04/01/2014 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB379 | |
| HB238 | |
| HB317 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 379 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 238 | TELECONFERENCED | |
| += | HB 317 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 1, 2014
8:07 a.m.
MEMBERS PRESENT
Representative Gabrielle LeDoux, Co-Chair
Representative Benjamin Nageak, Co-Chair
Representative Neal Foster
Representative Bob Herron
Representative Lora Reinbold
Representative Sam Kito III
MEMBERS ABSENT
Representative Kurt Olson
COMMITTEE CALENDAR
HOUSE BILL NO. 379
"An Act relating to the limitation on the value of property
taxable by a municipality; and providing for an effective date."
- MOVED OUT OF COMMITTEE
SPONSOR SUBSTITUE FOR HOUSE BILL NO. 238
"An Act relating to the state and municipal procurement
preferences for agricultural products harvested in the state and
fisheries products harvested or processed in the state; relating
to legislative oversight of those procurement preferences; and
providing for an effective date."
- MOVED CSSSHB 238(CRA) OUT OF COMMITTEE
HOUSE BILL NO. 317
"An Act relating to official traffic-control devices at schools
and in school zones."
- MOVED CSHB 317(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 379
SHORT TITLE: OIL & GAS PROPERTY TAX
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS
03/28/14 (H) READ THE FIRST TIME - REFERRALS
03/28/14 (H) CRA
04/01/14 (H) CRA AT 8:00 AM BARNES 124
BILL: HB 238
SHORT TITLE: PROCUREMENT PREF: AK GROWN FISH/AG PRODS
SPONSOR(s): TARR, GARA
01/21/14 (H) PREFILE RELEASED 1/10/14
01/21/14 (H) READ THE FIRST TIME - REFERRALS
01/21/14 (H) CRA, FIN
02/21/14 (H) SPONSOR SUBSTITUTE INTRODUCED
02/21/14 (H) READ THE FIRST TIME - REFERRALS
02/21/14 (H) CRA, FIN
03/18/14 (H) CRA AT 8:00 AM BARNES 124
03/18/14 (H) -- MEETING CANCELED --
03/27/14 (H) CRA AT 8:00 AM BARNES 124
03/27/14 (H) Heard & Held
03/27/14 (H) MINUTE(CRA)
04/01/14 (H) CRA AT 8:00 AM BARNES 124
BILL: HB 317
SHORT TITLE: TRAFFIC CONTROL DEVICES NEAR SCHOOLS
SPONSOR(s): TUCK
02/19/14 (H) READ THE FIRST TIME - REFERRALS
02/19/14 (H) CRA, TRA
03/13/14 (H) CRA AT 8:00 AM BARNES 124
03/13/14 (H) Heard & Held
03/13/14 (H) MINUTE(CRA)
03/27/14 (H) CRA AT 8:00 AM BARNES 124
03/27/14 (H) Heard & Held
03/27/14 (H) MINUTE(CRA)
04/01/14 (H) CRA AT 8:00 AM BARNES 124
WITNESS REGISTER
JOHN BITNEY, State Government Liaison
North Slope Borough
Barrow, Alaska
POSITION STATEMENT: Testified in favor of HB 379.
ROB ELKINS, Deputy Director
Administration and Finance
North Slope Borough
Barrow, Alaska
POSITION STATEMENT: Answered questions with regard to HB 379.
STEVE VAN SANT, State Assessor
Alaska Department of Commerce, Community & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions with regard to HB 379.
SCOTT BRANDT-ERICHSEN, Attorney
Ketchikan, Alaska
POSITION STATEMENT: Testified with regard to HB 379.
ANGELA RODEL, Commissioner
Alaska Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Testified with regard to HB 379.
MATT FONDER, Director
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Answered questions with regard to HB 379.
REPRESENTATIVE GERAN TARR
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As sponsor of HB 238, reviewed changes in
Version N.
DANNY CONSENSTEIN, State Director
Department of Agriculture, Farm Service Agency, Alaska
Member, Alaska Food Policy Council
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 238.
REPRESENTATIVE CHRIS TUCK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 238.
REPRESENTATIVE CHRIS TUCK
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as sponsor of HB 317.
CONNIE MCKENZIE, Legislative Liaison
Department of Transportation & Public Facilities (DOT)
Juneau, Alaska
POSITION STATEMENT: Reported on the fiscal note for CSHB 317.
JEFF STARK, Chief Assistant Attorney General
Department of Law, Transportation Section
Anchorage, Alaska
POSITION STATEMENT: Expressed concerns regarding CSHB 317.
KENDRA CLOSTER, Staff
Representative Chris Tuck
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding HB 317.
ACTION NARRATIVE
8:07:48 AM
CO-CHAIR GABRIELLE LEDOUX called the House Community and
Regional Affairs Standing Committee meeting to order at 8:07
a.m. Representatives Reinbold, Kito III, LeDoux, and Nageak
were present at the call to order. Representatives Herron and
Foster arrived as the meeting was in progress.
HB 379-OIL & GAS PROPERTY TAX
8:08:34 AM
CO-CHAIR LEDOUX announced that the first order of business would
be HOUSE BILL NO. 379, "An Act relating to the limitation on the
value of property taxable by a municipality; and providing for
an effective date."
8:08:57 AM
CO-CHAIR NAGEAK introduced HB 379, which is sponsored by the
House Community and Regional Affairs Standing Committee of which
he is a co-chair. He said the North Slope Borough is seeking a
legislative change that will provide more flexibility in
managing its own budget, while providing a sliding scale for
municipalities to lower taxes on oil and gas properties. He
summarized the history of the North Slope Borough. Beginning in
the late 1960s oil was discovered in Prudhoe Bay, and his people
were excited, but also apprehensive, because if anything
happened in areas of traditional hunting and gathering, it would
have tremendous impact on the people and their way of life, so,
initially, residents were against development in that area. He
recalled coming home from serving in the Army in 1972 and seeing
a completely different world. "It is an opportunity for our
people to move forward; to build things; but first we had to
form some sort of instrument to help us do that." He noted that
the leaders, like Eben Hobson, Jake Adams, and others, started
the land claims and the formation of the borough. The people
were uneasy, he said, but over the years they came to believe
that the oil industry and the people's way of life, including
the animals and the environment, can coexist. "That was a new
thing for us; we've seen the oil industry be a good neighbor in
the State of Alaska," he said, but it was not always like that.
CO-CHAIR NAGEAK said that when the borough was being formed,
there was considerable anxiety from the industry and the state,
and he recalled hearing that the Inupiaq were ignorant and could
not govern a municipality. They were told that they were not
far from the Stone Age and the area was so vast and there were
no family ties within the area. But for a millennia, his people
lived and traveled together, and he pointed out that his
grandfather was an Inupiaq missionary with a parish that went
from Barrow to Kaktovik and to the Canadian border. He has
relatives everywhere: Point Hope, Kotzebue, Anaktuvuk Pass,
Wiseman, and maybe even in Russia, he noted. Inupiaq and other
Alaska Natives have always had a form of government, but they
were characterized as ignorant and unable to run their own
affairs, and if they had a borough and money started coming in,
they would "go crazy and spend everything on frivolous things."
8:16:32 AM
CO-CHAIR NAGEAK said, "The reality is another story." His
people organized and became a home rule government in a fashion
like no other, and "from the get-go they knew what they were
doing." He spoke of the charter of the North Slope Borough: to
take care of the land, give everyone a say, and consider the
wildlife, and it was written by young men chosen by Eben Hobson.
To this day, it is one of best charters in the state-it even has
a department of wildlife management, he said, because it is
important to have viable animal populations. He noted that he
was the director of that department for about six years. He
asked, "What has happened since 1972?" He recalled waking up
some mornings, freezing-cold, and heading to the warmth of the
school mechanical room to wash up before walking in the front
door of school. Today, there are beautiful schools, airports,
runways, roads (although still dusty and filled with potholes),
clinics, and an educational system that is equal to anywhere in
the state. Co-Chair Nageak attributed it all to what the North
Slope Borough has provided. He repeated that the state and the
oil industry were against forming the borough, and so the state
sued the people of the North Slope, because "they didn't trust
us." The borough has been very successful and he is proud. He
has been an assessor and a mayor, and he recalled that at the
age of 24 he was talking with oil industry people about billions
of dollars. "We didn't back down. We got the valuation that we
thought was enough for the North Slope," he said.
8:23:41 AM
CO-CHAIR NAGEAK said, "Forty-some years later, we're in the same
dang boat." He said HB 379 would amend "the way the valuation
is." The same people who sued the people of the North Slope are
keeping the borough from making the desired changes. One
accusation is that the borough would make Alaska lose money, he
said. Since the borough was formed, it has operated on an 18.5
mill rate, although it is allowed a 20 mill rate, and "we didn't
use it all because we're good people," he said. The 1.5 mill is
$30 million annually, and it goes to the State of Alaska. The
state has benefitted from the borough, and since it was formed,
the borough has given the state $1.2 billion, and "that's being
a good steward," he said.
8:27:50 AM
JOHN BITNEY, State Government Liaison, North Slope Borough,
noted the importance of knowing the history in terms of "where
did this come from and why are we talking about it." Under
current law, the state assesses a property tax on oil and gas
properties at 20 mills, and the municipalities have authority to
set a tax rate that can capture some of that, up to 20 mills.
The North Slope taxes 18.5 mills, which leaves 1.5 mills to the
state, he explained. He said the North Slope Borough is trying
to amend a formula that was crafted in the early 1970s in state
law that puts a cap on what a municipality, with oil and gas
property, can use from those revenues for its operations budget.
He said the formula essentially caps the amount of oil and gas
property tax revenue that can be used for an operating budget.
This is not a bill to raise taxes, but rather to raise the cap
that limits what municipalities can use for their operations
budget, he clarified.
8:30:48 AM
CO-CHAIR LEDOUX asked if all municipalities have the cap.
MR. BITNEY said the cap is a general law of applicability that
applies to all oil and gas properties, and there are different
formulas that a municipality can choose. He stated that the law
applies to all, but there are two municipalities where the oil
and gas revenues are the most significant form of income, by
far, and that is the North Slope Borough and the City of Valdez.
8:32:26 AM
CO-CHAIR LEDOUX inquired as to why the state should even care
how a municipality spends its funds.
MR. BITNEY answered that "somebody did care," and "that is the
frustration that brings us here today." He said that when the
state was beginning to develop its gas and oil resources, a
limitation was placed in statute.
REPRESENTATIVE FOSTER requested an explanation of how [the
statute] works.
8:33:39 AM
MR. BITNEY pointed to a 2013 annual report produced by the state
assessor called, "Alaska Taxable," and he said there is a good
explanation of the formula on page 34. It shows two formulas,
and one sets the operating cap (which is the focus of HB 379),
and there is also the actual tax rate, he said. The formula
takes the average per capita of the full value of the
municipality, multiplies it by 225 percent, and then multiplies
that by the population, and the product is the operating cap.
In 2013 it was $174.6 million. "Once you have that number
calculated by the state assessor's office, you then move down to
the formation of the borough's budget and the actual tax levy
amount that the borough puts in place," he explained. The
borough sets that $174.6 million as the operating budget, and
that works out to be 9.08 mills of tax. He said that the
borough taxes at 18.5 mills, so the difference between that and
the 9.08 mills of property tax equals what the borough is
allowed to use for the debt service for its capital needs. Over
all of these years, the North Slope Borough has built up its
infrastructure to a point where it does not need the debt
service amount, he stated. What it needs is flexibility to
spend more on operations to maintain the existing facilities.
It is an inefficient system to try and pay for things with debt,
considering its interest charges and issuance costs, he added.
He said that HB 379 changes the formula for the operations cap
by increasing the 225 percent multiplier.
8:37:41 AM
CO-CHAIR LEDOUX asked about eliminating the formula altogether.
"Why does anybody have to regulate ... how much they can spend
for this and how much they can spend for that?" She suggested
that the borough be allowed to tax at 20 percent and leave it at
that.
REPRESENTATIVE FOSTER said that is a great idea.
MR. BITNEY said what he wants to emphasize is that it is the
borough's full intent to stay at 18.5 mills.
8:39:34 AM
REPRESENTATIVE FOSTER asked if there was a number, or a cut off
on the sliding scale, that the borough would prefer. He asked
if the borough would like to make that decision each year and
what they wanted the legislature to do.
MR. BITNEY said it is a sliding scale in HB 379. The intent was
to alleviate concerns that, if a formula were eliminated, it
would leave unlimited headroom for taxes to go up, and "we have
tried to craft something here that shows that that's not our
intention." That is why it is crafted as a sliding scale. In
fact, if [the tax] goes above 19 mills there will be no benefit
of an increased multiplier, but if [the tax] goes below 18.5
mills, there would be a higher multiplier than what is being
proposed for the borough. He said there may be an incentive to
lower taxes, which would remit more of that revenue to the
state. In essence, by lowering taxes there is a gain in
flexibility with the higher multiplier, he explained. At a 300
percent multiplier within the 18 mill range, there will be about
$50 to $55 million of flexibility for the borough. This is an
annual exercise of the mayor and the assembly, but in looking at
the history of budgets and taxation, 18.5 is a steady number by
the borough. He added that state law requires that the mill
rate apply equally to all taxpayers, so anyone raising taxes
will have to face the local constituency.
8:42:40 AM
REPRESENTATIVE FOSTER surmised that the borough does not intend
to increase the 18.5 mill rate, because the state has a concern
that an increase would leave the state with less [money]. If
the borough decreases that rate, the state would get more
[money], because "if you go down to 18, well now the state picks
up 2 mills instead of 1.5, so that's better for the state, but
the intent, though, is maybe to stay at 18.5 or go lower, and
however that sliding scale within how the borough wants to spend
that money, part of it goes to debt, part of it goes to
operations-I'm totally fine with that."
8:43:31 AM
REPRESENTATIVE REINBOLD said she is not sure that she fully
understands the intent of HB 379. She noted that she was part
of an initiative in Anchorage to cap taxes, so she finds this
really, really interesting. "Our operating budgets were getting
out of control-they still are, but at least this helped," she
explained. She said a 9 percent operating budget is impressive,
if that is how much the borough is spending. She said she wants
to ensure that nobody is paying more, even on existing
structures.
MR. BITNEY said that was true.
8:44:21 AM
REPRESENTATIVE REINBOLD surmised that, right now, the
municipality collects 18.5 [mills], but only 9 percent is used
for the operating budget. "It sounds like you think that you
have enough capital projects, so the capital projects are not
going to suffer in this, is that correct?"
MR. BITNEY said that is correct.
8:44:34 AM
REPRESENTATIVE REINBOLD said it is a good example if the borough
is able to keep a low budget and living affordable. The schools
are not going to be impacted; the roads are not going to be
impacted; none of the infrastructure is going to be impacted-"is
that correct?"
MR. BITNEY answered that what is needed is maintenance, so the
impact would be to keep it all in good shape for years to come.
8:45:02 AM
REPRESENTATIVE REINBOLD said she believes that a lot of people
use capital money for maintenance, and she really thinks that
maintenance and improvement should be in the capital budget.
REPRESENTATIVE KITO III declared that he has a conflict because
of a contract with the North Slope Borough on another issue. He
then pointed to the formula in the taxation manual and asked
about the 30 mills identified in the first calculation.
8:46:35 AM
ROB ELKINS, Deputy Director, Administration and Finance, North
Slope Borough, said the first thing that the North Slope Borough
uses is the formula in AS 29.45.080, which allows the borough to
choose between either developing a budget of $1,500 per person
or 225 percent per capita value of assessed property, multiplied
by the borough population. He said that the borough uses the
second figure. It provides an equivalent tax base, so in the
current year, the North Slope Borough has a total assessed tax
base of $17.9 billion, he explained. Because of the calculation
required under AS 29.45.080(c), the borough takes the per capita
average full property tax value, which is $146,000, and
multiplies it by the 225 percent allowed in statute and comes up
with an average modified full value of $330,152. That number is
then multiplied by the population (18,637), which provides an
equivalent tax base. "So rather than being able to tax for
operations that entire $17.9 billion, we have a modified tax
base of $6.153 billion-that number then has a 30 mill limit as
identified under statute, applied to it, which gives, this year,
the North Slope Borough $184 million to use for operations and
leaves a leftover of $146 million for debt service."
8:49:16 AM
REPRESENTATIVE KITO III asked where the 30 mills is in statute.
MR. ELKINS said he will have to get back to the committee.
CO-CHAIR NAGEAK noted his conflict of interest as he is a
resident of the North Slope Borough.
8:50:21 AM
CO-CHAIR LEDOUX said he [and Representative Kito] will be
required to vote, and she opened public testimony.
STEVE VAN SANT, State Assessor, Alaska Department of Commerce,
Community & Economic Development, said that the 30 mill language
is in AS 28.45.090(a), and it restricts the maximum operating
budget to 30 mills or 3 percent.
8:52:27 AM
SCOTT BRANDT-ERICHSEN, Attorney, Ketchikan, said he is only
representing himself and that he worked on a case several years
ago related to the statute being discussed. He originally
believed that HB 379 was special interest legislation to give
the North Slope Borough and Valdez a larger portion of the oil
and gas tax revenues, but after reviewing the bill, he sees it
as an opportunity to fix something that has annoyed him.
Firstly, the fiscal note will likely relate whether the amount
of revenues going to the state will be impacted by HB 379, but
the sections of law that he has had concern with, AS
29.45.080(b), 090(b)(1) and (c)(1), deal with the limit of
$1,500 per capita. He noted that the 2013 "Alaska Taxable
Report," pages 24-25, shows per capita revenues by municipality.
The North Slope Borough is $45,340 per capita and Juneau is
$2,420 per capita, and better than half of the municipalities
are above the $1,500 per capita limit. "I would submit that
that $1,500 a year per capita limit serves no purpose and is
ineffective." He said the state assessor's office has treated
those two limits as disjunctive-meaning that the municipality
only has to comply with one or the other. Since the $1,500
limit has no real meaning, he suggested eliminating it. He said
he also sees a benefit from eliminating both limits altogether.
A better limitation on the levy of taxes would be what the local
community would be willing to pay, he opined. From a public
policy standpoint, both the 225 percent limit and the $1,500
limit should be eliminated for all municipalities and then
decided by voters.
8:57:08 AM
ANGELA RODEL, Commissioner, Alaska Department of Revenue, said
she would like to give the state's perspective on oil and gas
property tax. It is important to know that the tax is a
mechanism for Alaska to receive revenue from areas that greatly
benefit from oil development and to allow the money to spread to
other parts of the state. Additionally, oil and gas property
tax affects Alaska's oil production tax calculations, "so when
you take off limitations on oil and gas property tax, that's a
deduction on the oil production tax, which feeds 90 percent of
the state budget." She said the state is supportive of the
borough's need for more funds to its operating budget, and the
bill before the committee has created a mechanism that allows
the borough to adjust mill rates to account for more operating
budget revenue if needed, but "we have a $10 million potential
negative affect, and that's simply to recognize the fact that if
the borough does in fact ... raise its tax rate and take the
full 20 mills, the state would have an impact of about $10
million as opposed to $30 million, which you heard
Representative Nageak speak to earlier." She noted that there
is no reason to believe that the borough will do that.
8:59:19 AM
CO-CHAIR LEDOUX asked if the borough could do that now-increase
the tax rate from 18.5 mills to 20 mills.
COMMISSIONER RODEL said, "They could increase it and it would
have an impact of $30 million; the reason they don't is because
they haven't-and they don't intend to-and they're fully using
their operating budget now, and I think that's the beauty of the
creation of the sliding scale is that it does minimize the
impact on the state at this time."
8:59:59 AM
REPRESENTATIVE FOSTER spoke to the sponsor statement, which says
that the municipality would gain more flexibility by lowering
the taxes, and lowering the taxes appears to increase the
multiplier. The goal is to be able to spend more on operations,
and, right now, the borough is being restricted by the formula.
"I was a little bit concerned when I saw the $10 million here
because I thought it's not the intent of the borough, I guess,
to increase their mill rate."
COMMISSIONER RODEL agreed. That is her understanding. "We try
to make a point to outline the impacts for you so that you
understand when you're making decisions about the bill."
9:01:18 AM
REPRESENTATIVE HERRON noted that Commissioner Rodel called it
"the beauty of the sliding scale," and he asked if the scale
could be modified to be more advantageous for the state.
COMMISSIONER RODEL said the state worked hard to find a
mechanism that did not impact the state, but [the statute]
applies to any municipality with oil and gas property tax. To
have zero impact on the state would force municipalities with
higher mill rates to cut them, she explained. "We think the
sliding scale is as neutral as we're going to be able to get,"
she added.
9:02:32 AM
REPRESENTATIVE KITO III asked why a limit was placed on
operating funds originally.
COMMISSIONER RODEL said she does not know, but she knows there
is the 30 mill rate that applies to all municipalities, and this
multiplier was to equalize property values with areas without
oil and gas property tax.
9:03:30 AM
MATT FONDER, Director, Tax Division, Alaska Department of
Revenue, said he believes that is the basic premise [of the
statute], but he does not have the exact legislative intent.
The statutes are about 40 years old, he noted.
CO-CHAIR NAGEAK said it has been more than 40 years, and the
borough has never gone above 18.5 mills. It never will because
people understand that "we have to be good stewards of not only
our municipality, but we need to be good citizens of the state."
Being good citizens means sharing some of the wealth-"we could
go all the way to 20; we could have, but we choose not to and we
will continue to choose not to," he stated.
9:05:25 AM
CO-CHAIR LEDOUX closed public testimony. She said HB 379 is
good legislation, but if she had drafted it, she may have
eliminated the entirety of the formula, but she does not want to
slow the bill down to do that.
REPRESENTATIVE HERRON moved to report HB 379 out of committee
with individual recommendations and the accompanying fiscal
note. There being no objection, it was so ordered.
9:06:33 AM
The committee took an at-ease from 9:06 a.m. to 9:10 a.m.
HB 238-PROCUREMENT PREF: AK GROWN FISH/AG PRODS
9:10:30 AM
CO-CHAIR LEDOUX announced that the next order of business would
be the SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 238, "An Act
relating to the state and municipal procurement preferences for
agricultural products harvested in the state and fisheries
products harvested or processed in the state; relating to
legislative oversight of those procurement preferences; and
providing for an effective date."
9:11:21 AM
REPRESENTATIVE FOSTER moved to adopt the CS to SSHB 238, labeled
28-LS1167/N, as the working document.
CO-CHAIR LEDOUX objected for purposes of discussion.
REPRESENTATIVE GERAN TARR, Alaska State Legislature, said the
bill in front of the committee contains the changes that were
adopted at the last meeting. She said that the first change to
HB 238 removes the audit section, and the second change moves
the effective date up. She noted that there is a handout
related to the fiscal note.
9:12:46 AM
REPRESENTATIVE FOSTER said he totally supports the idea of
supporting Alaska industries. He asked if a school district
would be required to purchase [Alaska] products, as long as the
price did not exceed the price of Outside goods by 12 percent,
and then that would increase school costs. He pointed out the
issues of [base student allocations] and school funding.
REPRESENTATIVE TARR said that school food purchases are funded
by the Farms-to-School program, and HB 238 merely provides
purchasing flexibility. She added, "We would hope that with
that additional price flexibility that for products that are
available, they would purchase them."
9:14:15 AM
REPRESENTATIVE FOSTER asked if the [Farms-to-School program]
fund needs to be increased.
REPRESENTATIVE TARR noted that the timeline she just provided to
the committee will show where the costs might show up. In May
or June of this year, she said, the bill could be signed into
law, and then in the summer and fall, "we" would work with the
Department of Agriculture Farm Service Agency and its networks.
There are electronic newsletters and the Alaska Grown Booklet to
communicate with purchasers and sellers, she said. As budgets
are finalized in the fall-and if new products and vendors come
in through the program-that is when there might be changes in
the budget. But, she added, "it could be true that it's just a
shifting in costs, where some of the purchasing is now Alaska-
grown products that replace products that were purchased
Outside." There may not be an overall increase from HB 238, it
just might be that [the state] is paying a little bit more for
Alaska products, she explained.
9:15:45 AM
CO-CHAIR LEDOUX said if [the state] is paying a little more for
the products, why would there not be an increase?
REPRESENTATIVE TARR said it would be part of overall food
purchasing, and the buyers could shift purchases so that there
would not be an overall increase.
9:16:36 AM
CO-CHAIR LEDOUX asked about the school districts, because they
would be required to buy those Alaska items that are less than
12 percent over the cost of non-Alaska foods-so it would impact
those budgets.
REPRESENTATIVE TARR said it would for those particular items,
but it would not necessarily impact the overall budget. "It may
mean that they are buying Alaska-grown products that they
weren't buying before, because the price was a limiting factor.
It doesn't necessarily mean that they didn't find efficiencies
in their other purchases that allowed them to just essentially
cost shift around in their overall items that they buy."
9:17:26 AM
REPRESENTATIVE FOSTER inquired as to the position of the school
districts regarding HB 238.
REPRESENTATIVE TARR said she worked with the Division of
Agriculture, which is the sponsor of the Farm-to-School program,
and it has been supportive of the bill.
REPRESENTATIVE HERRON asked if the calculation is pre or post
FOB. If a school district wants to buy a product "and it is bid
FOB-in other words, you have to deliver it to us.... "
REPRESENTATIVE TARR said she assumes it would be pre FOB.
REPRESENTATIVE HERRON said there is a significant difference.
9:18:41 AM
REPRESENTATIVE HERRON asked if Representative Tarr has "actually
looked at what it costs to buy product outside of the delivery
system of agricultural products harvested in the state and
fisheries products harvested in the state comparing when we buy
it from outside. Is that comparable?"
REPRESENTATIVE TARR said large-scale purchases tend to be less
expensive through the large companies like Cisco. It has been a
challenge for Alaskan farmers to get into those distribution
chains and be able to provide that reliable amount each week.
She recalled the comments that were made [in the last hearing]
that the hope is to build more reliability in the food system.
9:20:16 AM
CO-CHAIR LEDOUX said this is not a new program, it just changes
the percentage from 7 percent to 12 percent, "so whatever it's
doing with the FOB, et cetera, it's no change." She asked where
the 12 percent figure came from.
REPRESENTATIVE TARR said it came from conversations with farmers
regarding prices, and this is a 5 percent increase, which seemed
to be a reasonable first step. This was a priority of the
Alaska Food Policy Council, because it views HB 238 as a way to
achieve the goal of strengthening food systems and security in
Alaska and to increase Alaska-grown purchases.
REPRESENTATIVE HERRON asked if Representative Tarr would
consider HB 238 as Alaskan-hire legislation.
REPRESENTATIVE TARR said she had not thought about it, but she
does believe there are great opportunities and more Alaska hire.
9:22:11 AM
REPRESENTATIVE REINBOLD said she does not want to increase
school budgets. She said she is a huge supporter of Alaska
Grown, especially if Alaska encounters a food crisis. She noted
that Alaska food is a lot fresher and healthier-and tastes
better. She said she thinks HB 238 could decrease shipping, and
that is important. The legislation may increase jobs in Alaska.
Her understanding of the bill, she said, is it just allows 5
percent more flexibility to purchase Alaska-grown products.
REPRESENTATIVE TARR agreed, and it allows for that increased
price flexibility, and we will see if the market can meet that
demand, otherwise, foods will keep being purchased from Outside.
9:23:35 AM
REPRESENTATIVE REINBOLD stated that if the program works, there
is potential for the prices to decrease.
REPRESENTATIVE FOSTER noted that HB 238 is supposed to provide
more flexibility, but on page 1, Section 1(a), it says "shall".
REPRESENTATIVE TARR said, "shall to the extent that those
products are available," and "that's what we're trying to
accomplish here is creating more product availability that would
fulfill the needs of those larger institutional purchasers and
by having additional price flexibility that can help accomplish
that goal."
9:24:37 AM
CO-CHAIR LEDOUX gave an example of a limited budget, like $100,
and Alaska-grown sweet potatoes are 12 percent over the market
price, and then she suggested prices might increase if Alaska-
grown food can be sold at 12 percent over market price. Then
municipalities might buy less Alaska-grown products, she
surmised.
REPRESENTATIVE TARR said she had not considered that as a
potential outcome. The Alaska-grown produce that is available
has established prices, and to increase prices would work
against those sellers. She believes there will be market
pressure to keep prices reasonable, but the prices reflect that
Alaska-grown products come from smaller farms, she said.
REPRESENTATIVE KITO III said that it seems like HB 238 will
provide an opportunity for smaller Alaska businesses to be
competitive.
9:27:50 AM
DANNY CONSENSTEIN, State Director, Department of Agriculture,
Farm Service Agency Alaska and member of the Alaska Food Policy
Council, said the Alaska Food Policy Council has the goal of
strengthening food stability in the state. He noted that
probably 95 percent of foods Alaskans eat come from Outside. If
Alaska purchased more Alaskan food, the economic benefits would
include job opportunities, supporting small entrepreneurs who
are in the food business, and keeping more food dollars in the
community, he added. He noted the health benefits and spoke of
the costs of health-related diseases and the lack of fresh
vegetables in village markets. He said the bill will have
educational benefits as school children can see that food comes
from the ground, not from a package. He said that one out of
five children go to school hungry, and Alaska is not prepared
for emergencies, so there is lack of food security because of
the lack of a food system. The bill is just one little piece of
building a stronger food system by having the state play a
larger role as a purchaser, he noted. If the state can become
more of a driver, then it can create more of a market for
Alaska-grown food, and, thus, there will be incentive to expand
and to add new entrants. As the supply increases, there will be
an economy of scale, he said, and prices will come down. The
larger vegetable producers in Alaska will currently match
outside prices, and "so why wouldn't a state agency or a school
district purchase that?"
9:34:45 AM
REPRESENTATIVE CHRIS TUCK, Alaska State Legislature, recalled
some of the past agricultural resolutions in the legislature,
and on this subject alone, every single member in the House
spoke, because it is a passionate issue and something where all
Alaskans want to see more done. He said this is a step in right
direction, to sustain the state and to provide better nutrition
in Alaska schools. He noted that attempts for local hire
preferences have been found unconstitutional, but one thing that
has been successful is Alaska's procurement policies for Alaska
businesses. This step is to make sure that products grown and
produced in Alaska have a preference with state procurement, and
such policies have been proven and tested. He said he likes HB
238; Alaska needs to be self-reliant with food.
9:37:20 AM
CO-CHAIR LEDOUX closed public testimony and removed her
objection, therefore Version N was before the committee.
CO-CHAIR NAGEAK moved to report the committee substitute to SSHB
238, labeled 28-LS1167/N, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSSSHB 238(CRA) was reported from the House
Community and Regional Affairs Standing Committee.
9:38:07 AM
The committee took an at-ease from 9:38 a.m. to 9:40 a.m.
HB 317-TRAFFIC CONTROL DEVICES NEAR SCHOOLS
9:40:05 AM
CO-CHAIR LEDOUX announced that the final order of business would
be HOUSE BILL NO. 317, "An Act relating to official traffic-
control devices at schools and in school zones." She noted that
Version U was previously adopted and is before the committee as
a working document.
REPRESENTATIVE CHRIS TUCK, Alaska State Legislature, said the CS
to HB 317 has new fiscal notes.
9:41:07 AM
CONNIE MCKENZIE, Legislative Liaison, Department of
Transportation & Public Facilities (DOT), said that there are
fiscal notes for each of the three DOT regions. Statewide, the
cost is $624,000 to implement HB 317 for the schools that are
now included in the definition. Approximately 30 percent will
be on state roads, she added.
9:42:01 AM
CO-CHAIR LEDOUX noted the huge change in the fiscal note.
MS. MCKENZIE said the change is due to allowing the traffic
safety practitioners to be able to review all the various signs,
crosswalks, and signals for each school, instead of just
flashing signals. "By being able to look at the different kinds
of signs and signals that might be practical for any one school,
we were able to reduce the fiscal note down to $624,000."
9:43:05 AM
REPRESENTATIVE TUCK thanked DOT and said there will be
appropriate, cost-effective signage to bring public awareness of
school locations.
CO-CHAIR LEDOUX opened public testimony.
9:43:53 AM
JEFF STARK, Chief Assistant Attorney General, Department of Law,
Transportation Section, said he works a great deal with DOT, and
he still has concerns with Version U. The requirements in
current law are that the state adopt a uniform system of traffic
safety devices, and that requirement is in two sections, AS
19.10.040 and AS 19.10.050, he said. Currently, DOT engineers
have discretion as to where traffic control devices are placed.
He said his concern with Version U is that Alaska statutes
indicate that the uniform system adopted by the state must
include provisions for both posting traffic control signals and
marking and posting traffic control devices. He believes, based
on the fiscal note, that DOT is interpreting a great deal of
discretion under the new bill, but he does not read it as
liberally as DOT does. "I know that DOT is fully on board with
what I believe is the intent of the sponsor, which is to treat
private schools, charter schools, [and] religious schools all
the same as public schools, and this bill does that, but I am
concerned that it still restricts the discretion of the traffic
and safety engineers in terms of what sort of signage, what sort
of signals they use more than it should." He said that language
can be worked out, but it is not yet done.
9:47:07 AM
REPRESENTATIVE KITO III asked if current statute needs changing.
MR. STARK said no, the current statute is probably fine,
although it is not terribly well written. It dates back to pre-
statehood. He said AS 19.10.040 deals with marking and posting
of highways, and AS 19.10.050 deals with providing signals. He
said he would rather the two be combined and just address
"installing traffic control devices." But under current law,
the state has adopted the Manual on Uniform Traffic Control
Devices, which originates with the Federal Highway
Administration and is adopted by the American Association of
Highway and Transportation Officials. It is then incorporated
by the state into the Alaska Traffic Manual, which is approved
by the Federal Highway Administration. That manual provides a
great deal of discretion to the traffic and safety engineers as
to the placement of traffic control devices, so his concern with
CSHB 317 is the use of the term "must" on page 1, line 14, and
page 2, line 5. He noted that safety engineers do not believe
that signals are required in all school zones as it would be an
unnecessary expense and can even decrease safety. "Having these
requirements split and saying that they must use both in school
zones, I think they've lost the necessary discretion that they
have under current law," he concluded.
9:50:10 AM
REPRESENTATIVE KITO III pointed to Section 5 of Version U,
requiring the municipality to erect traffic control devices in
school zones "in conformance with the Alaska Traffic Manual."
It seems that there is discretion, he said.
MR. STARK said Section 5 addresses municipalities, and it does
give that discretion under current law, but Sections 1 and 2
deal with DOT, "and I would read it saying you must provide
traffic control devices ... and that, again, would remove the
discretion from the municipality."
CO-CHAIR LEDOUX asked Mr. Stark if he would be willing to work
with the sponsor of HB 317 to develop the appropriate language.
MR. STARK said absolutely.
REPRESENTATIVE FOSTER asked about committee referrals.
9:52:00 AM
KENDRA CLOSTER, Staff, Representative Chris Tuck, Alaska State
Legislature, said the bill will go to the House Transportation
Standing Committee next.
REPRESENTATIVE FOSTER said the concept is good, and if HB 317
were going to the finance committee, it could be fixed there.
CO-CHAIR LEDOUX said it might go to the finance committee now
that it has a fiscal note.
9:52:39 AM
MS. CLOSTER noted that she has been working with Doug Gardner
[Attorney for Legislative Legal Services], traffic engineers,
and people from the Office of the Attorney General, and there
have been some differences of opinions. There have been
multiple requests from traffic engineers to reference both
sections of the statute, she said. The transportation committee
could address current statute and what might need to be changed,
because markings, postings, and signage are all under different
sections.
9:54:05 AM
CO-CHAIR LEDOUX closed public testimony.
REPRESENTATIVE HERRON said if "must" was changed to "may" on the
first page, the committee could move the bill along and it may
not need a fiscal note.
REPRESENTATIVE FOSTER said he supports moving the legislation
along. The transportation committee can look at some of the
detailed questions, but, overall, he said he likes the concept.
9:55:22 AM
CO-CHAIR LEDOUX stated that she would like to move HB 317 out of
committee but with the proviso that the House Transportation
Standing Committee work on Mr. Stark's concerns.
REPRESENTATIVE REINBOLD asked if Representative Herron had made
a conceptual amendment.
REPRESENTATIVE HERRON said it was just a suggestion.
CO-CHAIR LEDOUX noted that changing "must" to "may" guts the
entire bill because DOT could do what it wanted.
9:56:42 AM
REPRESENTATIVE REINBOLD said the change would help with the
fiscal note.
REPRESENTATIVE TUCK said he does not have a problem with the
fiscal note as it exists. "The department has been working
really well with us," he added. Without "must" there will not
be the public awareness for charter, private, and religious
schools. He said he wants action on this.
9:57:49 AM
REPRESENTATIVE HERRON said he disagreed because both DOT and the
assistant attorney general "disagree with your statement."
Given all of the other changes, he said, HB 317 could become a
reality, but if "must" and the fiscal note remain, "I am not as
hopeful."
CO-CHAIR LEDOUX asked if he would like to offer an amendment.
REPRESENTATIVE HERRON said, "My colleague from the Eagle River
Valley has offered to make that conceptual amendment."
9:58:44 AM
REPRESENTATIVE REINBOLD said she does not want to gut the bill,
because it is really, really important, but she does not want to
make it mandatory if it includes all Headstart programs and
preschools.
CO-CHAIR LEDOUX stated that she prefers passage of HB 317
without amendment.
REPRESENTATIVE HERRON said he supports the co-chair.
9:59:45 AM
REPRESENTATIVE FOSTER moved to report CSHB 317, Version U, out
of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, CSHB
317(CRA) was reported from the House Community and Regional
Affairs Standing Committee.
CO-CHAIR LEDOUX reiterated the proviso stated earlier.
10:00:26 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 10:00 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 379.pdf |
HCRA 4/1/2014 8:00:00 AM |
HB 379 |
| HB 379 Sponsor Statement.pdf |
HCRA 4/1/2014 8:00:00 AM |
HB 379 |
| HB 379 Sectional Analysis.pdf |
HCRA 4/1/2014 8:00:00 AM |
HB 379 |
| HB 379 Letter of Support.pdf |
HCRA 4/1/2014 8:00:00 AM |
HB 379 |
| HB 379 13 Tax.pdf |
HCRA 4/1/2014 8:00:00 AM |
HB 379 |
| HB 238 ver N.pdf |
HCRA 4/1/2014 8:00:00 AM |
HB 238 |