Legislature(1997 - 1998)

02/05/1997 08:05 AM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              HOUSE COMMUNITY AND REGIONAL AFFAIRS                             
                       STANDING COMMITTEE                                      
                        February 5, 1997                                       
                           8:05 a.m.                                           
 MEMBERS PRESENT                                                               
 Representative Ivan Ivan, Chairman                                            
 Representative Scott Ogan                                                     
 Representative Joe Ryan                                                       
 Representative Jerry Sanders                                                  
 Representative Al Kookesh                                                     
 Representative Reggie Joule                                                   
 MEMBERS ABSENT                                                                
 Representative Fred Dyson                                                     
 COMMITTEE CALENDAR                                                            
 *HOUSE BILL NO. 35                                                            
 "An Act extending the termination date of the Alaska regional                 
 economic assistance program; and providing for an effective date."            
      - MOVED HB 35 OUT OF COMMITTEE                                           
 *HOUSE BILL NO. 86                                                            
 "An Act relating to the payments in lieu of taxes program for                 
 cities in the unorganized borough; and providing for an effective             
      - MOVED HB 86 OUT OF COMMITTEE                                           
 (* First public hearing)                                                      
 PREVIOUS ACTION                                                               
 BILL:  HB 35                                                                
 SHORT TITLE: EXTEND REG. ECONOMIC ASST PROGRAM                                
 JRN-DATE      JRN-PG         ACTION                                           
 01/13/97        37    (H)   PREFILE RELEASED 1/3/96                           
 01/13/97        37    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/13/97        37    (H)   CRA, FINANCE                                      
 02/05/97              (H)   CRA AT  8:00 AM CAPITOL 124                       
 02/05/97       239    (H)   CRA RPT  6DP                                      
 02/05/97       239    (H)   DP: JOULE, OGAN, SANDERS, KOOKESH, RYAN           
 02/05/97       239    (H)   IVAN                                              
 02/05/97       239    (H)   FISCAL NOTE (DCRA)                                
 02/05/97       239    (H)   REFERRED TO FINANCE                               
 BILL:  HB 86                                                                
 SHORT TITLE: CITIES:  PAYMENTS IN LIEU OF TAXES                               
 JRN-DATE      JRN-PG         ACTION                                           
 01/24/97       137    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/24/97       137    (H)   CRA, FINANCE                                      
 02/05/97              (H)   CRA AT  8:00 AM CAPITOL 124                       
 02/05/97       240    (H)   CRA RPT  5DP 1NR                                  
 02/05/97       240    (H)   DP: JOULE, SANDERS, RYAN, KOOESH, IVAN            
 02/05/97       240    (H)   NR: OGAN                                          
 02/05/97       240    (H)   ZERO FISCAL NOTE (DCRA)                           
 02/05/97       240    (H)   REFERRED TO FINANCE                               
 WITNESS REGISTER                                                              
 BROOKE SELMER                                                                 
 Arctic Development Council                                                    
 P.O. Box 371                                                                  
 Barrow, Alaska  99723                                                         
 Telephone:  (907) 852-4146                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 PAUL FUHS                                                                     
 Alaska ARDOR Association                                                      
 10652 Porter Lane                                                             
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 790-3030                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 JEROME SELBY, Mayor                                                           
 Kodiak Island Borough                                                         
 710 Mill Bay Road                                                             
 Kodiak, Alaska  99615                                                         
 Telephone:  (907) 486-9300                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 WAYNE STEVENS, Executive Director                                             
 Kodiak Chamber of Commerce                                                    
 P.O. Box 1485                                                                 
 Kodiak, Alaska  99615                                                         
 Telephone:  (907) 486-5557                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 JAMES A. ELSON, Chairman                                                      
 Kenai Peninsula Borough Economic Development                                  
 P.O. Box 2788                                                                 
 Kenai, Alaska  99611                                                          
 Telephone:  (907) 283-3335                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 ALICE RUBY, President                                                         
 Southwest Alaska Municipal Conference                                         
 Box 121                                                                       
 Dillingham, Alaska  99576                                                     
 Telephone:  (907) 562-7330                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 JAMES WINCHESTER, Executive Director                                          
 Prince William Sound Economic Development                                     
 P.O. Box 1553                                                                 
 Valdez, Alaska                                                                
 Telephone:  (907) 835-2085                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 LAMAR COTTON, Deputy Commissioner                                             
 Department of Community & Regional                                            
 P.O. Box 112100                                                               
 Juneau, Alaska  99811-2100                                                    
 Telephone:  (907) 465-4700                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 MARY STADUM, Executive Director                                               
 Southwest Alaska Municipal Conference                                         
 3300 Arctic, Suite 203                                                        
 Anchorage, Alaska  99503                                                      
 Telephone:  (907) 562-7380                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 DOUG SMITH, Executive Director                                                
 Matsu Resource Conservation & Development                                     
 351 West Park, Number 100                                                     
 Wasilla, Alaska  99654                                                        
 Telephone:  (907) 373-1062                                                    
 POSITION STATEMENT:  Testified on HB 35                                       
 BILL ROLFZEN                                                                  
 State Revenue Sharing                                                         
 Division of Municipal & Regional                                              
 Department of Community & Regional                                            
 P.O. Box 112100                                                               
 Juneau, Alaska  99811-2100                                                    
 Telephone:  (907) 465-4750                                                    
 POSITION STATEMENT:  Testified on HB 86                                       
 KEN WEAVER, Manager                                                           
 City of Bethel                                                                
 P.O. Box 388                                                                  
 Bethel, Alaska                                                                
 Telephone:  (907) 543-2047                                                    
 POSITION STATEMENT:  Testified on HB 86                                       
 ACTION NARRATIVE                                                              
 TAPE 97-4, SIDE A                                                             
 Number 016                                                                    
 CHAIRMAN IVAN IVAN called the House Community and Regional Affairs            
 Standing Committee meeting to order at 8:03 a.m.   Members present            
 at the call to order were Representatives Ogan, Sanders, Ryan and             
 Joule.  Representative Kookesh joined the proceedings at 8:10 a.m.            
 Representative Dyson was absent.                                              
 HB 35 - EXTEND REG. ECONOMIC ASST PROGRAM                                   
 Number 145                                                                    
 REPRESENTATIVE ALAN AUSTERMAN came forward as sponsor of HB 35                
 which extends the sunset date of the Alaska Rural Development                 
 Organizations (ARDOR) program to July 1, 2000.  Representative                
 Austerman read the sponsor statement into the record:                         
 "In 1988 the Alaska Regional Development Organizations program was            
 created in statute.  Commonly referred to as ARDOR's, they are                
 private, nonprofit corporations formed by local initiative to                 
 promote private sector economic development within their designated           
 "The ARDOR program has led to the formation of 11 regional                    
 development organizations such as the Southwest Alaska Municipal              
 Conference, the Southeast Conference, the Lower Kuskokwim Economic            
 Development Council and the Anchorage Economic Development                    
 Corporation.  Nearly two hundred representatives of local                     
 political, social and economic interests, who serve on ARDOR boards           
 of directors, are working together to lead their regions to greater           
 economic self-sufficiency.                                                    
 "ARDOR's are achieving significant success in sustainable                     
 development through the establishment of production and marketing             
 cooperatives, improved access to capital, development and marketing           
 of tourism destinations, technical assistance and training for                
 local businesses and entrepreneurs, support to value added                    
 production and proactive involvement in locally initiated economic            
 development projects.                                                         
 "Sound economic development relies heavily on solid partnerships              
 between the public and private sectors.  The ARDOR's were conceived           
 to facilitate this kind of partnering and to bring a regional                 
 perspective to the discussion of economic development issues.                 
 "The original legislation had a sunset clause that ended the                  
 program in 1993, but was extended until the end of fiscal year                
 1997.  I believe it is in the best interest of the State of Alaska            
 to continue the ARDOR program to insure the ongoing economic                  
 viability of Alaska's various regions."                                       
 REPRESENTATIVE AUSTERMAN noted that in 1986, when he was first                
 elected to the Kodiak Island Borough Assembly, they became involved           
 with regional aspects of local government and state government.               
 They formed the Southwest Alaska Municipal Conference.  This was              
 done in the hopes of developing an ARDOR type of program which they           
 eventually did.                                                               
 Number 416                                                                    
 BROOKE SELMER, Arctic Development Council, came forward to testify            
 on HB 35.  In the last few years his organization has been heavily            
 involved with (indisc.) on the North Slope which has proven to be             
 an educational process.  This effort has been very successful.                
 They've established an incubator where businesses are promoted and            
 seven businesses have graduated so far.  They have a technical                
 assistance program which investigates the feasibility of proposed             
 businesses and develops marketing plans.  They also assist these              
 businesses in securing financing and they've established a                    
 revolving loan fund.  They also have a project information center             
 for small contractors who can't afford the cost of plans and other            
 MR. SELMER said they have a village out-reach program.  Barrow                
 being the largest populated village on the slope probably receives            
 most of the attention, but the infrastructure development is very             
 important for the more small, outlying villages.  They visit the              
 villages about once month and they've had some substantial                    
 successes there.  They are in the process of trying to become a               
 grant funding information source by helping to write grants or                
 assisting in any way which helps clients along.                               
 Number 594                                                                    
 PAUL FUHS, Alaska ARDOR Association, came forward to testify on HB
 35.  He stated again that this is a public and private partnership.           
 The ARDOR program is a good example of how a relationship such as             
 this works effectively.  The boards of directors related to this              
 organization are made up of approximately 50 percent municipal                
 government officials and 50 percent private sector people.  The               
 private sector participation is very important by keeping the                 
 ARDOR's on track with a realistic development program with people             
 who are actually in business.  The ARDOR'S assist small businesses            
 with small projects, but also large projects which are regional in            
 nature such as the Iron Carbide Reduction Plant in Kenai, as well             
 as with the Magnuson Act issue, the Community Development Quota               
 Program, and the Foreign Vessel Re-flagging Act which spurred the             
 Americanization of the fishing industry in the 200 mile limit.                
 MR. FUHS stated that the ARDOR funding comes from program receipts            
 through the Alaska Industrial Development & Export Authority                  
 (AIDEA) and the ARDOR's serve an important function in terms of               
 outreach for AIDEA allowing people throughout the state to know               
 what programs are available and by making referrals.  He added that           
 the ARDOR program will be critical in Welfare Reform implementation           
 in terms of creating jobs, as well as making sure there are                   
 coordinated training programs and services available to people in             
 order for them to move from welfare to work.  All of the ARDOR                
 programs are involved with this issue on a regional basis.                    
 Number 744                                                                    
 JEROME SELBY, Mayor, Kodiak Island Borough, testified by                      
 teleconference from Kodiak.  The ARDOR's, in his opinion, are                 
 probably one of the greatest success stories which the legislature            
 has ever funded in terms of developing the economic base of Alaska.           
 The Southwest Alaska Municipal Conference, which is the ARDOR for             
 Kodiak, Alaska Peninsula and the Aleutian chain, see a lot of                 
 development which has resulted from their efforts such as business            
 opportunity tours.  These tours allow individuals to see facilities           
 that they might consider expansion of in their own communities.               
 There has also been quite a lot of activity in this region with the           
 tourism industry, such as new charter operations, new lodges, etc.            
 MAYOR SELBY stated that the Southwest Conference gets information             
 out to people so that there is a constant flow of good, solid                 
 information about business opportunities, as well as information              
 about how to run their businesses effectively in order to stay                
 operational.  He added that good solid small businesses have                  
 resulted from the ARDOR programs which allows the economy to grow             
 quietly and gradually, rather than under a boom scenario.                     
 Number 915                                                                    
 WAYNE STEVENS, Executive Director, Kodiak Chamber of Commerce                 
 testified by teleconference from Kodiak on HB 35.  He also serves             
 as a board member on the Southwest Alaska Municipal Conference.  He           
 very briefly expressed his support of HB 35.  The ARDOR program has           
 been very successful in their region.  It is a collaboration of               
 government, business and non-profits.  The chamber has supported              
 the ARDOR program since its inception and he encouraged the                   
 committee's continued support with the passage of HB 35.                      
 Number 970                                                                    
 JAMES ELSON, Chairman, Kenai Peninsula Borough Economic Development           
 District, testified by teleconference from Kenai on HB 35.  He has            
 been a resident of Kenai since 1967 and since, then he's been                 
 involved in economic development.  From 1973 to 1976, he served as            
 mayor of Kenai which was before Prudhoe Bay and before money.  He             
 understands the struggles that the small communities have had to go           
 through.  The Kenai Peninsula Borough Economic Development District           
 was the first economic development organization to become certified           
 as an ARDOR.  Initially they were organized into three committees,            
 industrial, business assistance and tourism.  ARDOR allowed their             
 Kenai organization to have a professional staff.                              
 MR. ELSON stated that through their tourism committee, they were              
 able to put together an organization which has spun off and is a              
 corporation itself called the Tourism and Marketing Council.  He              
 used this as a successful illustration of how different sectors of            
 industry can come together in an effective manner.                            
 MR. ELSON stated that prior to the ARDOR program, tourism was very            
 fractured.  The whole peninsula was brought together in a                     
 successful program with now close to 600 members in their                     
 organization.  Also, because of the professional staff, they've               
 developed a partnership with the Small Business Development Center            
 and the First National Bank of Anchorage in order to host a region            
 wide small business assistance program.  As a result of this first            
 effort, they networked with 255 clients.  Presently, they assist 21           
 of these clients with projects that range from small businesses to            
 value added, to natural resources, to technical assistance in the             
 oil industry to brand new products, as well as with assistance in             
 the tourism trade.                                                            
 Number 1180                                                                   
 MR. ELSON noted that they host educational seminars throughout the            
 year within the borough.  Their efforts are truly regional and this           
 would not be possible without the assistance of the ARDOR program.            
 They've been involved with numerous successful projects over the              
 years including a study on the gas reserves in Cook Inlet which was           
 introduced to the Koreans.  Unfortunately, this effort didn't                 
 develop into anything, but as a result of this study, Stewart                 
 Drilling made the first successful find in the inlet in 20 some               
 years.  He also made mention of the Carbide project which Mr. Fuhs            
 had outlined.                                                                 
 MR. ELSON stressed the importance of the involvement of the                   
 Economic Development district and the professional staff coming               
 together to work on these projects.  Because of staff, they are               
 able to access state agencies and also key people in the native               
 corporations, as well as other citizen groups.  The ARDOR program             
 allows the state to contract without going through a competitive              
 bid process.  This has been very beneficial for their shellfish               
 industry and he outlined other fish related projects they've been             
 involved with.  He felt as though the contractual services within             
 ARDOR will be very important as government continues to downsize in           
 the future.   ARDOR will be very effective with the Welfare to Work           
 program in providing necessary training.                                      
 Number 1456                                                                   
 ALICE RUBY, President, Southwest Alaska Municipal Conference                  
 testified by teleconference from Dillingham on HB 35.  The ARDOR              
 program has allowed them to make significant achievements and                 
 economic development in their region.  ARDOR allows them to                   
 facilitate networking which is very important.  They also provide             
 education through workshops and technical assistance to their                 
 communities, as well as cooperating on specific economic                      
 development projects especially with the idea of bringing together            
 community, government, private industry, and non-profit                       
 organizations.  She gave an example of one of these successes in              
 the Dillingham area called the Day and Dillingham Project where the           
 municipal conference is working with the City of Dillingham to try            
 and develop some tools to bring visitors into the community.                  
 Number 1583                                                                   
 JAMES WINCHESTER, Executive Director, Prince William Sound Economic           
 Development Council testified from Valdez on HB 35.  This                     
 organization is the ARDOR for Prince William Sound and they                   
 represent the communities of Valdez, Cordova, Whittier, Tatitlik              
 and Chenega Bay.  This ARDOR was formed in 1990.  Mr. Winchester              
 helped write some of the grants at that time and served as the                
 first board president.  He felt then that if this ARDOR at the very           
 least, served as a forum for communication for the communities of             
 Prince William Sound, then, it would be a success.  It does this              
 very well, along with a number of other important things.                     
 MR. WINCHESTER stated that what they are about in Prince William              
 Sound are jobs, jobs, and jobs for local people.  This program has            
 proved very efficient at putting together programs that provide               
 employment.  They offer the following services:  small business               
 development through workshops; counseling services for people in              
 the start up phases including business plans, advice on loans,                
 grants, etc.; economic development plans for communities which                
 include putting together strategic plans for their own economic               
 development; and infrastructure development for economic activity.            
 Over the last two years, they've undertaken a dozen infrastructure            
 projects with a price tag of more than $100,000.  They've had $3              
 million in projects just this year.                                           
 Number 1712                                                                   
 LAMAR COTTON, Deputy Commissioner, Department of Community &                  
 Regional Affairs, testified by teleconference from Anchorage on HB
 35.  He stated that he didn't know if he could add more to what's             
 been said already.  The ARDOR programs are locally driven as                  
 opposed to state directed.  The examples highlighted are proven               
 examples of a continued partnership between the public and private            
 sectors, both locally and regionally.   The department supports               
 this ARDOR program.                                                           
 Number 1767                                                                   
 MARY STADUM, Executive Director, Southwest Alaska Municipal                   
 Conference, testified by teleconference from Anchorage on HB 35.              
 Their organization is the ARDOR for southwest Alaska and they were            
 formed in 1986, prior to the creation of ARDOR.  They are also a              
 federal economic development district.  They are structured on a              
 membership basis.  They represent the four boroughs in the region,            
 all large and small communities, including villages, native                   
 organizations, non-profit entities and businesses.  They have over            
 130 members who are concerned about the seafood industry, tourism,            
 transportation, small business development, education,                        
 communication and infrastructure development in southwest.                    
 MS. STADUM noted that some of the services that they provide                  
 include preparing annually, an overall economic development plan              
 with regional economic development data for southwest Alaska.  They           
 provide education and training for over 200 participants at their             
 twice yearly conferences, one in southwest Alaska and one in                  
 Anchorage.  They provide marketing assistance for southwest Alaska            
 tourism businesses and make referrals for over 2,000 tourism                  
 enquiries each year.                                                          
 MS. STADUM stated that on an annual basis they provide a                      
 consolidated southwest needs list to the Alaska Department of Fish            
 & Game and they work closely with the department throughout the               
 year to prioritize the organization's needs for fish and game                 
 management.  They also work closely with the Alaska Marine Highway            
 System on the scheduling and availability of ferry service in their           
 region which is critical to intra-regional commerce.  They intend             
 to be involved for the next eighteen months in the southwest                  
 regional transportation plan effort headed by the Department of               
 MS. STADUM added that their members have supported the ARDOR                  
 program through two resolutions in the last six months.  They feel            
 very strongly that economic development and the development of                
 self-sufficiency for communities and regions throughout the state             
 are key to the future.  ARDOR programs provide vehicles to bring              
 communities together in order to work together.                               
 Number 1931                                                                   
 DOUG SMITH, Executive Director, Mat-su Resource Conservation and              
 Development, testified by teleconference from Anchorage on HB 35.             
 He explained that their organization is a marriage of the United              
 States Department of Agriculture Resource Conservation and                    
 Development (USDARC&D) to the regional ARDOR.  They've been in full           
 time operation for three years in the Mat-su.  They have 20 board             
 members and they represent agriculture, utilities, cities, chambers           
 of commerce and the local soil & water conservation district.  They           
 bring a common sense approach to economic development in the Mat-             
 su.  Currently, they face a number of challenges.  Forty percent of           
 those people employed in the Mat-su work outside of the borough.              
 Their unemployment rate is double that of Anchorage while wages are           
 twenty percent less.  As welfare rolls are cut, they are going to             
 be terribly affected, yet in spite of this, the opposition to                 
 development in their area is often very organized and articulate.             
 Every time there is a major proposal such as the development of               
 iron ore reduction, for instance, at Fort MacKenzie they find                 
 tremendous opposition.  They are the response to this and they                
 bring a common sense approach.  They are  a low cost, high benefit            
 MR. SMITH stated that the major economic development projects that            
 face the Mat-su Borough are the development of a ski facility at              
 Hatcher Pass.  They are very much involved with developing this               
 project.  They represent the Mat-su Borough Port Commission.  They            
 recently met with a number of Japanese firms after sending out                
 3,000 prospectus to various concerns in the United States, Japan,             
 Korea and Taiwan.  They are trying to find a major client that                
 would justify the construction of a port facility and he listed               
 various other projects they take an active part in.                           
 Number 2076                                                                   
 REPRESENTATIVE REGGIE JOULE noted that someone mentioned earlier              
 that AIDEA provides receipts for the ARDORS.  He wondered what                
 statewide development projects generate enough money to make these            
 kinds of dollars available.                                                   
 Number 2099                                                                   
 MR. FUHS offered that these are program receipts from AIDEA which             
 are earnings from their capital base, initial asset base and their            
 earnings from investments they make in the stock market, treasury             
 bills, etc.  These are surplus funds within AIDEA and he added that           
 this figure was $650,000 last year.  This year the Administration             
 has proposed $620,000.  He referred to the last page of the annual            
 report with an outline of funding that has come into the ARDORS               
 from other sources which included about $6 million of funding from            
 other federal, state, and local government.  The ARDORs charge fees           
 for services of business that participate, through membership,                
 federal grants, from the private sector, contributions, etc.  About           
 $600,000 state funding leverages roughly $6 million in other funds            
 for the ARDORs.                                                               
 Number 2164                                                                   
 REPRESENTATIVE JERRY SANDERS moved and asked unanimous consent to             
 move HB 35 out of committee with individual recommendations and               
 accompanying zero fiscal note.  Hearing no objection, HB 35 was               
 moved out of the House Community and Regional Affairs Committee.              
 HB 86 CITIES: PAYMENTS IN LIEU OF TAXES                                     
 Number 2177                                                                   
 CHAIRMAN IVAN, as sponsor, presented HB 86 to the committee.  This            
 legislation would give the Department of Community and Regional               
 Affairs the authority to pass through federal funds to cities in              
 the unorganized borough.  He read the sponsor statement into the              
 House bill 86 establishes the payment in lieu of taxes program                
 within the Department of Community and Regional Affairs for home              
 rule and general law cities located in the unorganized borough                
 within federally designated areas of Alaska.                                  
 The payment in lieu of taxes program or PILT is financed by funds             
 the state will receive annually from the federal government under             
 31 U.S.C. 6901 - 31 U.S.C. 6902, which was passed as part of the              
 Omnibus Parks and Public Lands Management Act of 1996 (P.L. 104-              
 333, sec. 1033).  The particular section (sec. 1033) of this                  
 federal legislation was sponsored by Senator Stevens to allow                 
 cities in the unorganized borough to receive payment.                         
 The main purpose of this bill is to provide a method for the                  
 Department of Community and Regional Affairs to distribute the                
 annual funding and to establish criteria to determine whether a               
 city is eligible to receive payment under the program as intended             
 by federal law.  The amount of money to be distributed to each                
 eligible home rule and general law city in the unorganized borough            
 will be based upon the population of the city as certified by the             
 commissioner of the department for the fiscal year preceding the              
 year in which payment is made to the city.  This bill establishes             
 an annual payment date of November 1 of the state fiscal year.  The           
 money received by the cities from this program may be used for any            
 general propose for which a city is authorized under federal, state           
 or local law.  Finally, the bill is given an immediate effective              
 date in order to meet the first year's application and payment                
 schedule set out in the bill.                                                 
 Number 2330                                                                   
 REPRESENTATIVE SCOTT OGAN asked about the zero fiscal note attached           
 to this legislation and whether or not this was because of the pass           
 through nature of the federal funds.  He also wondered if this was            
 a new program that simply enables this new legislation to allow               
 these communities to receive this money?                                      
 CHAIRMAN IVAN stated that yes, this was the case.                             
 Number 2347                                                                   
 BILL ROLFZEN, State Revenue Sharing, Department of Community and              
 Regional Affairs, testified on HB 86.  He stated that                         
 Representative Ogan was correct, that these are new federal funds             
 which will be coming into the state.  This legislation provides the           
 mechanism for the department.  Once those payments are received,              
 they will be distributed directly to the cities.                              
 Number 2360                                                                   
 REPRESENTATIVE JOE RYAN asked what the administrative fee the                 
 department will charge to handle this fund.                                   
 MR. ROLFZEN stated that there will be no fee which is reflected in            
 the zero fiscal note.                                                         
 REPRESENTATIVE RYAN asked what would happen if these funds stop               
 coming into the state.  Would the state be expected to supplement             
 MR. ROLFZEN stated that no, these are federal funds coming into the           
 state.  The organized boroughs receive their payments directly from           
 the Bureau of Land Management (BLM) at the federal level.  The                
 department will be the liaison, so to speak, to receive the                   
 payments and turn them around to distribute since the department              
 already deals with the municipalities and they have all the systems           
 in place to take the money and distribute it out with a zero fiscal           
 Number 2392                                                                   
 REPRESENTATIVE OGAN noted that there is a sovereignty issue coming            
 up before the state and he asked what happens when a community                
 becomes a sovereign nation?                                                   
 MR. ROLFZEN stated that as eligibility for distribution, there are            
 certain criteria which a community must meet, mainly that they are            
 a functioning municipality organized under state law.  If a                   
 community dissolves its municipal government, they would no longer            
 be eligible.                                                                  
 TAPE 97-4, SIDE B                                                             
 Number 000                                                                    
 REPRESENTATIVE SANDERS asked how this money would be distributed,             
 whether on a per capita basis or per area?                                    
 MR. ROLFZEN stated that at the federal level they determine what              
 the payment for that federal census area is based on a somewhat               
 convoluted formula that incorporates the amount of entitlement                
 federal lands within that area and the population.  Once they do              
 this calculation they send the state a check for that area.  The              
 state then, with this legislation in place, will distribute this              
 funding to each city within that area on a strict per capita basis.           
 Number 034                                                                    
 REPRESENTATIVE OGAN asked if there was any idea of the numbers they           
 were talking about.                                                           
 MR. ROLFZEN said at this time it would be pure speculation, but it            
 will probably be several million dollars, any where between $1                
 million and $5 million.                                                       
 Number 090                                                                    
 KEN WEAVER, Manager, City of Bethel, testified on HB 86.  After               
 examination of the information he had on HB 86 he supports this               
 concept.  It would be especially beneficial in the bush communities           
 and the rural areas, particularly Bethel, which has had a reduction           
 in other revenue sources from the fish tax and sales tax revenue as           
 a result of the reverse multiplying affect from this reduced                  
 revenue.  He did ask whether there would be a population cap on the           
 communities of 5,000 residence or more.                                       
 MR. ROLFZEN stated that there is a population ceiling cap at the              
 federal level when they determine the payment for each federal                
 census area, but as far as a state program the proposed legislation           
 does not include a population ceiling cap, but just a straight per            
 capita base.                                                                  
 Number 168                                                                    
 REPRESENTATIVE SANDERS moved and asked unanimous consent to move HB
 86 out of committee with individual recommendations and                       
 accompanying zero fiscal note.  Hearing no objection, HB 86 was               
 moved out of the House community and Regional Affairs committee.              
 Number 175                                                                    
 CHAIRMAN IVAN adjourned the meeting at 8:55 a.m.                              

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