNDARY COMMISSION
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
DARROLL HARGRAVES, Chair
Local Boundary Commission
Anchorage, Alaska
POSITION STATEMENT: Provided the Local Boundary Commission's
report and a brief overview.
DAN BOCKHORST, Local Boundary Commission
Division of Community Advocacy
Department of Commerce, Community, & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During the Local Boundary Commission's
presentation, answered questions.
ACTION NARRATIVE
CO-CHAIR GABRIELLE LEDOUX called the House Community and
Regional Affairs Standing Committee meeting to order at 8:02:04
AM. Representatives LeDoux, Fairclough, Dahlstrom, and Neuman
were present at the call to order. Representatives Cissna and
Salmon arrived as the meeting was in progress.
^^Presentation of the Local Boundary Commission
8:02:27 AM
CO-CHAIR LEDOUX announced that the only order of business would
be the presentation from the Local Boundary Commission.
8:02:54 AM
DARROLL HARGRAVES, Chair, Local Boundary Commission (LBC), noted
that the committee should have the Local Boundary Commission
report, which has three chapters. The first chapter provides an
overview of the LBC. The second chapter summarizes municipal
boundary activities and pending proposals for 2006. The third
chapter discusses public policy issues of interest to the LBC.
8:04:46 AM
MR. HARGRAVES explained that the first chapter relates that of
the 120 state boards and commissions, the LBC is only one of two
executive branch boards named in the Alaska State Constitution.
The framers of the constitution provided for the LBC in order to
ensure that municipal boundary issues would be dealt with
objectively and from a statewide perspective. The framers
recognized that city and borough governments, as political
subdivisions of the state, were critical to the efficient and
effective delivery of public services. The LBC's
responsibilities include judging proposals for incorporation of
cities and boroughs, annexation to and detachment from cities
and boroughs, reclassification of cities, dissolution of cities
and boroughs, and merger and consolidation of cities and
boroughs. He highlighted that the LBC has other mandatory
duties, which have resulted from actions by the legislature.
These mandatory duties include an obligation to make studies of
local government boundary problems and adopt regulations
establishing standards and procedures for boundary actions. He
related that the LBC consists of four members one from each of
Alaska's judicial districts and the fifth member, the chair, is
appointed at-large member. Mr. Hargraves then introduced the
LBC members: Robert Hicks, Dr. Robert Harcharek, Dr. Anthony
Nakazawa, and Georgianna Zimmerle. He further explained that
members are appointed by the governor for five-year overlapping
terms. Commission members offer their time as a public service
and receive no compensation for it. These are volunteer
positions, he said. In response to Co-Chair LeDoux, Mr.
Hargraves related that the commissioners receive a food
allowance. Mr. Hargraves highlighted that the Department of
Commerce, Community, & Economic Development (DCCED) provides the
staff, Mr. Bockhorst, to the LBC.
8:09:03 AM
MR. HARGRAVES moved on to the second chapter of the report. The
reported activities range from those involving formal petitions
filed with the LBC to prospective proposals being contemplated
at the local level. In 2006, the reported activities include
review of city incorporations on six proposals. In fact, in one
case the LBC acted on a formal petition to incorporate a second
class city government in Naukati, a community of approximately
105 residents on Prince of Wales Island, in the unorganized
borough. The LBC has also dealt with city annexations involving
at least 10 city governments, one formal city annexation
petition was pending before the LBC last year. He noted that
many of these petitions are ultimately withdrawn by the
petitioners. In 2006, the LBC considered city dissolutions,
city reclassifications, and borough incorporations. During the
past year, 16 areas of the state have had some level of
activity. In fact, one borough annexation petition is currently
pending before the LBC and six boroughs have expressed interest
in consolidation. This past year the LBC went into a heavy
schedule, with the support of DCCED, in order to update
regulations that haven't been addressed in over a decade. In
fact, after this week the LBC will, throughout the state, hold
its second set of hearings on these regulations. He related
that the intention is to complete [the revision of the
regulations] by June 30, 2007.
8:13:00 AM
MR. HARGRAVES continued with the third chapter of the report,
which he characterized as the most important section of the
report as it relates what the LBC views as the most important
policy issues. Of the five policy issues, he identified the
following: increasing difficulties in rendering borough
boundary decisions; a general lack of incentives for borough
incorporation; and the absence of methods and standards for the
establishment of unorganized boroughs.
8:14:20 AM
REPRESENTATIVE NEUMAN recalled the passage of House Bill 130,
which allowed the university to choose 250,000 acres to be
matched from the federal government. He related his view that
the aforementioned is an opportunity to help communities,
particularly in Southeast Alaska which is surrounded by federal
lands. Therefore, he inquired as to whether the LBC has looked
into this to identify any of these federal lands around
Southeast Alaska in order to provide a land base to support
boroughs, because some communities simply don't have the land
base with the resource development opportunities required to
support a borough government.
MR. HARGRAVES replied no, but said that the LBC is aware of it.
He said that the LBC's activities have been limited to
encouraging incentives. He agreed that land just isn't
available as an incentive for incorporation, particularly in
Southeast Alaska. Mr. Hargraves said, "Since lands aren't
available, we're also aware that some legislators, from time-to-
time, have proposed some pretty heavy payment -- actual dollars
in place of the lands."
REPRESENTATIVE NEUMAN inquired as to the status of
Representative Thomas's legislation to create boroughs that was
introduced last year.
MR. HARGRAVES deferred to Mr. Bockhorst.
8:17:44 AM
DAN BOCKHORST, Local Boundary Commission, Division of Community
Advocacy, Department of Commerce, Community, & Economic
Development, recalled that Representative Thomas's legislation
didn't pass the legislature. He further recalled that it didn't
even pass from this committee. The legislation included the
grant provision for newly formed borough governments with very
little land. Under a municipal land entitlement program, these
newly formed boroughs would, as an organizational incentive,
receive $15 million. If the area had a certain level of land,
$12 million would be provided. He recalled that there were
other aspects of Representative Thomas's legislation that were
of concern for some, such as the creation of a new type of
borough government without education powers.
8:19:38 AM
CO-CHAIR LEDOUX inquired as to why an unorganized borough
resident would want to form a borough and pay property taxes.
MR. HARGRAVES acknowledged that is how some view the situation
rather than seeing the incentives. He indicated that there is a
level of financial funding that would encourage the formation of
boroughs. However, the state isn't likely to fund at that
level, he opined. Therefore, the LBC can merely encourage
incentives for those places where it's feasible to incorporate.
CO-CHAIR LEDOUX inquired as to how many boroughs have formed
voluntarily.
MR. BOCKHORST specified that currently there are sixteen
organized boroughs, eight of which formed voluntarily. In terms
of numbers residents, he highlighted that 96 percent of
residents who live in organized boroughs live in organized
boroughs established by the 1963 Mandatory Borough Act. The
aforementioned, he indicated, highlights that the problem of the
lack of incentives has been in place for some time. The
aforementioned Act resulted in the formation of eight boroughs,
after which the policy returned to the prior practice of
allowing boroughs to form voluntarily. As indicated by Mr.
Hargraves, boroughs form when there is an attractive enough
incentive to take on that local responsibility. In further
response to Co-Chair LeDoux, Mr. Bockhorst related that the
first borough to form [voluntarily] was the Bristol Bay Borough
and it formed because it was able to tax the fishing and canning
industry. The resources from those taxes were used to build and
fund schools. The next borough that formed voluntarily was the
Haines Borough, which formed due to heavy pressure from the
state to address education matters. From that point on,
boroughs organized in regions taking advantage of natural
resources. Currently, the Deltana region has a pending petition
to organize due to the presence of the Pogo Mine. Mr. Bockhorst
noted that not every organized borough in Alaska levies property
taxes. In fact, four of the five boroughs that recently formed
don't levy property taxes.
CO-CHAIR LEDOUX surmised then that boroughs have formed
voluntarily when there has been an opportunity to tax those who
live outside of the borough.
MR. BOCKHORST noted his agreement.
8:26:01 AM
REPRESENTATIVE SALMON inquired as to the progress of the Delta
incorporation petition.
MR. BOCKHORST related that on March 16th the LBC will hold a
public hearing in Delta Junction to consider the petition to
incorporate a Deltana Borough. The aforementioned would
dissolve Delta Junction and establish a home rule borough
government encompassing the existing Delta-Greely Regional
Education Attendance Area. He expected that the LBC will have
rendered a decision on that matter by the end of March.
8:27:24 AM
CO-CHAIR FAIRCLOUGH inquired as to how much money is flowing
into incorporated areas.
MR. HARGRAVES said he didn't know, but noted that the LBC does
periodically review the areas of that state that are developing
faster. He assured the committee that there are "hot spots"
[areas] that do have a considerable amount of per capita income
and wealth available, which is due to the development of natural
resources in some areas. He added that land and legislative
funds aren't the only incentives for borough formation, as
evidenced by borough formation in areas where there are natural
resources that the area seeks to protect or develop.
CO-CHAIR FAIRCLOUGH clarified that her question is in regard to
the disincentive provided at the state level by providing
funding without requirements to organize an area. Co-Chair
Fairclough opined that although she didn't want to discontinue
services to communities, continued funding from the state [with
no requirements] won't cause people to take responsibility or
control of their own area. Therefore, the legislature should
either commit to funding unincorporated boroughs or determine
how to change the program to encourage areas to take control.
8:29:57 AM
MR. HARGRAVES returned to his presentation with regard to other
policy issues, including the absence of standards and methods
for the establishment of unorganized boroughs; funding for
borough feasibility studies; and compensation of LBC members.
He pointed out that Article X, Section 3 of the Alaska State
Constitution calls for all of Alaska to be divided into
boroughs, whether organized or unorganized, and to be
established per standards and methods specified in law. The
constitution also calls for a minimum number of boroughs and
that each borough embrace an area in population with common
interest to the maximum degree possible. In 1963 only one
borough had formed, which lead to the aforementioned Mandatory
Borough Act requiring eight regions of the state to form
boroughs. The eight regions encompassed about 80 percent of
Alaska's population, which has increased to about 84 percent.
Six of the seven members of the House Community and Regional
Affairs Standing Committee live in boroughs that were mandated
by the Act. Mr. Hargraves then opined that there is a common
misperception that unorganized areas can't afford to operate
boroughs. Studies performed by the LBC, DCCED, and independent
consultants indicate that the aforementioned perception is
correct for a few areas, but not for every region of the state.
Therefore, the LBC can't suggest merely incorporating every
unorganized area. In response to these circumstances, the LBC
endorses legislative action to reform the policy regarding
borough incorporation, establish meaningful incentives for areas
of the state to form organized boroughs, and establish standards
and methods for the creation of multiple regional unorganized
boroughs.
8:34:06 AM
MR. HARGRAVES then related the need to address funding for
borough feasibility studies. Although the legislature provided
some funding last year for borough studies in four regions,
there is no source of funding for new borough studies at this
time. Therefore, the LBC encourages the legislature to continue
to fund studies for those areas interested in incorporation.
Mr. Hargraves concluded with the LBC's compensation request,
which he characterized as a token expression of appreciation.
The growing number of proposals before the LBC has resulted in
the unpaid commissioners of the LBC devoting increased amounts
of time to carry the business of the LBC. For example, for one
proceeding alone one member reported that he had devoted over
350 hours, which is the equivalent of almost 9 40-hour work
weeks. Therefore, the commissioners believe that some measure
of compensation should be offered to the commission, especially
since the work of the LBC is an ongoing every day affair.
8:37:04 AM
CO-CHAIR FAIRCLOUGH asked if there is an average fee for a
borough feasibility study.
MR. BOCKHORST answered that of the projects funded last year, it
was on average $75,000. Those were contracted out to multiple
contractors. In 2006, the legislature appropriated money and
the department contracted, through professional consultant
services. In further response to Co-Chair Fairclough, Mr.
Bockhorst related that the LBC took a "hands-off" approach with
regard to the contractors based on the possibility that the
prospect could evolve. However, he offered to provide the names
of all the contractors.
CO-CHAIR FAIRCLOUGH noted the lack of success [with regard to
incorporation]. Therefore, she questioned whether the
methodology or the selection process of the vendors should be
reviewed.
MR. BOCKHORST opined that there's a valley between conducting a
borough feasibility study and moving to the next stage of
borough incorporation. In the past 30 years, borough
feasibility studies have been performed for most of the
unorganized areas. As mentioned by Mr. Hargraves, those studies
have demonstrated that the regions do have the fiscal and
administrative capacity to operate borough governments.
Although the current policy/practice is that boroughs are formed
through local initiative, it's possible that the LBC could bring
proposals to the legislature. However, the LBC hasn't done so
thus far. Therefore, the feasibility study isn't intended or
guaranteed to initiate borough formation, rather it's a tool to
determine the capacity, voting structure, services, and fiscal
consequences of borough formation.
8:41:11 AM
CO-CHAIR FAIRCLOUGH inquired as to the last time the scope of
the project for the request for proposals (RFP) for the study
was reviewed.
MR. BOCKHORST explained that the work done as a result of the
2006 appropriations was a fresh look at the scope of the
project. Prior to that time, the more common approach was for
the department or LBC to perform the study.
CO-CHAIR FAIRCLOUGH requested a copy of the RFP. She then
turned to the request for compensation, as discussed on page 99
subsection (c). She inquired as to what the LBC believes other
boards and commissions receive that it does not.
MR. HARGRAVES related that some members of boards and
commissions are paid per meeting or a monthly stipend. He
related his preference for the stipend concept.
CO-CHAIR FAIRCLOUGH pointed out that stipends are taxable while
per diem isn't.
MR. HARGRAVES related his agreement.
8:44:12 AM
REPRESENTATIVE SALMON clarified that although he doesn't live in
an organized area, he still pays taxes [for property that he
owns in an organized area].
8:45:22 AM
REPRESENTATIVE CISSNA returned to the incentives and
disincentives. She recalled the Alaska Municipal League's
mention that many areas are struggling to pay the bills for
having a government. She asked how many of the communities that
have failed are located in unorganized boroughs.
MR. HARGRAVES recalled that a few years ago there were a large
number of requests for dissolution, all of which were from
unorganized areas. However, there hasn't been such proposals
come before the LBC in recent years.
MR. BOCKHORST pointed out that formation of a regional
government provides broader jurisdiction with regard to levying
taxes, collecting revenues, taking on responsibilities, and
achieving economies of scale that aren't always available at a
community level. There are areas of the state, organized and
unorganized, that have economic difficulties. However, some of
the poorest communities in the state have education
responsibilities as home rule and first class cities, which is
important in regard to the foundation formula.
8:49:23 AM
REPRESENTATIVE CISSNA related that her review of health systems
in the state have illustrated that telemedicine, technology, and
local training have made a difference. Therefore, she asked if
any thought has been given to offering training with regard to
writing grants and organizing better.
MR. HARGRAVES pointed out that DCCED has divisions that work
with local governments on such matters. Although the LBC could
recommend encouraging such activities, the LBC wouldn't actually
perform such activities.
8:51:53 AM
REPRESENTATIVE SALMON asked if the Pebble Mine is within borough
boundaries
CO-CHAIR LEDOUX replied yes, adding that the Pebble Mine is
located within the Lake & Peninsula Borough.
8:52:22 AM
CO-CHAIR FAIRCLOUGH acknowledged the hard work of the LBC. She
questioned whether the committee would want to form a
subcommittee, including rural Representatives, to review the
LBC's recommendations and whether the committee should sponsor
legislation based on any of those. She then related her own
situation in which the community that she represents would
probably support the Municipality of Anchorage not having taxing
authority over it, but the community does enjoy services
provided by that municipality.
8:54:58 AM
REPRESENTATIVE DAHLSTROM suggested that prior to any legislation
lots of review of the LBC's recommendations is necessary.
Representative Dahlstrom noted her support of a subcommittee or
another committee with members from the Senate.
8:56:01 AM
REPRESENTATIVE SALMON opined that it's [necessary] to find a tax
base to go along with the recommendation [to organize] because
many of the unorganized areas don't receive government contracts
and need something to sustain a government.
MR. HARGRAVES concluded by offering to the committee the LBC and
DCCED staff as a resource.
8:57:35 AM
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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