02/12/2008 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HJR30 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 30 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 12, 2008
8:04 a.m.
MEMBERS PRESENT
Representative Anna Fairclough, Co-Chair
Representative Gabrielle LeDoux, Co-Chair
Representative Nancy Dahlstrom
Representative Kurt Olson
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
Representative Mark Neuman
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 30
Disapproving the Local Boundary Commission recommendation
regarding the annexation of territory to the Ketchikan Gateway
Borough.
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HJR 30
SHORT TITLE: DISAPPROVING KETCHIKAN ANNEXATION
SPONSOR(s): REPRESENTATIVE(s) THOMAS
01/25/08 (H) READ THE FIRST TIME - REFERRALS
01/25/08 (H) CRA
02/12/08 (H) CRA AT 8:00 AM BARNES 124
WITNESS REGISTER
REPRESENTATIVE BILL THOMAS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HJR 30.
SCOTT BRANDT-ERICHSEN, Attorney
Ketchikan Gateway Borough
Ketchikan, Alaska
POSITION STATEMENT: Requested the committee reject HJR 30.
RICHARD CARLSON, Superintendent
Klawock City School District
Klawock, Alaska
POSITION STATEMENT: Testified in favor of HJR 30.
KAREN CLEARY, Vice President
Prince of Wales Chamber of Commerce
Klawock, Alaska
POSITION STATEMENT: Testified in support of HJR 30.
RONALD ERICKSON, Superintendant
Craig City School District
Craig, Alaska
POSITION STATEMENT: Testified in support of HJR 30.
DON JOHNSON, Superintendant
Hydaburg City School District
Hydaburg, Alaska
POSITION STATEMENT: During hearing of HJR 30, discussed the
impacts of the proposed annexation on Hydaburg.
DICK COOSE
Ketchikan, Alaska
POSITION STATEMENT: Testified in opposition to HJR 30.
LAUREN BURCH, Superintendant
Southeast Island School District
Thorne Bay, Alaska
POSITION STATEMENT: Testified in favor of HJR 30.
JAMES GOULD, Mayor
City of Thorne Bay
Thorne Bay, Alaska
POSITION STATEMENT: Testified in favor of moving HJR 30
forward.
MARK MINNILLO
Thorne Bay
Thorne Bay, Alaska
POSITION STATEMENT: Testified in favor of HJR 30.
SHERRI HAYWARD
Annette Island School District
Metlakatla Indian Community
Metlakatla, Alaska
POSITION STATEMENT: Encouraged the committee to support HJR 30.
LYNN CHRYSTAL, Member
Local Boundary Commission
Valdez, Alaska
POSITION STATEMENT: Testified in opposition to HJR 30.
DENNIS WATSON, Mayor
City of Craig
Craig, Alaska
POSITION STATEMENT: Testified in support of HJR 30.
BOB BLASCO, Attorney at Law
Thorne Bay, Alaska
POSITION STATEMENT: During hearing of HJR 30, expressed
concerns with the proposed Ketchikan Gateway Borough annexation.
BRETT AGENBROD, Superintendant
Annette Island School District
Metlakatla Indian Community
Metlakatla, Alaska
POSITION STATEMENT: Testified in support HJR 30.
PETER CAFFAL-DAVIS
Hyder, Alaska
POSITION STATEMENT: Urged passage of HJR 30.
PAUL BRENDIBLE, Council Member
Metlakatla Indian Community
Metlakatla, Alaska
POSITION STATEMENT: Testified in support of HJR 30.
ERIC GEBHART, Superintendent
Kake School District
Kake, Alaska
POSITION STATEMENT: Testified in support of HJR 30.
ACTION NARRATIVE
CO-CHAIR ANNA FAIRCLOUGH called the House Community and Regional
Affairs Standing Committee meeting to order at 8:04:08 AM.
Representatives Fairclough, LeDoux, Dahlstrom, Olson, Cissna,
and Salmon were present at the call to order.
HJR 30-DISAPPROVING KETCHIKAN ANNEXATION
8:04:26 AM
CO-CHAIR FAIRCLOUGH announced that the only order of business
would be HOUSE JOINT RESOLUTION NO. 30, Disapproving the Local
Boundary Commission recommendation regarding the annexation of
territory to the Ketchikan Gateway Borough.
8:04:42 AM
CO-CHAIR LEDOUX moved to adopt CSHJR 30, Version 25-LS1378\E,
Cook, 2/1/08, as the working document. There being no
objection, Version E was before the committee.
8:06:28 AM
REPRESENTATIVE BILL THOMAS, Alaska State Legislature, speaking
as the sponsor of HJR 30, opined that HJR 30 should be passed
and allow the legislature to decide the fate of the petition for
annexation of territory to the Ketchikan Gateway Borough. He
recalled his time serving on the House Community and Regional
Affairs Standing Committee when he encouraged the formation of
boroughs. He emphasized that he's not opposed to the formation
of new boroughs, but is opposed to a money grab for annexation
of lands that impact other communities. The impact will be felt
by 16 small communities with 12 school districts that has about
2,700 children. However, the Ketchikan Gateway Borough (KGB)
won't provide any additional services in these areas.
Therefore, Representative Thomas opined that this annexation is
an attempt to obtain the forest receipts for the Tongass
National Forest. He explained that the Tongass National Forest
receipts are impact aid money given to the communities in
Southeast Alaska where logging has occurred on federal lands.
He said he is somewhat surprised that the recent petition by
Ketchikan was accepted as it reads similar in form and language
to the 1999 petition that was rejected. Representative Thomas
then turned to the concern with regard to the payment in lieu of
taxes (PILT), which is utilized in areas where there aren't
boroughs. In the [area to be annexed], Prince of Wales
District, the PILT amounts to $543,913,000 of which about
$200,000 would be given to the Ketchikan Gateway Borough if the
annexation were to be approved. The aforementioned will create
an even stronger hardship coupled with the $1.2 million loss in
Tongass National Forest receipts. He highlighted that during
testimony to the Local Boundary Commission (LBC), 36 members
provided testimony and no members of the public spoke in favor
of the annexation. Only borough staff and three current or
former assembly members of Ketchikan spoke in favor of the
annexation.
REPRESENTATIVE THOMAS directed attention to a letter dated
January 31, 2008, from the Ketchikan Gateway Borough, which
mainly refers to the inequities of funding. He emphasized that
most of the communities being impacted are former logging camps
that became small communities. The letter alleges that the
unorganized boroughs receive a disproportionate amount of the
National Forest receipts, which are divided into three types of
funds. With regard to the funds for the roads, Representative
Thomas pointed out that on Prince of Wales Island alone there
are between 5,000-6,000 miles of road [due to logging
activities] and thus that area should share a greater proportion
of the funding. He clarified that he isn't speaking against
logging.
8:15:14 AM
REPRESENTATIVE THOMAS emphasized that this proposed annexation
is about the money because save that there's no reason to move
forward with the annexation. Furthermore, with approval of the
annexation, Ketchikan's revenues will increase by five times its
current revenues with no increase in impact to the borough.
However, the following cities will experience the following
losses: City of Craig - 1 percent; Hoonah - .9 percent; Kake -
.9 percent; Hydaburg - 1.4 percent; and Klawock - 1.3 percent.
8:16:35 AM
CO-CHAIR LEDOUX inquired as to whether any school children live
in the areas to be annexed.
REPRESENTATIVE THOMAS replied no. He characterized the areas to
be annexed as uninhabited and for which Ketchikan would provide
no service at all. However, the Southeast Island School
District may need to close one of its schools if this annexation
occurs and it loses it's share of the National Forest receipts.
This proposed annexation is going to create a large financial
hole for the earlier mentioned communities and doesn't seem to
encourage the formation of a borough. He then highlighted the
timeline of events with this proposed annexation and the actions
of former LBC Commissioner Dan Bockhorst. He suggested that the
committee may want to ask Mr. Bockhorst what is different and
made him change his mind with the current annexation
application.
8:18:57 AM
REPRESENTATIVE CISSNA related her understanding that the
sponsor's concern is the funding lost due to loss of Tongass
National Forest receipts. She inquired as to how that relates
to education funding.
REPRESENTATIVE THOMAS explained that the Tongass National Forest
receipts are to be used primarily for education funding.
REPRESENTATIVE CISSNA asked if the receipts were originally
intended for schools.
REPRESENTATIVE THOMAS clarified that the receipts are intended
for roads and schools. However, he reiterated that the primary
use of these receipts is for education. Juneau is the number
one recipient of these receipts, although there are no clear
cuts in the City & Borough of Juneau. Representative Thomas
then pointed out that the Tongass National Forest receipts
weren't reauthorized, although there's a strong effort to reopen
the Tongass National Forest at a level of 300 million board feet
a year.
[Co-Chair Fairclough passed the gavel to Co-Chair LeDoux.]
8:23:08 AM
CO-CHAIR LEDOUX inquired as to who currently receives these
forest receipts in the uninhabited areas.
REPRESENTATIVE THOMAS explained that currently the receipts are
placed in a pool and the receipts are parsed out based upon
whether the area is organized or not. This refers to the
receipts for the unorganized areas. Ketchikan, since it's a
borough, already receives its funds as do other organized areas
[in the Southeast Alaska]. The proposed annexation results in
the loss of about $1.2 million in Tongass National Forest
receipts [from the areas outside the borough] because it's based
on the acreage left outside the borough. At the same time, the
PILT amounts to an additional $200,000 loss to communities,
which totals $1.4 million loss to these [unorganized]
communities. In further response to Co-Chair LeDoux,
Representative Thomas deferred to others regarding what
percentage of that is federal revenues.
8:26:04 AM
SCOTT BRANDT-ERICHSEN, Attorney, Ketchikan Gateway Borough,
requested that the committee reject HJR 30. He informed the
committee that there is a pending court challenge on this
proposed annexation. Therefore, the legality and propriety of
the LBC process will be determined by the court. Although the
legislature may wish to consider the aforementioned, it doesn't
need to guide the committee's decision. During the legislative
review process, the legislature has the opportunity to express
its view with regard to the policy. He suggested the committee
consider the message it would send if this annexation is
rejected.
8:27:43 AM
CO-CHAIR LEDOUX inquired as to the difference between the
original annexation proposal and this most recent proposal.
MR. BRANDT-ERICHSEN specified that there are some structural
changes, both in the regulations and the way in which the
petition was put together. He explained that in the first
process, the Ketchikan Gateway Borough sought to carve out small
pockets around Meyers Chuck and Hyder without following the
natural geography. At that time, the LBC initially said it
would reject the petition, but would approve it if Hyder and
Meyers Chuck were included. The Ketchikan Gateway Borough
Assembly determined that if the LBC wishes, it can amend the
petition to include Hyder and Meyers Chuck. The residents of
Hyder and Meyers Chuck didn't want to be included in the
Ketchikan Gateway Borough. Therefore, the borough stayed with
it's initial application, which the LBC rejected. With the most
recent application, the Ketchikan Gateway Borough petitioned to
include Meyers Chuck and developed more detailed information
about Hyder. He informed the committee that Hyder uses the
Canadian phone system, power, and money. Hyder's connections
lay more with Canada than the U.S.
8:29:30 AM
MR. BRANDT-ERICHSEN, in further response to Co-Chair LeDoux,
specified that the Ketchikan Gateway Borough proposed annexation
of Meyers Chuck, as did the Wrangell Borough. The LBC decision
on the Wrangell petition placed Meyers Chuck and Union Bay
within the Wrangell Borough. The LBC has approved the
aforementioned so far, but there are still some required steps
remaining, such as a vote on the matter in Wrangell. He noted
that the Ketchikan Gateway Borough told the LBC that it didn't
object to those communities being included in the Wrangell
Borough, if the LBC viewed that as more appropriate. Earlier on
in the process the residents of Meyers Chuck indicated a
preference to be included in the Wrangell Borough. Another
difference between the two petitions was the amendment of the
LBC's regulations. One of the amendments shifted the focus to
whether the proposed borough would have sufficient resources
provide the services throughout its proposed boundaries, which
the LBC found to be the case. He then noted that another
difference is that the Department of Education and Early
Development (EED) opposed the earlier petition, but did not
oppose the current petition. The other difference is that there
seemed to be a change in LBC philosophy such that there's a less
strict adherence to the Model Borough Boundaries. This change
in philosophy, he opined, is reflected in the Wrangell and
Ketchikan decisions because the Model Borough Boundary for
Wrangell includes Wrangell and Ketchikan in a single borough.
The LBC didn't reject Wrangell's petition, although it didn't
include Petersburg. Furthermore, the LBC expressed interest in
Ketchikan ultimately including Hyder, and didn't strictly hold
to the Model Borough Boundaries.
MR. BRANDT-ERICHSEN then clarified that the area proposed for
annexation isn't completely vacant, but includes some remote
lodges and privately held land. The owners of those haven't
objected to the proposed annexation, he related. However, those
objecting are folks from communities and school districts
located outside of the proposed annexation area. The only
explanation, he opined, seems to be the National Forest
receipts.
8:33:00 AM
MR. BRANDT-ERICHSEN informed the committee that when the draft
petition was presented to the Ketchikan Gateway Borough Assembly
in 1996, it was accompanied by two budgets. One budget was
based on the premise that Congress continued to fund National
Forest receipts at a high level and second budget based on no
National Forest receipts. On one budget the Ketchikan Gateway
Borough would gain $1 million or more, but on the other budget
there would be revenue losses in the first year or two and the
revenues in the future would be about $100,000 in additional
funds each year. The assembly at the time recognized that the
National Forest receipts may not continue and was willing to
accept the additional territory and provide local government
services to the territory, even without the current level of
National Forest receipts. Mr. Brandt-Erichsen said that it's
unfortunate that communities on Prince of Wales Island are
objecting to the expansion of the Ketchikan Gateway Borough as
there has been a long history of a positive and cooperative
relationship between the communities on Prince of Wales Island
and the Ketchikan Gateway Borough. Furthermore, Ketchikan has
served as a regional service and support center. He related the
hope that this process doesn't result in long-term damage to the
relationship. The Ketchikan Gateway Borough agrees with the
LBC's finding that what the federal government does with
National Forest receipts shouldn't be a guiding factor in
borough formation or expansion. Singling out the Ketchikan
Gateway Borough annexation is inappropriate [in light of the
fact that] the Wrangell borough would result in taking about
$250,000 of National Forest receipts from the unorganized
borough to the Wrangell borough. The difference between the
impact of the Wrangell borough formation and the Ketchikan
Gateway Borough expansion is only in terms of the dollar amount
of Tongass National Forest receipts. For the above reasons, Mr.
Brandt-Erichsen, on behalf of the Ketchikan Gateway Borough,
urged the committee not to forward HJR 30.
[Co-Chair LeDoux returned the gavel to Co-Chair Fairclough.]
8:36:08 AM
REPRESENTATIVE CISSNA inquired as to the benefits of this
proposed annexation.
MR. BRANDT-ERICHSEN said there are several reasons for the
proposed annexation. He then stated that it would be incorrect
to say that the potential of National Forest receipts wasn't
taken into consideration. However, he highlighted that it
wasn't the driving factor, which is evidenced by the fact that
the Ketchikan Gateway Borough Assembly was prepared to proceed
even with the prospect of not receiving the National Forest
receipts. He mentioned the mineral exploration possibilities in
the areas to be annexed. Most significantly, Rudyard Bay is a
world class tourist destination to which about 50,000 tourists
went last year. When there are problems, as was the case this
summer with a plane crash, the response services come from
Ketchikan. He noted that the Ketchikan Gateway Borough has a
long history of supporting the Ketchikan Volunteer Rescue Squad.
In fact, the borough has purchased a boat and provided office
space for the squad. The Ketchikan Volunteer Rescue Squad is an
initial responder along with community volunteers and borough
firefighters. If [Rudyard Bay] is in the borough, the Ketchikan
Gateway Borough is better able to handle providing services.
8:38:30 AM
REPRESENTATIVE CISSNA pointed out that the boundaries chosen for
annexation don't actually have to do with communities that the
borough would want to develop and serve in the future.
MR. BRANDT-ERICHSEN acknowledged that there aren't large
settlements in the area to be annexed, but reiterated that there
are outlying properties and a couple of lodges. To the extent
the owners of the aforementioned properties want services that
are among those that borough provides, the Ketchikan Gateway
Borough would provide those. He said that the economic activity
in Ketchikan is significantly impacted by what happens in those
outlying areas. Metlakatla is seeking to have the U.S.
Secretary of Interior expand its boundaries to include waters up
to Canada. The waters desired are prime fishing grounds for
charter, sport, and commercial fishermen from Ketchikan. If
Metlakatla is expanded to include those waters, it could
adversely impact those economic interests in Ketchikan whereas
if those waters were within the Ketchikan Gateway Borough, the
borough would have a better ability to communicate with the U.S.
Secretary of Interior and represent the citizens of Ketchikan
whose livelihood could be impacted.
8:41:01 AM
CO-CHAIR LEDOUX related her understanding that the Ketchikan
Gateway Borough is already performing search and rescue services
in the areas proposed for annexation.
MR. BRANDT-ERICHSEN confirmed that the Ketchikan Volunteer
Rescue Squad, which is a private nonprofit entity that's
supported by the borough, is performing those services. In
further response to Co-Chair LeDoux, he confirmed that the same
entity performs search and rescue services within the borough.
He then informed the committee that there are three fire
departments in the Ketchikan Gateway Borough and one within the
City of Ketchikan. While those fire departments may assist with
rescue, most often the rescue services performed are outside of
the service areas for those fire districts. Therefore, for
incidents out on the water or in a more remote part of the
borough, the Ketchikan Volunteer Rescue Squad is the front-line
of response.
CO-CHAIR LEDOUX surmised then that the Ketchikan Gateway Borough
Volunteer Firefighters would still respond if the proposed areas
are annexed.
MR. BRANDT-ERICHSEN confirmed that they would likely be the
initial response.
CO-CHAIR LEDOUX questioned then how things would be different if
the proposed area for annexation is annexed.
MR. BRANDT-ERICHSEN said that there would be the potential for
expanding the service areas of the existing fire departments.
"More directly, once the economic activity that is generating
the need for the services is within the borough, there's the
ability to develop ways to get revenue from that economic
activity, which can be given as grant supporting the Volunteer
Rescue Squad and those sorts of efforts," he explained. In
further response, Mr. Brandt-Erichsen used Yes Bay lodge as an
example. He explained that with the sales tax revenue and the
transient occupancy tax revenue from the visitors, the borough
would have the ability to provide some financial support for the
Ketchikan Volunteer Rescue Squad. Although the borough has done
so in the past, it hasn't been a regular budget item.
8:44:14 AM
CO-CHAIR LEDOUX related her understanding that some of the areas
being annexed are fairly remote from the Ketchikan Gateway
Borough.
MR. BRANDT-ERICHSEN replied yes, adding that one may need to get
there by aircraft or boat. He clarified that the annexed areas
wouldn't necessarily be service areas on their own, but rather
may be included in a larger service area. For example,
currently almost all the populated areas are within an existing
fire service area. Therefore, if the borough was to adopt
nonareawide fire powers, those areas would be within the fire
service area. Similarly, if one of the existing service areas
was expanded to include the areas to be annexed.
8:45:25 AM
REPRESENTATIVE SALMON inquired as to how much of an increase in
funds and land the Ketchikan Gateway Borough would experience.
He also asked how much would be taken from the [National Forest]
receipts.
MR. BRANDT-ERICHSEN answered that the area to be annexed is
about 4,300 square miles, which would roughly triple the current
borough size. He pointed out that currently the Secure Rural
Schools payments haven't been reauthorized. If the
distributions of receipts are based upon timber harvest and
activity within the Tongass National Forest, he estimated that
the amount of money will likely be less than $300,000. However,
if Congress appropriates at the same funding level as in the
past for the Secure Rural Schools funds, the Ketchikan Gateway
Borough would expect an increase of about $1.2 million. He
explained that each acre within the National Forest is valued in
relation to the total receipts off the forest and the money is
distributed based on how many acres are within a borough's
boundaries. The distributions are based upon the geographic
boundaries as of September 30, two years prior and thus any
receipts would be received two years out if reauthorization
occurs.
8:48:11 AM
REPRESENTATIVE OLSON inquired as to what the borough would use
the $1.2 million for if it's actually reauthorized.
MR. BRANDT-ERICHSEN answered that most of the funds would
probably go to the Ketchikan Gateway Borough's school district.
He related that about 75 percent of the allocation is earmarked
for education. Currently, the borough receives approximately
$158 per student, while the unorganized areas receive $1,400 per
student. If the Wrangell Borough is formed and the Ketchikan
Gateway Borough annexation is approved and the funding remains
at the same level, Ketchikan would receive $500-$600 per student
and the unorganized boroughs would receive about $1,200 per
student. Therefore, the unorganized boroughs would face a
reduction in the per student amounts for the unorganized areas.
In further response to Representative Olson, Mr. Brandt-Erichsen
said that the Ketchikan Gateway Borough doesn't anticipate
picking up any new students until the annexation of Hyder.
8:49:34 AM
CO-CHAIR LEDOUX asked then if the smaller school districts' loss
of funds as a result of the annexation would result in the
state, which serves as the school board for the unorganized
boroughs, having to supplement from the general fund the
balance.
MR. BRANDT-ERICHSEN deferred to EED. He related his
understanding that the National Forest receipts aren't included
in the formula for the basic need, although they can be used as
part of the local required tax burden. He further related his
understanding that most districts use the National Forest
receipts in addition to the basic need amount. Therefore, the
state wouldn't necessarily be required to makeup those amounts,
but it would be a reduction in the total funds available. If
the communities wanted to makeup the loss from National Forest
receipts, they would have to come from local revenue sources.
The committee took a brief at-ease.
8:51:39 AM
REPRESENTATIVE THOMAS recalled a community in his district that
filed for the formation of a municipality, but the LBC carved
out the lodges in the areas to be annexed. The aforementioned
resulted in thwarting the formation of the municipality. He
opined that it seems surprising that now the LBC is allowing
lodges to be included in the area to be annexed in the Ketchikan
Gateway Borough. The aforementioned seems to illustrate
inconsistency. Representative Thomas, recalling his time on
this committee, related his understanding that annexation
usually occurs when a community outside an area impacts the
services provided by the community desiring annexation.
However, he didn't believe that to be the situation in this case
and thus he opined that the real reason for the proposed
annexation is the money [from the National Forest receipts].
8:54:33 AM
RICHARD CARLSON, Superintendent, testified in favor of HJR 30,
although he mentioned that he strongly believes there are
constitutional questions. The annexation will cost small
unorganized communities and the districts within them $1.2
million annually. Klawock's share of that is about $63,000
annually. Although $63,000 isn't a large sum, it will have a
tremendous impact on Klawock, particularly when compounded over
the years. The aforementioned loss in revenue translates into
one staff position. He said that the district will have to
severely reduce or eliminate some educational programs and
potential reduction of staff. Furthermore, districts are up
against a timeline in which it will have to make staffing
decisions. While the amount of actual dollars seems to be
relatively small, this could be a death blow for some schools
and school districts in Southeast. Mr. Carlson urged the
committee not to allow the aforementioned to occur, but to allow
HJR 30 to go before the full House for further debate.
8:58:01 AM
CO-CHAIR LEDOUX inquired as to how close Klawock and the other
impacted communities are from the land the Ketchikan Gateway
Borough wants to annex. She asked if there's any possibility of
annexing the land and some of the communities.
8:58:42 AM
CO-CHAIR FAIRCLOUGH asked if the committee would like to have a
work session with the LBC to discuss the 14 points it has to
consider for annexation. Upon determining that there was some
interest from committee members, Co-Chair Fairclough announced
that she would try to set up a work session.
8:59:50 AM
MR. CARLSON said that Klawock isn't very close to the areas
proposed to be annexed.
9:00:20 AM
KAREN CLEARY, Vice President, Prince of Wales Chamber of
Commerce, began by noting that although she is not speaking in
this capacity, she is the president of the Klawock City School
Board. Ms. Cleary related that in these very small communities,
the school districts are often one of the primary employers. As
positions are lost due to the loss of funding, jobs will be lost
and stores in the community will not have customers. Therefore,
there's a ripple effect. Although Ms. Cleary said she was sure
that the loss of the $1.2 million is an unintended consequence,
it's a consequence that can't be endured. Therefore, she
encouraged the committee to move HJR 30 to protect the children
and small communities of Prince of Wales.
9:02:33 AM
RONALD ERICKSON, Superintendant, Craig City School District,
testified in support of HJR 30. He emphasized that the issue is
money. The problem in Craig is that it's a first class city and
the resources from the National Forest receipts are used to help
support the school district. Under the proposed annexation, the
loss for the Craig City School District and the City of Craig
would amount to $165,000, which equals approximately 40 percent
of the local contribution. Craig has a limited ability to
generate resources and funds, and therefore the loss of $165,000
would mean the loss of 2-3 positions in the district if no other
resources are found.
9:04:23 AM
CO-CHAIR LEDOUX inquired as to where Craig would look for other
resources.
MR. ERICKSON answered that the school district would look for
grants and approach the city. However, from the local
standpoint, the availability of funds is limited. In further
response to Co-Chair LeDoux, Mr. Erickson said that none of the
districts would be eligible to receive more funds from the state
due to the loss of the National Forest receipts.
9:05:29 AM
DON JOHNSON, Superintendant, Hydaburg City School District,
related that although the amount of funds Hydaburg would lose is
relatively small, the district has a small budget. He indicated
that approximately $34,000 would be lost due to the proposed
annexation, which is about $10,000 more than the in-kind
contribution from the City of Hydaburg. Although it's a very
important program, the vocational education program could be
cut. The vocational education program includes a diving
program, which has certified divers over the last seven years.
The diving program has really had an impact on the children and
the school as the classes are full every year. Unfortunately,
that's the program that would have to be cut, which would be
devastating to the children in Hydaburg. Hydaburg already has a
high unemployment rate, and therefore to lose the program would
result in the loss of training for young people in a field in
which they could work.
9:07:07 AM
CO-CHAIR LEDOUX asked if Hydaburg is part of the Wrangell
annexation.
MR. JOHNSON replied no, and specified that Hydaburg is the
southernmost city on Prince of Wales Island.
9:07:25 AM
REPRESENTATIVE DAHLSTROM related that she and several other
legislators have discussed the aforementioned diving program,
which has kept several kids in school. She then commended Mr.
Johnson and the diving instructor and further related that she
is trying to find a way to utilize the program in other school
districts.
9:08:03 AM
REPRESENTATIVE CISSNA recalled visiting Hydaburg four years ago,
and remembered the stress Prince of Wales faces to keep its
economy going. She then inquired as to the number of students.
She also inquired as to how long the forest receipts have been
available for [Hydaburg], and inquired as to the percentage of
the total budget.
MR. JOHNSON answered that the total National Forest receipts
received By Hydaburg amounts to 10-12 percent of the total
budget, although he noted that the $34,000 will amount to a lot
less than that. This last fall there were 77 students, which is
a decrease over the past several years. For [Hydaburg] the loss
of five students is devastating for the school's budget.
9:10:16 AM
DICK COOSE, began by relating that he served for two terms on
the Ketchikan Gateway Borough Assembly back in 1997 and 2003.
He related that he was one of the instigators of this [proposed
annexation]. He further related that he is a retired forest
service employee. In fact, he was the district ranger in
Ketchikan from 1980-1987 during which he opined there should be
a larger borough. In 1987, the intent was to follow the Model
Borough Boundary. He acknowledged that a consequence of the
aforementioned is redistribution of the forest receipts,
although he opined that it wasn't the primary reason for the
annexation. The primary reason for annexation, he proffered,
was the influence a local government, especially a borough, can
have with the U.S. Forest Service through a memorandum of
understanding to address forest management. He reminded the
committee of the loss of the timber economy in Southeast Alaska.
In fact, Ketchikan lost 25 percent of its kids and the average
wage has decreased. Therefore, Mr. Coose opined that it makes
sense for Ketchikan to try to follow the state's laws,
regulations, and constitution to form a complete borough. He
explained that there isn't the inclusion of a great deal more
population because the areas proposed for annexation tried to
remain in the [Model Borough Boundary]. Prince of Wales makes a
logical borough boundary itself, he mentioned. Mr. Coose said
that the quandary is that timber harvest has decreased 95
percent in the last 10 years in the Tongass National Forest.
Although there's a new forest plan, he said he didn't believe
that could be produced and thus he surmised that "we" will
remain at 50 million feet, which won't increase forest receipts.
From all the indications he has received from Alaska's
congressional delegation, the subsidy for Secure Rural Schools
isn't going to continue and the National Forest receipts won't
be much and everyone will be hurting, including the Ketchikan
Gateway Borough. Mr. Coose pointed out that the state is in
control of the distribution of the National Forest receipts,
which is distributed on the basis of acreage not the number of
kids.
9:13:32 AM
REPRESENTATIVE OLSON asked if Mr. Coose would still pursue
annexation even if National Forest receipts weren't going to the
Ketchikan Gateway Borough.
MR. COOSE replied yes, adding that he views it as a forest
management issue. He also said that he believes National Forest
receipts will "go away." He clarified that he is in opposition
to HJR 30.
9:14:20 AM
LAUREN BURCH, Superintendant, Southeast Island School District,
testified in favor of HJR 30. Mr. Burch opined, "We do ...
small schools exceptionally well." In fact, 7 of the district's
8 schools have 10-15 students in each. He related that all of
the schools in the Southeast Island School District meet
adequate yearly progress (AYP), with two schools in the top ten.
He informed the committee that the school in Hyder will be
retained without the National Forest receipts, which amounts to
$82,000 [for Hyder]. He recalled that the overall [district]
budget is $4 million of which approximately half would be in
federal grants and other grants. Therefore, the $82,000 loss to
Hyder would result in the [reduction] of services to the other
schools in the district. Although testimony indicated that
residents of Hyder are more Canadian than Alaskan, the parents
of children in Hyder are quite adamant that their children not
be forced to attend Canadian schools. Mr. Burch said that he
hasn't noted any keen interest from the Ketchikan Gateway
Borough with regard to absorbing the Hyder students. Therefore,
he presumed that the students in Hyder would either be
encouraged to attend school in Canada or utilize correspondence
programs. Hyder doesn't want to be part of this proposed
annexation, he related. There is a school in Meyers Chuck that
is included in this annexation, however the community has shrunk
such that a school is no longer viable. At last count, there
was one student in Meyers Chuck who is doing correspondence. He
indicated that had there been any other economic opportunities
in this area to encourage year-round residents and the need for
a school, that would've been the responsibility of Southeast
Island School District. However, under the proposed annexation
it will be the responsibility of the Ketchikan School District.
9:18:07 AM
JAMES GOULD, Mayor, City of Thorne Bay, testified in favor of
moving forward HJR 30. He characterized the proposed annexation
as a money grab that will devastate all the communities on the
Prince of Wales Island. To the small town of Thorne Bay, the
$28,000-plus of the suspected loss due to the annexation would
result in the loss of at least one city position. Economically,
Thorne Bay has been devastated by the loss of the timber
industry and now the proposed annexation will take the
community's support for the school system and roads. As
mentioned earlier, there are thousands of miles of roads on
Prince of Wales Island. In the small community of Thorne Bay,
there are approximately 21 miles of unpaved road that must be
maintained. He related that as a result of annexation Thorne
Bay would lose $23,800 of its road maintenance funds. Although
that may sound small, a loss in that amount would result in the
City of Thorne Bay seeking outside funding or elimination of the
services to 40 percent of the population. Mayor Gould
emphasized that the Southeast Island School District is one of
the major economic players in the economy of Thorne Bay, and
therefore the loss to the district in terms of jobs and families
would be absolutely devastating to Thorne Bay.
9:20:39 AM
MARK MINNILLO noted that although he is a member of the City
Council of Thorne Bay, he is speaking as a resident of Thorne
Bay and father of two sons who attend school in Thorne Bay. Mr.
Minnillo testified in favor of HJR 30 and expressed hope that it
would pass based on the repercussions it would have on the
schools. He noted that he is also a wrestling coach in Thorne
Bay. Funding for sports is always an issue, he remarked. The
Thorne Bay wrestling team wrestles the other kids on Prince of
Wales Island, but to expand their experience Thorne Bay
wrestlers need to wrestle others off the island. The
aforementioned would require transportation via boat or
airplane. Mr. Minnillo related that the Thorne Bay wrestling
team was allocated $400 from the school district, which is
hardly adequate to cover the costs of wrestling on the island.
Therefore, to further lose the National Forest receipts would
result in no travel for these wrestlers. Furthermore, the loss
of the National Forest receipts would also result in the loss of
positions, including teachers with children in the school.
9:22:17 AM
SHERRI HAYWARD, Annette Island School District, Metlakatla
Indian Community, informed the committee that she has two
children who are members of the Annette Island Reserve, although
she is not a member. She said that she's present today to
advocate for all the children of the Southeast Island District.
Ms. Hayward opined that this proposed annexation is wrong and
every child matters. She further opined that if the proposed
annexation is denied it won't impact the Ketchikan Gateway
Borough, but if it's approved it will impact all of the children
of Southeast Alaska, their education, and their future. Ms.
Hayward concluded by encouraging the committee to support HJR
30.
9:25:28 AM
LYNN CHRYSTAL, Member, Local Boundary Commission, provided the
following remarks:
Borough annexations are a constitutionally endorsed
means of fulfilling the purpose of Title 10, Section 1
of Alaska's constitution at the local level: "to
provide for maximum local self-government with a
minimum of local government units and to prevent
duplication of tax-levying jurisdictions." The
Ketchikan Gateway Borough petitioned for annexation of
4,701 square miles, instead the Local Boundary
Commission recommend annexation of 4,510 square miles,
putting Meyers Chuck and Union Bay into the Wrangell
Borough. There are three elements to the annexation
decision by the Local Boundary Commission. Number
one, the process defined by law. Number two, the
standards in law. And then three, the facts and the
record. The annexation process was lengthy and
thorough, all procedural requirements were met or
exceeded. I have Attachment A Summaries "Key Steps in
the Ketchikan Annexation Proceedings" .... Commission
decisions on borough annexations are governed by
standards in law, the commission's evaluation of
borough annexation proposals is governed by 11 formal
standards established in law. Generally, these
standards relate to such factors as suitability of
proposed boundaries, the economy, the transportation
and other factors, common interest, and best interest
of the state. Attachment B lists the 11 standards
applicable to the borough annexation. Based on the
law and the facts in record, the commission found that
annexation of 4,510 square miles satisfied all legal
standards. The record of the Ketchikan annexation
proceeding consists of the borough's petition, which
includes a pre-petition hearing and the comment
materials received during the pre-petition process;
three responsive briefs, written comments on the
petition by 19 persons; the borough's reply brief;
DCCED's preliminary report and written comments on it;
a letter of non-objection to the annexation by the
Department of Education and Early Development; DCCED's
final report and statements, testimony, and public
comments made at the commission's November 6, 2007,
public hearing. A copy of the commission's decision
that is the basis for the legislative proposal before
you sets out the commission's evaluation of the record
in view of the standards in law .... The commission's
letter dated February 1, 2008, sets out our opposition
to House Joint Resolution 30 and notes several
misstatements of fact in the resolution. Among other
things we noted that every member of the commission
who participated in the annexation proceeding received
and studied all documents in the case and heard the
testimony of all parties and interested members of the
public before making the decision.
9:28:54 AM
CO-CHAIR LEDOUX inquired as to whether impacts on areas not to
be annexed are considered by the LBC.
MR. CHRYSTAL answered that he didn't believe that's specifically
mentioned in the law, although the LBC always listens to
interested individuals. During the public hearings, the LBC
listens to anyone with objection. Under the law many of the
transitory matters that are unknown, such as the timber
receipts, are difficult upon which to base decisions but
certainly it was taken into consideration.
CO-CHAIR LEDOUX surmised then that the fact that the outlying
communities would lose a considerable amount from National
Forest receipts in the short-term wasn't considered during the
annexation.
MR. CHRYSTAL said he couldn't say that it wasn't considered
because it was one of the points that was discussed. However,
it wasn't an overriding [factor in the] decision. At this
point, the National Forest receipts are not in law as the
program has been sunsetted. He opined that when a permanent
decision in regard to boundaries is being made, it's difficult
to "use a lot of transitory funds in our decision making."
9:30:56 AM
MR. CHRYSTAL remarked that the suggestion of a work session is a
good idea. He then concluded his testimony as follows:
The evidence submitted to the LBC, its discussions and
decisional statements, constitutes a record that
sufficiently reflects the basis for the decision of
the LBC to enable meaningful judicial review. And
then in conclusion, the ... commission ... reconfirms
its recommendation that annexation to the Ketchikan
Gateway Borough and oppose the resolution before you.
And I certainly thank you for your time.
9:31:47 AM
DENNIS WATSON, Mayor, City of Craig, emphasized that he is in
strong opposition to the annexation proposed by the Ketchikan
Gateway Borough but in support of moving out HJR 30. The issue
at hand in this situation is the National Forest receipts. He
informed the committee that he has been a member of the National
Forest Counties and Schools Coalition, which has worked on this
issue for years. [These National Forest receipts] will continue
to be an issue, he opined. Mayor Watson said that if the
National Forest receipts aren't an issue, the Ketchikan Gateway
Borough should've went forward with an annexation petition that
specifies that it doesn't want any other community's National
Forest receipts. He highlighted that Ketchikan isn't, in its
proposed annexation, increasing its population or increasing
enrollment in their schools. Furthermore, the Ketchikan Gateway
Borough doesn't have road powers. However, Ketchikan is
Southeast Alaska's second largest economy and has, on a number
of recent occasions in recent months, touted the large amount of
sales tax it has collected and the things on which it will spend
those taxes. He further highlighted that Ketchikan is able to
fund two competing forms of municipal government, and therefore
he questioned why the borough needs to take money from the
smaller communities. The economies of all but a couple of the
communities [from which the borough will take National Forest
receipts] are just barely hanging on financially or already face
financial difficulties. The needs will remain even if the funds
are no longer. Mayor Watson emphasized that Craig and the
Prince of Wales communities have no means to recoup the lose of
funds if the proposed annexation were to move forward. He
stated that becoming a borough is not an option for Craig. In
fact, studies commissioned by island communities have clearly
illustrated that at this time Prince of Wales Island couldn't
generate enough revenue to fund even the very basic required
borough services. Therefore, Prince of Wales Island was
eliminated from the Mandatory Boroughization Act that passed a
couple of years ago. With the aforementioned in mind, Mayor
Watson requested that the committee vote to deny the proposed
annexation and move HJR 30 from committee.
9:35:18 AM
BOB BLASCO, Attorney at Law, informed the committee that he is
representing the 17 communities and school districts who have
filed the appeal with the superior court. He related that this
loss of National Forest receipts will continue as long as there
is such a program. He then pointed out that there are two parts
to the National Forest receipts: the Secure Rural Schools Act,
which is the $1.2 million; and the underlying Tongass receipts.
Even if the Secure Rural Schools Act isn't funded, all of the
communities and school districts will lose 22 percent of the
underlying funds to the Ketchikan Gateway Borough if the
proposed annexation is approved. However, the borough isn't
taking in any new people or school students and thus no services
would be provided. Mr. Blasco emphasized the importance of
Representative Thomas's comment that this isn't a borough
formation. There are constitutional mandates to form boroughs
as is the case with Wrangell, but there are no such mandates to
annex land into boroughs. Recalling Mr. Coose's testimony, Mr.
Blasco opined that it's a shame that the committee doesn't have
the comments from members of the Ketchikan Gateway Borough
Assembly when it considered filing the current annexation
petition. Those comments were related to the borough obtaining
more money. As was mentioned earlier, if the Ketchikan Gateway
Borough would move forward with the proposed annexation even
without the funds, the petition could've been filed specifying
that the borough wouldn't take the [National Forest] receipts.
He highlighted that those petitioning to form the borough in
Skagway did exactly that. The Ketchikan Gateway Borough is not
willing to do so, he opined, because the amount of funds is so
substantial. Furthermore, the PILT amounts to about $598,000
for these communities, of which the loss would amount to about
half of that to these communities yearly. The PILT is unrelated
to the Tongass National Forest receipts program. He pointed out
that either Ketchikan will gain the PILT funds or the federal
funding will be lost. Mr. Blasco opined, "It's just hard to
imagine how, under a best interest of the state standard, we're
looking at something like this annexation that's in the best
interest of the state for these 17 school districts and
communities ... to lose that substantial amount of federal
funding on a yearly basis, which is not going to go away."
9:40:25 AM
BRETT AGENBROD, Superintendant, Annette Island School District,
Metlakatla Indian Community, echoed Mr. Blasco's comment that
[annexation], which is proposed by the Ketchikan Gateway Borough
petition, isn't mandated by the constitution. He then recalled
testimony questioning what message the legislature would send if
it didn't approve the LBC's decision. Mr. Agenbrod countered
that by questioning the message the legislature and LBC send
when the Ketchikan Gateway Borough annexation application
excluded the communities of Meyers Chuck, Union Bay, and Hyder
and refused to include them even upon the LBC's recommendation
to do so. In the 2007 petition, the inclusion of Union Bay is
held out as a major change. However, that community has no
school children and thus the borough incurs no costs to annex
the area. The one community that would benefit from borough
services is Hyder, but that community wasn't [included in either
annexation proposal]. Mr. Agenbrod relayed that the folks he
represents at the Annette Island School District and the
Metlakatla Indian Community don't feel it's in the state's best
interest to burden the Southeast Island School District in
Prince of Wales by Ketchikan taking $83,000 of their National
Forest receipts without annexing Hyder. At the very least, he
opined that the LBC should've required immediate annexation of
Hyder rather than suggesting possibly five years later with no
trigger to implement annexation. Mr. Agenbrod mentioned a
conflict of interest with a former LBC staffer who basically
reversed the 1999 decisions and applied for and obtained a six-
figure position and a multi-year contract as the city manager of
Ketchikan. Until there's an investigation of the
aforementioned, the decision regarding the proposed annexation
should be halted. Mr. Agenbrod related his support of HJR 30
moving forward.
9:44:09 AM
CO-CHAIR FAIRCLOUGH announced that the committee will hold a
work session on the LBC.
9:45:29 AM
PETER CAFFAL-DAVIS noted his appreciation of Mr. Chrystal's
comments because Mr. Chrystal heard many of the arguments the
committee is hearing. He related that the LBC chair, throughout
the Ketchikan Gateway Borough annexation meetings, said that the
LBC is bound by law not to consider the financial impacts such
as those being discussed that will devastate the schools in the
unorganized borough. If the LBC is not allowed to base its
decision on this transitory financial information, the
legislature can do so. Mr. Caffal-Davis pointed out that no one
in the areas being annexed or in the Ketchikan Gateway Borough
had the opportunity to vote on this proposed annexation, which
he opined is a serious constitutional issue. He related his
understanding that even residents of the Ketchikan Gateway
Borough are opposed to the proposed annexation. Originally
borough administrators said there would be an opportunity to
vote on the proposed annexation, but reversed that opinion at
the very next meeting. Therefore, the proposed annexation is
going forward from the commissioners who aren't elected
officials. Mr. Caffal-Davis opined that the Ketchikan Gateway
Borough and Mr. Bockhorst were hoping that the LBC
recommendation would sail through without attention from elected
officials. In conclusion, Mr. Caffal-Davis urged passage of HJR
30 as he said that he wanted to see this proposed annexation
overturned. He then turned to Hyder and related that the
Ketchikan Gateway Borough hasn't sought a relationship with
Hyder and has told Hyder that if it is annexed, the Hyder school
would be closed and correspondence would be utilized.
9:48:40 AM
CO-CHAIR FAIRCLOUGH recalled the Chugiak Eagle River annexation
into the Municipality of Anchorage, for which there was no vote.
She further recalled that challenges to that annexation haven't
been successful either.
MR. CAFFAL-DAVIS clarified that he doesn't believe the LBC
commissioners did anything inappropriate, but he related his
hope that [the legislature] gets to vote on the matter.
9:49:36 AM
PAUL BRENDIBLE, Council Member, Metlakatla Indian Community,
informed the committee that he is a past president of the
Annette Island School Board and past president of the Alaska
Association of School Boards. He then related his support for
HJR 30. He related that due to the closure of the Tongass
National Forest, Metlakatla has lost 400 individuals. The
proposed annexation is all about money, he opined. All the
schools [outside the borough] will have to find a way in which
to makeup the loss of funding. With regard to the earlier
mention of Metlakatla's proposed boundary expansion, Mr.
Brendible clarified that it's an expansion into the water only.
9:51:36 AM
ERIC GEBHART, Superintendent, Kake School District, testified in
support of HJR 30. This year Kake's school will receive about
$170,000 in National Forest receipts and it's projected that
approximately $40,000 would be lost in the coming year. Mr.
Gebhart opined, "I can't see how it is in the best interest of
the state to take funds from so many and give it to one single
entity, again, without any ... increase in service ... without
any pickup as far as students."
9:53:44 AM
CO-CHAIR FAIRCLOUGH, upon determining no one else wished to
testify, announced that the public hearing would be left open.
9:54:57 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:55:00 AM.
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