Legislature(1999 - 2000)
05/04/1999 08:08 AM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE May 4, 1999 8:08 a.m. MEMBERS PRESENT Representative Andrew Halcro, Co-Chairman Representative John Harris, Co-Chairman Representative Carl Morgan Representative Lisa Murkowski Representative Fred Dyson Representative Reggie Joule Representative Albert Kookesh MEMBERS ABSENT All members present COMMITTEE CALENDAR *HOUSE BILL NO. 215 "An Act making an appropriation to the Department of Community and Regional Affairs for renters' tax equivalency payments; and providing for an effective date." - MOVED OUT OF COMMITTEE HOUSE JOINT RESOLUTION NO. 23 Proposing amendments to the Constitution of the State of Alaska relating to the community development fund, the permanent fund, and the budget reserve fund. - MOVED CSHJR 23(CRA) OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: HB 215 SHORT TITLE: APPROP: RENTERS' EQUIV REBATE PROGRAM SPONSOR(S): REPRESENTATIVES(S) BERKOWITZ, Croft, Grussendorf, Cissna, Smalley, Moses, Kemplen, Brice, Kerttula Jrn-Date Jrn-Page Action 4/01/99 (H) CRA AT 8:00 AM CAPITOL 124 4/28/99 1051 (H) READ THE FIRST TIME - REFERRAL(S) 4/28/99 1051 (H) CRA, FIN 5/04/99 (H) CRA AT 8:00 AM CAPITOL 124 BILL: HJR 23 SHORT TITLE: COMMUNITY DEVELOP FUND/PFD/BUD RESERVE SPONSOR(S): REPRESENTATIVES(S) DAVIS Jrn-Date Jrn-Page Action 3/05/99 366 (H) READ THE FIRST TIME - REFERRAL(S) 3/05/99 366 (H) CRA, JUDICIARY, FINANCE 4/08/99 (H) CRA AT 8:00 AM CAPITOL 124 4/08/99 (H) HEARD AND HELD 4/08/99 (H) MINUTE(CRA) 5/04/99 (H) CRA AT 8:00 AM CAPITOL 124 WITNESS REGISTER PATRICK FLYNN, Legislative Assistant for Representative Berkowitz Alaska State Legislature Capitol Building, Room 404 Juneau, Alaska 99801 Telephone: (907) 465-4919 POSITION STATEMENT: Presented HB 215. STEVE VAN SANT, State Assessor Department of Community & Regional Affairs 333 West 4th, Suite 220 Anchorage, Alaska 99501 Telephone: (907) 269-4605 POSITION STATEMENT: Answered questions. GERALD DORSHER, Appointed Legislative Officer Veterans of Foreign Wars PO Box 240003 Douglas, Alaska 99824 Telephone: (907) 364-3346 POSITION STATEMENT: Supported HB 215. JANE DEMMERT, Executive Director Alaska Commission on Aging PO Box 110209 Juneau, Alaska 99811-0209 Telephone: (907) 465-4879 POSITION STATEMENT: Requested that serious consideration be given to HB 215. REPRESENTATIVE BERKOWITZ, Sponsor of HB 215 Alaska State Legislature Capitol Building, Room 404 Juneau, Alaska 99801 Telephone: (907) 465-4919 POSITION STATEMENT: Testified as Sponsor of HB 215. REPRESENTATIVE DAVIS Alaska State Legislature Capitol Building, Room 513 Juneau, Alaska 99801 Telephone: (907) 465-2693 POSITION STATEMENT: Testified as Sponsor of HJR 23. KEVIN RITCHIE Alaska Municipal League 217 Second Street Juneau, Alaska Telephone: (907) 586-1325 POSITION STATEMENT: Testified on HJR 23. ACTION NARRATIVE TAPE 99-29, SIDE A Number 0001 CO-CHAIRMAN HALCRO called the House Community and Regional Affairs Standing Committee meeting to order at 8:08 a.m. Members present at the call to order were Representatives Halcro, Harris, Morgan, Murkowski and Dyson. Representatives Joule and Kookesh were not present. HB 215 - APPROP: RENTERS' EQUIV REBATE PROGRAM CO-CHAIRMAN HALCRO announced that the first order of business would be HOUSE BILL NO. 215, "An Act making an appropriation to the Department of Community and Regional Affairs for renters' tax equivalency payments; and providing for an effective date." Number 0050 PATRICK FLYNN, Legislative Assistant for Representative Berkowitz, Alaska State Legislature, explained that HB 215 would simply appropriate $300,000 in order to fund the renters' equivalency rebate program at the same level as funded in the fiscal year (FY) 99. If this program was fully funded, it would cost the state over $1 million. Mr. Flynn informed the committee that the funding for this program has been zeroed out in the FY 2000 budget. He noted that the committee should have a letter from the Disabled American Veterans which states its support for this program. Mr. Flynn recalled that the committee had recently heard legislation that would make the senior and disabled veteran property tax exemption an option for municipalities. Within HB 215, there is no local option. Once the renters' rebate program is eliminated in the state budget, the program is eliminated for good. This program impacts people who live from month to month and from check to check. Therefore, the modest sum of $277 per year makes a big difference for these people. REPRESENTATIVE MURKOWSKI inquired as to how many people take advantage of the seniors renters' rebate versus the disabled veterans renters' rebate. MR. FLYNN said that he did not have those specific numbers. However, Mr. Flynn believed that the program has roughly 1,200 participants in total. In further response to Representative Murkowski, Mr. Flynn informed the committee that a disabled veteran must be 50 percent disabled or more in order to qualify for this program. REPRESENTATIVE MURKOWSKI asked if a $300,000 appropriation would reach the same number of those eligible for the program on a reduced basis or are some eliminated. MR. FLYNN stated that there would be a reduction in the benefit level rather than the number of benefit participants. Number 0403 STEVE VAN SANT, State Assessor, Department of Community & Regional Affairs, testified via teleconference from Anchorage. He noted that he was present for informational purposes as his office handles the administration of the renters' rebate program. REPRESENTATIVE MURKOWSKI inquired as to the breakdown of numbers regarding how many participants are seniors and how many are disabled veterans participating in the renters' rebate program. MR. VAN SANT informed the committee that in 1998, there were 993 seniors and 112 disabled veterans. REPRESENTATIVE MURKOWSKI asked what would a senior's income have to be in order to qualify for the renters' rebate program. MR. VAN SANT clarified that the renters' rebate program is not needs based. This program is similar to the senior citizens' property tax exemption program. In order to qualify for the renters' rebate program, a senior citizen must be 65 years of age or older and rent their home in a municipality that levies taxes. For a disabled veteran, that individual must have a 50 percent service-connected disability and live in a municipality that levies taxes in order to qualify for the renters' rebate program. CO-CHAIRMAN HALCRO inquired as to the number of applicants for this program over the years since the funding has decreased. MR. VAN SANT informed the committee of the number of participants in the program in the following years: 1992 - 1,032; 1993 - 1,207; 1994 - 1,233; 1995 - 1,048; 1996 - 1,092; 1997 - 1,111; 1998 - 1,105. Typically, the applications are sent to all previous filers, municipalities, Legislative Information Offices, senior centers, and to the assessor's offices throughout the state. CO-CHAIRMAN HALCRO asked if there is a geographic breakdown as to where these folks are located. MR. VAN SANT said that he did not have that information broken down percentage wise. He informed the committee that out of the $300,000 approximately over half is given to Anchorage. Almost every community that has property taxes has participants in this program. Number 0728 GERALD DORSCHER, Appointed Legislative Officer, Veterans of Foreign Wars, informed the committee that the renters' rebate program was established in 1976. He requested the committee's support for HB 215. Veterans are the backbone of America and Alaska. The freedoms everyone enjoys were protected by the veterans. Seniors work to build our communities and our state. Mr. Dorscher emphasized that budget cuts should not be placed on the backs of disabled veterans and senior citizens. He noted that the program has dwindled from $820,000 in 1991 to $300,000 in 1998. As mentioned earlier, the current year's budget zeros out the renters' rebate program completely. Mr. Dorscher stressed that senior citizens and disabled veterans serve and continue to serve the country and their communities and are assets to the state. CO-CHAIRMAN HARRIS said that $277 per person per year for an individual on a $1,000 budget would not seem to make a huge difference. He asked if there are other programs similar to this which would help subsidize the cost of living for seniors and disabled veterans. MR. DORSCHER deferred to Mr. Van Sant. CO-CHAIRMAN HARRIS asked if there are other programs available. MR. DORSCHER stated, "Not in the veterans .... programs that are available." Number 1058 JANE DEMMERT, Executive Director, Alaska Commission on Aging, said that this is a difficult year for the legislature, Alaskans and particularly difficult for older Alaskans and disabled veterans. When the constellation of legislation and the budget is reviewed, the impact on almost all of the dimensions of economic stability becomes apparent. These are dimensions with which older Alaskans have planned their retirement. Although the renters' rebate program is small, the program is significant for those who depend upon the program. These are Alaskans for whom the program can make a difference as to whether there is a roof over their head or not. MS. DEMMERT explained that all Alaskans, but older Alaskans and disabled veterans in particular, are facing the following: the property tax exemption legislation for seniors and disabled veterans, the renters' rebate program, legislation prorating benefits, municipal assistance reductions, and cuts to the Alaska Housing Finance Corporation budget. The Commission on Aging would request the committee seriously consider HB 215 as well as the interplay between the aforementioned legislation. Ms. Demmert recommended that the larger picture be reviewed in order to create a humanely developed approach to the budgets for the future. REPRESENTATIVE MURKOWSKI agreed that the constellation or mix of all this legislation is very significant. With regards to HB 215, it is a drop in the bucket. Representative Murkowski said that Ms. Demmert's point of the impact of all this legislation is well taken. There being no one else to testify, the public testimony on HB 215 was closed. CO-CHAIRMAN HARRIS asked if HB 215 is the appropriate vehicle to place the renters' rebate program funding back in the budget. He indicated that this seems to be a slow way in which to return the funding for this program in the budget. Number 1470 REPRESENTATIVE BERKOWITZ, Sponsor of HB 215, Alaska State Legislature, agreed that this is a slow way to return funds to the budget, but when an item has been zeroed in both bodies that item is gone. Therefore, there needs to be another vehicle to keep the program alive for further consideration. Representative Berkowitz noted that he had offered amendments on the House floor during the budget debate in order to encourage the retention of this program. He believed that this is a self-selective low income group since these folks are renters on a fixed income. This legislation was the only vehicle that Representative Berkowitz could think of to help. CO-CHAIRMAN HARRIS inquired as to the parameters of the program. REPRESENTATIVE BERKOWITZ said that he did not know the exact parameters of the program. Most of these individuals are living on small fixed incomes of approximately $1,000 per month. Although there are some taking advantage of this program who do not need to do so, substantial numbers of people are depending on this program. Representative Berkowitz said that he would be willing to contemplate means testing, but it would probably be a cumbersome bureaucracy given the small sums involved. In further response to Co-Chairman Harris, Representative Berkowitz agreed that funding the program at $300,000 was chosen because that was the funding level last year. CO-CHAIRMAN HALCRO reiterated the earlier question regarding whether there are similar federal programs available should this money not be restored to the budget. REPRESENTATIVE BERKOWITZ said that he would continue his search for alternative funding sources which he seemed to think should exist. Number 1643 REPRESENTATIVE DYSON moved to report HB 215 out of committee with individual recommendations. There being no objection, it was so ordered. The committee stood at-ease from 8:29 a.m. to 8:30 a.m. HJR 23 - COMMUNITY DEVELOP FUND/PFD/BUD RESERVE CO-CHAIRMAN HALCRO announced that the final order of business before the committee would be HOUSE JOINT RESOLUTION NO. 23, Proposing amendments to the Constitution of the State of Alaska relating to the community development fund, the permanent fund, and the budget reserve fund. Number 1681 REPRESENTATIVE DAVIS, Sponsor of HJR 23, Alaska State Legislature, recalled that three questions were brought forth at the last meeting which have been addressed in a memorandum. Representative Davis believed that HJR 23 would develop into a revenue source for local municipalities to deal with many of the funding schemes put in place by past legislatures. People have come to depend on those programs. This legislation goes a long way in correcting and continuing valuable programs that would be subject to decreasing funding. Representative Davis pointed out that the concerns regarding the eligibility of these funds is addressed on page 1, lines 14-16. CO-CHAIRMAN HARRIS moved to adopt CSHJR 23, Version LS0573\D, Cook, 4/8/99, as the working document before the committee. There being no objection, it was so ordered. REPRESENTATIVE DAVIS pointed out that the language incorporated on page 1, lines 14-16 of the proposed CS should be broad enough to accommodate the formation of additional municipalities and other municipalities under statute. With regard to the question of how the fund will be invested and who will administer it, Representative Davis said that initially the Department of Revenue will invest and administer the fund. It is possible that in the future the legislature could establish an investment group similar to the Permanent Fund Corporation. Representative Davis emphasized that this resolution merely puts the question to the voters as to whether this fund should be created, no statute is established. Therefore, there is much leeway for future legislatures to develop the statute. With regard to the distribution of the funds, Representative Davis said it was his intention that the funds be distributed with no strings attached. Here again, this will be left up to future legislatures. CO-CHAIRMAN HALCRO understood that when the permanent fund was developed, such investment and distribution questions were determined after the fund was established. He asked if that was Representative Davis' understanding as well. REPRESENTATIVE DAVIS replied yes. The constitutional amendment for the permanent fund only asked if a savings account should be established. How the earnings would be distributed or spent was not addressed. REPRESENTATIVE MURKOWSKI asked if the community development fund would mesh with any long-term fiscal plan. REPRESENTATIVE DAVIS said that he believed it would. This fund is the answer to the elimination of municipal assistance and revenue sharing which is the intent. He noted that this legislation was offered during the last legislature. As this fund grows, the state would be able to transfer many of its functions and expenditures to municipalities. REPRESENTATIVE MURKOWSKI noted that former Governor Hickel had discussed an individual community permanent fund. How would this fund relate to the former Governor Hickel's idea? REPRESENTATIVE DAVIS stated that he was not exactly sure, but the idea for this fund came from the former Governor Hickel's idea. There are definitely differences between the two proposals. He indicated that Representative Moses may have a similar proposal as well. Number 2205 KEVIN RITCHIE, Alaska Municipal League (AML), noted that the committee should have two brown sheets from the AML. He said that this legislation is a way to eliminate the general funds for state revenue sharing and potentially capital matching grants. This is part of a long-range fiscal plan. The public needs to know that those services most important to them, roads, police, fire, et cetera, are things that can continue. Therefore, this would be important in selling a long-range fiscal plan to the public. Mr. Ritchie stated that the legislature will have to answer the question, "Does this somehow hurt the state budget?" He pointed out that the "Alaska Plan" and the community development fund are endowments. A separate endowment of $750 million would be set aside for the community development fund. The AML feels that would further the state's goals to transition programs to municipalities. He emphasized the importance of those municipalities being able to accept those programs. Furthermore, municipalities would need to be assured that there will be a long-term source of funding that will not be reduced in one year, two years, or three years. He indicated that this fund would be a way to achieve such. MR. RITCHIE referred the committee to the example listed on the bottom of the first page of the AML document. The example points out that currently there are separate state and local road maintenance shops. Local governments in some communities would not be able to accept, consolidate and pay for road maintenance. Historically, the state has only been able to commit funds for road maintenance for one year. Mr. Ritchie said that having a fund like the proposed community development fund would allow a long-term plan between state and local governments. For that reason, the AML supports this legislation. Mr. Ritchie noted that page 2 of the AML document is an example of what could comprise a long-range fiscal plan. By doing this, municipalities would not be after a windfall of funds from the state. As funding increases, so would the level of services provided by municipalities. As funding increases, there would also potentially be a decrease in the level of service provided by the state. That is why page 2 of the AML document has $0 indicating that there would not be a net revenue increase for local governments. CO-CHAIRMAN HARRIS referred to page 2 of the AML document which has a heading, "Eliminate $68 million State GF to:". If the state eliminates some areas, how would the municipality eliminate those as well because those figures are bracketed. MR. RITCHIE explained that it would take two years for the community development fund to create revenue. Therefore, the elimination of municipal revenue sharing is not recommended for this year. This would be a transition from revenue sharing to a community development fund. He pointed out that the revenue in brackets which would be eliminated for revenue sharing and municipal capital matching grants could be replaced with a gas tax and the community development fund. He reiterated that this is just an example and there are many options. CO-CHAIRMAN HARRIS asked if it was the intent to include education funding. MR. RITCHIE replied no. Currently, education funding is approximately $800 million. Mr. Ritchie said that it would be difficult to imagine placing enough money in the community development fund to replace that type of state funding. He reiterated that this is just an example and there are many options. CO-CHAIRMAN HALCRO asked if there was anyone who would like to testify on HJR 23. There being no one, the public testimony was closed. Number 2600 CO-CHAIRMAN HARRIS moved to report CSHJR 23, Version LS0573\D, Cook, 4/8/99, out of committee with individual recommendations and the accompanying two fiscal notes. There being no objection, it was so ordered. ADJOURNMENT There being no further business before the committee, the House Community & Regional Affairs Standing Committee meeting was adjourned at 8:49 a.m.