03/03/2005 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB49 | |
| HB25 | |
| HB133 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 25 | TELECONFERENCED | |
| *+ | HB 49 | TELECONFERENCED | |
| *+ | HB 74 | TELECONFERENCED | |
| += | HB 133 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
March 3, 2005
8:07 a.m.
MEMBERS PRESENT
Representative Kurt Olson, Co-Chair
Representative Bill Thomas, Co-Chair
Representative Pete Kott
Representative Gabrielle LeDoux
Representative Mark Neuman
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Carl Moses
COMMITTEE CALENDAR
HOUSE BILL NO. 49
"An Act relating to municipal aid grants; and providing for an
effective date."
- HEARD AND HELD
HOUSE BILL NO. 25
"An Act relating to the sharing of fisheries business tax
revenue with municipalities; and providing for an effective
date."
- MOVED CSHB 25(CRA) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 133
"An Act relating to incorporation of boroughs and to regulations
of the Local Boundary Commission to provide standards and
procedures for municipal incorporation, reclassification,
dissolution, and certain municipal boundary changes; and
providing for an effective date."
- MOVED CSSSHB 133(CRA) OUT OF COMMITTEE
HOUSE BILL NO. 74
"An Act relating to enhanced 911 surcharges."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 49
SHORT TITLE: MUNICIPAL AID GRANTS
SPONSOR(S): REPRESENTATIVE(S) ROKEBERG
01/10/05 (H) PREFILE RELEASED 1/7/05
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) CRA, FIN
03/03/05 (H) CRA AT 8:00 AM CAPITOL 124
BILL: HB 25
SHORT TITLE: REFUND OF FISH BUSINESS TAX TO MUNIS
SPONSOR(S): REPRESENTATIVE(S) SEATON
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) CRA, FIN
01/20/05 (H) CRA AT 8:00 AM CAPITOL 124
01/20/05 (H) Heard & Held
01/20/05 (H) MINUTE(CRA)
02/03/05 (H) CRA AT 8:00 AM CAPITOL 124
02/03/05 (H) Failed To Move Out Of Committee
02/03/05 (H) MINUTE(CRA)
02/24/05 (H) CRA AT 8:00 AM CAPITOL 124
02/24/05 (H) <Bill Hearing Canceled>
03/03/05 (H) CRA AT 8:00 AM CAPITOL 124
BILL: HB 133
SHORT TITLE: LOCAL BOUNDARY COMMISSION REGS & POWERS
SPONSOR(S): REPRESENTATIVE(S) COGHILL
02/09/05 (H) READ THE FIRST TIME - REFERRALS
02/09/05 (H) CRA, STA
02/16/05 (H) SPONSOR SUBSTITUTE INTRODUCED
02/16/05 (H) READ THE FIRST TIME - REFERRALS
02/16/05 (H) CRA, STA
02/24/05 (H) CRA AT 8:00 AM CAPITOL 124
02/24/05 (H) Heard & Held
02/24/05 (H) MINUTE(CRA)
03/03/05 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE NORMAN ROKEBERG
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HB 49.
KEVIN RITCHIE, Executive Director
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 49, related that
AML will support any bill helping the [plight of rural
communities].
DAVID TRANTHAM, JR., Member
Bethel City Council;
Board of Directors for Alaska Municipal League - Region 9
Bethel, Alaska
POSITION STATEMENT: Testified that HB 49 is a good start, but
expressed the need to help the 66 communities that don't fall
under HB 49.
WILBUR NAPAYONAK, Mayor
City of Koyuk
Koyuk, Alaska
POSITION STATEMENT: During discussion of HB 49, relayed Koyuk's
situation.
SALLY SADDLER, Legislative Liaison
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 49, answered
questions.
BILL ROLFZEN, State Revenue Sharing Municipal Assistance
Division of Community Advocacy
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 49 and HB 25,
answered questions.
LOUIE FLORA, Staff
to Representative Paul Seaton
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Explained Amendment 1 to HB 25 and answered
questions.
LINDA FREED, Manager
City of Kodiak
Kodiak, Alaska
POSITION STATEMENT: Testified in support of HB 25.
WANETTA AYERS
Southwest Alaska Municipal Conference (SWAMC)
Anchorage, Alaska
POSITION STATEMENT: Requested more time to review HB 25,
Version L.
JULIE DECKER, Executive Director
Southeast Alaska Regional Dive Fisheries Association (SARDFA)
Wrangell, Alaska
POSITION STATEMENT: Testified in support of HB 25, and
expressed concerns with some of the amendments.
VALERY MCCANDLESS, Mayor
City of Wrangell
Wrangell, Alaska
POSITION STATEMENT: Testified that HB 25 is a fair solution.
WILLARD DUNHAM, Member
Seward City Council
City of Seward
Seward, Alaska
POSITION STATEMENT: Testified in support of HB 25.
CLARK CORBRIDGE, Interim City Manager
City of Seward
Seward, Alaska
POSITION STATEMENT: Testified in support of HB 25 and Version L
of HB 25.
DEAN BAUGH, Finance Director
City of Homer
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 25.
CHRIS MOSS
Homer, Alaska
POSITION STATEMENT: Expressed concerns with CSHB 25, Version L.
BUCK LAUKITIS, President
North Pacific Fisheries Association
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 25.
JOHN VELSKO
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 25.
ROLLO POOL, Executive Director
Southeast Conference
Juneau, Alaska
POSITION STATEMENT: Testified that the Southeast Conference has
no position on HB 25.
CHRIS HLADICK, Manager
City of Unalaska
Unalaska, Alaska
POSITION STATEMENT: Testified in opposition to HB 25.
REPRESENTATIVE JOHN COGHILL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of SSHB 133.
DAN BOCKHORST, Staff
to the Local Boundary Commission (LBC)
Department of Commerce, Community, & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During discussion of SSHB 133, answered
questions.
ACTION NARRATIVE
CO-CHAIR KURT THOMAS called the House Community and Regional
Affairs Standing Committee meeting to order at 8:07:41 AM.
Representatives Olson, Thomas, LeDoux, Neuman, and Salmon were
present at the call to order. Representatives Kott and Cissna
arrived as the meeting was in progress.
HB 49-MUNICIPAL AID GRANTS
CO-CHAIR THOMAS announced that the first order of business would
be HOUSE BILL NO. 49, "An Act relating to municipal aid grants;
and providing for an effective date."
REPRESENTATIVE NORMAN ROKEBERG, Alaska State Legislature,
sponsor, opined that HB 49 is the first, small step in the re-
institution of municipal aid grants in the modest amount of
$50,000 to the local governmental units around the state.
Representative Rokeberg related the plight of local governments
due to the end of revenue sharing. This proposed grant would go
to all 163 municipalities in the state in order to avoid any
allocation problems. Representative Rokeberg acknowledged that
even with this relatively modest grant amount, the fiscal note
is significant. Representative Rokeberg opined that this
committee, of all the committees, should recognize the problems
in Alaska's small communities. Representative Rokeberg
concluded by recognizing Representative Moses long-time advocacy
for municipal dividends.
8:11:22 AM
REPRESENTATIVE NEUMAN asked from where the $8.1 million would
come.
REPRESENTATIVE ROKEBERG specified that the money would come from
the general fund (GF). In further response to Representative
Neuman, Representative Rokeberg informed the committee that
historically there have been two major programs that have
provided [funds] for small communities. Although those programs
remain in statute, the funding for them has been zeroed out.
Representative Rokeberg highlighted that he tried to make the
legislation simple and create a simplified grant system.
8:12:27 AM
REPRESENTATIVE SALMON questioned why about 66 villages wouldn't
be included in this municipal aid grant.
REPRESENTATIVE ROKEBERG pointed out that the committee packet
includes a listing of the 163 municipalities that have
incorporated as local governments under state statute. The
aforementioned is the method that has been used in the past and
in this legislations.
REPRESENTATIVE SALMON emphasized the need to recognize that the
66 villages are "under the state law" and should be entitled to
this program as well. He questioned why these 66 villages have
to be left out just because the state doesn't recognize them.
He stressed the need to cover the entire state rather than just
those [entities] recognized by the state.
REPRESENTATIVE ROKEBERG related his understanding that the
municipal revenue sharing programs and aid in the past was in
place to encourage the maximum amount of local government and
local participation. In fact, Article X of the Alaska State
Constitution encourages local government. He pointed out that
subsection (c) of HB 49 indicates that under federal law an
entity with reservation status would be recognized, such as
Metlakatla.
8:15:22 AM
REPRESENTATIVE NEUMAN inquired as to what these 66 communities
would have to do to fall under this legislation.
REPRESENTATIVE ROKEBERG answered that these 66 communities would
have to incorporate at some level to be recognized.
8:16:38 AM
REPRESENTATIVE LEDOUX asked whether this legislation could
include areas that function as municipalities and provide a
certain level of services that are generally viewed as municipal
services.
REPRESENTATIVE ROKEBERG deferred to representatives from the
Department of Commerce, Community, & Economic Development
(DCCED). However, he characterized this as a statement of
policy. Moreover, the large fiscal note illustrates the need to
determine the progress that can be made.
REPRESENTATIVE NEUMAN opined that Representative LeDoux's
suggestion could be problematic.
8:19:27 AM
KEVIN RITCHIE, Executive Director, Alaska Municipal League
(AML), highlighted that rural Alaska is in crisis and
financially rural Alaska has no way out. Furthermore, there are
significant state financial impacts beyond the crisis of service
in rural Alaska. He noted that [the committee packet should
include] a number of letters from municipalities, which
highlight the problems in rural Alaska, including high fuel
costs, high unemployment, and virtually no tax base. Property
tax is not a solution for rural Alaska, he said. However, most
communities in rural Alaska tax themselves. Although more than
100 communities have a sales tax, the sales tax generated isn't
enough to fill the gap.
MR. RITCHIE informed the committee that 9 of Alaska's 146 cities
are no longer functioning. Furthermore, 17 cities are in deep
debt and 39 cities have terminated key local services, such as
police and road services. He further informed the committee
that the insurance for 10 cities has been canceled over the past
year and 33 cities are on month-to-month payment plans. "These
communities cannot afford to buy municipal insurance for the
things that they're doing," he emphasized. He posed a situation
in which a police officer is involved in an accident and a
citizen is hurt in a community with no insurance and virtually
no assets. If the aforementioned occurred in the unorganized
borough, [DCCED] and AML believe that a jury would look for a
"deep pocket." Most of these communities are in the
legislature's unorganized borough pocket and the legislature is
obligated to provide services that it deems necessary in the
unorganized borough. Therefore, the impact of one uninsured
loss could be equal to the cost of HB 49.
MR. RITCHIE highlighted the growing movement of people from
rural Alaska to urban Alaska, which he believes is, in part,
attributable to the lack of services [in rural Alaska]. As
people move to urban areas, they are probably moving without
jobs and the commerce that creates about one out of five jobs in
urban Alaska is going to decrease. The aforementioned
illustrates that Alaska is a large economic network of which the
villages and communities are an important part.
MR. RITCHIE informed the committee that the revenue sharing
program has been in existence since 1969, after which 84 cities
organized. This is the first year the revenue sharing program
hasn't been funded. He mentioned the governor's bill providing
for an interim program this year. Mr. Ritchie related that AML
will support any bill helping this problem. "A bill like this
can provide a life line to buy insurance, to buy fuel, to
provide some level of support to a ... public safety officer to
provide some road maintenance. So, it's a key ... need for
rural Alaska," he emphasized.
8:27:48 AM
CO-CHAIR OLSON inquired as to how many of the 66 villages are
participating in AML and its joint insurance program.
MR. RITCHIE specified that if the area isn't a municipality,
then it can't participate in the insurance program. He
explained that a goal of AML's Joint Insurance Association is to
be able to allow tribal councils or other nonprofits within the
unorganized borough to buy insurance. However, state law
restricts membership to municipalities and school districts. In
further response to Co-Chair Olson specified that full members
of AML are defined as cities or boroughs.
8:28:55 AM
REPRESENTATIVE NEUMAN commented that HB 49 is a good bill. He
acknowledged the need for the legislature to do what it can to
support the smaller communities, and suggested working with the
areas not included under HB 49. He encouraged the committee to
vote [in favor] of HB 49.
8:29:26 AM
REPRESENTATIVE SALMON highlighted that the federal government
recognizes these other 66 villages. He emphasized that those on
the tribal councils strive for the same things as those on the
city councils. Therefore, he questioned how one can
differentiate between tribes and cities because "we're still the
people." Representative Salmon said that although he agrees
that HB 49 is good for the communities it includes, he disagrees
with leaving out the 66 communities. Therefore, Representative
Salmon requested that the committee review this matter more
closely.
8:31:48 AM
DAVID TRANTHAM, JR., Member, Bethel City Council; Board of
Directors for Alaska Municipal League - Region 9, opined that HB
49 is a good start, although not including all of the
communities in Alaska seems to be a weakness. Many of these 66
communities that aren't included look to tribal governments due
to the lack of revenue sharing. He highlighted that the cost of
living in Western Alaska communities is extremely high. For
example, in Bethel, a gallon of gas costs $3.59 and $2.99 for
heating fuel. Moreover, there is a fuel surcharge on everything
shipped into the area. Mr. Trantham echoed earlier testimony
regarding the fact that many communities are trying to support
themselves with a sales tax. For example, Bethel has a 5
percent sales tax, a 5 percent gaming tax, a 5 percent alcohol
user fee, and various other taxes and user fees. Mr. Trantham
reiterated that HB 49 is a good start, and said that any
financial support to the [66] communities would be appreciated.
8:35:55 AM
WILBUR NAPAYONAK, Mayor, City of Koyuk, discussed the situation
in rural Alaska, specifically in Koyuk. He opined that the
money coming in is not enough to even function as a government.
He said that the challenge today, without revenue sharing, is
trying to pay the monthly bills. Mr. Napayonak related that
whether the government of Koyuk will continue is the question.
Although Koyuk is looking to increase its taxes and utility
rates, money isn't coming into the community. Furthermore, the
lack of jobs in the community contributes to the problem. Mr.
Napayonak expressed interest in Koyuk becoming self-supporting,
and HB 49 is very important in helping Koyuk move in that
direction.
8:40:57 AM
CO-CHAIR THOMAS questioned whether there would be a problem
giving money to unorganized boroughs if HB 49 was amended to do
so.
SALLY SADDLER, Legislative Liaison, Department of Commerce,
Community, & Economic Development (DCCED), related her
understanding that currently the language in HB 49 calls for the
funding to go to municipalities. She said that she isn't aware
of any problem with giving money to unorganized municipalities.
She characterized it as a policy call for the legislature.
8:42:13 AM
BILL ROLFZEN, State Revenue Sharing Municipal Assistance,
Division of Community Advocacy, Department of Commerce,
Community, & Economic Development, responding to Co-Chair
Thomas, said that there is no problem with providing funding to
unorganized communities. Historically, revenue sharing and the
capital matching grant programs provided funding to
unincorporated communities. He noted that under the revenue
sharing program, the amount provided to the unincorporated
communities wasn't at the same level provided to [organized]
city governments. In further response to Co-Chair Thomas, Mr.
Rolfzen recalled that in fiscal year (FY) 2003, [the
unincorporated communities] received approximately $3,500, which
was also the amount provided to the unincorporated entities
under the temporary fiscal relief program in FY 04.
8:43:10 AM
REPRESENTATIVE NEUMAN inquired as to why Talkeetna and Trapper
Creek aren't included.
MR. ROLFZEN explained that since 1969, unincorporated
communities within organized boroughs haven't received funding
directly from the state. It was a local decision whether the
organized borough chose to pass through some of the money it
received to the unincorporated communities within the organized
area. Historically, unincorporated communities outside of an
organized borough were funded. He surmised that it was a policy
decision.
REPRESENTATIVE NEUMAN asked whether communities such as
Talkeetna receive any aid from the state at all.
MR. ROLFZEN replied no. In response to Representative Cissna,
Mr. Rolfzen specified that unincorporated areas within an
organized borough, such as Talkeetna, can't receive revenue
sharing.
8:44:44 AM
REPRESENTATIVE LEDOUX surmised that not providing [revenue
sharing funds to an unincorporated area within an organized
borough] is a statutory provision under current law that could
be changed by the legislature.
MR. ROLFZEN said that's correct.
8:45:12 AM
REPRESENTATIVE NEUMAN inquired as to how [that change] could
happen.
MR. ROLFZEN pointed out that within organized boroughs on the
road system, defining [an unincorporated] community and its
boundaries is difficult. For example, in Juneau, one could make
the argument that Douglas is an unincorporated community within
a borough. Therefore, if the definition of unincorporated
community is provided, the determination could be made and the
community could receive funds.
8:46:22 AM
CO-CHAIR THOMAS announced that HB 49 would be held over.
8:46:34 AM
REPRESENTATIVE ROKEBERG said he appreciated the debate.
However, he commented that it becomes complex, in terms of
equity, when one discusses federally recognized tribal entities
vis-à-vis unincorporated cities within boroughs. Representative
Rokeberg cautioned the committee against the perils of the
"Christmas tree effect." He related his hope that HB 49 would
pass and be on the governor's desk this year.
HB 25-REFUND OF FISH BUSINESS TAX TO MUNIS
8:48:26 AM
CO-CHAIR THOMAS announced that the next order of business would
be HOUSE BILL NO. 25, "An Act relating to the sharing of
fisheries business tax revenue with municipalities; and
providing for an effective date."
8:50:20 AM
CO-CHAIR OLSON moved to adopt CSHB 25, Version 24-LS0169\L,
Utermohle, 3/1/05, as the working document. There being no
objection, Version L was before the committee.
8:51:03 AM
LOUIE FLORA, Staff to Representative Paul Seaton, Alaska State
Legislature, explained that Amendment 1 [labeled 24-LS0169\L.2,
Utermohle, 3/2/05, text provided below] corrects an oversight.
Initially, the belief was that to place the [tax collection] in
line with the state's budget cycle, it would be easiest to have
[the tax collected] on a fiscal year basis. However, taxes are
reported and collected on a calendar year basis; the change
would return the language to refer to calendar year.
8:52:56 AM
REPRESENTATIVE NEUMAN moved that the committee adopt Amendment 1
[labeled 24-LS0169\L.2, Utermohle, 3/2/05], which read:
Page 2, line 19:
Delete "fiscal [CALENDAR]"
Insert "calendar"
Page 2, line 21:
Delete "fiscal [CALENDAR]" in both places
Insert "calendar" in both places
Page 2, line 24:
Delete "fiscal [CALENDAR]" in both places
Insert "calendar" in both places
Page 2, line 27:
Delete "fiscal [CALENDAR]" in both places
Insert "calendar" in both places
Page 3, line 2:
Delete "fiscal [CALENDAR]"
Insert "calendar"
Page 3, line 4:
Delete "fiscal [CALENDAR]" in both places
Insert "calendar" in both places
Page 3, line 7:
Delete "fiscal [CALENDAR]" in both places
Insert "calendar" in both places
Page 3, line 10:
Delete "fiscal [CALENDAR]" in both places
Insert "calendar" in both places
Page 3, line 14:
Delete "during a fiscal year"
Page 3, line 22:
Delete "during a fiscal year"
Page 3, line 31:
Delete "during a fiscal year"
Page 4, line 12:
Delete "during a fiscal year"
There being no objection, Amendment 1 was adopted.
8:53:23 AM
REPRESENTATIVE LEDOUX related, "Amendment 2 is supposed to do
what the CS was supposed to do; it's just clearing up some
technical language in the CS." She deferred to Mr. Flora or the
Department of Commerce, Community, & Economic Development
(DCCED) representative for further explanation.
8:54:11 AM
REPRESENTATIVE LEDOUX moved that the committee adopt Amendment
2, which read as follows [original punctuation provided; with
handwritten changes]:
(page 3, line 23) delete "retained" insert
"transferred"
(page 3, line 24) delete "until the amount necessary
to make the hold harmless payment required"
(page 3, line 25) delete "under AS 29.60.450(g) is
calculated and paid by"
(page 3, line 24) after "department"; insert "to"
REPRESENTATIVE CISSNA objected and requested an explanation.
8:54:44 AM
BILL ROLFZEN, Department of Commerce, Community, & Economic
Development, explained that after DCCED computes the hold
harmless add-on amounts, Amendment 2 provides that the
Department of Revenue withhold the export landing tax payment,
until such time DCCED determines the fish tax add-ons are
necessary to raise the small communities to the amount they
would've received had the export landing tax not been enacted.
Amendment 2 withholds the revenue until DCCED makes the
calculations and the funds are transferred to DCCED in order to
hold harmless those communities. After the hold harmless
payments are provided by DCCED under the shared fishery business
tax program, the Department of Revenue prorates the export
landing tax payments by an amount necessary to fund those hold
harmless payments, and sends those payments to the export
landing tax communities.
8:55:58 AM
REPRESENTATIVE CISSNA withdrew her objection.
There being no objection, Amendment 2 was adopted.
8:56:07 AM
REPRESENTATIVE LEDOUX moved that the committee adopt Amendment
3, as follows:
Page 4, line 18,
Delete "2005"
Insert "2006"
8:56:39 AM
REPRESENTATIVE CISSNA objected. She noted she had contemplated
a sunset amendment. She opined that the purpose of this
legislation is to create incentives for communities to develop
value-added [products] and move into new markets. She related
her understanding that there are no qualifying communities that
couldn't find some resource. She asked if communities fishing
now would, with an incentive, be able "to figure out something."
MR. FLORA said that's correct.
REPRESENTATIVE CISSNA opined, then, that it's wise for the state
to tie resources to incentives to expand what local communities
do. She related that although she likes the idea of giving an
extended period to work on this and develop resources, she
expressed concern with doing so in perpetuity.
8:59:02 AM
REPRESENTATIVE LEDOUX stated that Amendment 3 merely changes the
effective date to 2006 rather than 2005. One of the reasons for
Amendment 2 is that even under Version L, there will be
communities that lose under the proposed program. Therefore,
changing the effective date provides those losing communities
more time to prepare for the significant loss of money.
8:59:57 AM
REPRESENTATIVE CISSNA related her understanding that under
Version L a population of 500 or less would be held harmless
without sunset.
9:00:42 AM
CO-CHAIR THOMAS interjected that the fishing season has already
started, and therefore implementing [this legislation] at this
time "would probably be wrong." Therefore, Amendment 3 moves
the effective date back a year in order to allow communities
time to adjust their budgets.
9:01:00 AM
REPRESENTATIVE CISSNA withdrew her objection to Amendment 3.
9:01:12 AM
CO-CHAIR THOMAS asked if the change in the effective date is
complicated for DCCED. Upon a signal from DCCED representatives
in the room, he related his understanding that it wouldn't be
complicated to do so.
9:01:25 AM
CO-CHAIR THOMAS, upon hearing no further objections, announced
that Amendment 3 was adopted.
9:01:39 AM
REPRESENTATIVE LEDOUX explained that she wanted to hold harmless
the small communities that would lose under the original
legislation. Therefore, she suggested that communities with
populations of 500 or less or small boroughs with populations of
3,000 or less would be held harmless and given the same amount
of money they would've received [before the passage of this
legislation].
9:03:19 AM
REPRESENTATIVE NEUMAN inquired as to how many boroughs there are
with a population of less than 3,000.
CO-CHAIR THOMAS, upon hearing a department representative in the
audience, related that there are four boroughs with populations
of less than 3,000.
REPRESENTATIVE LEDOUX specified that Lake & Peninsula, Aleutians
East, Bristol Bay, and [Yakutat] are the four boroughs.
9:04:14 AM
REPRESENTATIVE NEUMAN asked if there will be a fiscal note or
idea as to [the financial impacts] of this change.
REPRESENTATIVE LEDOUX related her understanding that [Version L]
would give communities gaining under this proposal about 60
percent of what they would've gained without the hold harmless
clause. In further response to Representative Neuman,
Representative LeDoux confirmed that communities such as Homer
would receive about 60 percent of what it would have without
[Version L]. However, she didn't believe the fiscal note for
the state would change.
9:05:13 AM
REPRESENTATIVE SALMON commented that this is a complex issue,
and therefore he suggested holding HB 25 once more in order to
determine the numbers for the smaller villages.
CO-CHAIR THOMAS said that the department can't provide the
numbers related to the impact to specific communities. Version
L merely tries to hold the smaller communities harmless at
60:40.
9:06:19 AM
REPRESENTATIVE CISSNA inquired as to the sponsor's reaction to
Version L.
CO-CHAIR THOMAS informed the committee that the original
agreement was [to hold harmless] those communities with
populations of 500 or less. However, Version L now includes
boroughs with populations of 3,000 or less.
9:07:11 AM
MR. FLORA confirmed that the sponsor was made aware of Version L
yesterday and isn't particularly fond of the idea, but can live
with it. He related that the sponsor had ideas for possible
sunset dates. However, the sponsor felt that the legislation is
already complex enough and didn't want to burden it further.
9:08:05 AM
CO-CHAIR THOMAS inquired as to whether the committee wanted to
take testimony today or hold over the legislation to allow
witnesses time to review Version L and comment at a later
hearing. He related his understanding that the sponsor is
happy, the maker of the CS is happy, and therefore he opined
that the committee could move the legislation. He said he would
entertain a motion.
REPRESENTATIVE CISSNA expressed her desire to allow testimony.
9:09:28 AM
LINDA FREED, Manager, City of Kodiak, announced her support of
HB 25. Based on the sponsor statement and other information,
the Kodiak City Council believes that the proposal in HB 25 is
appropriate because the fisheries business tax was put in place
to provide a sharing of the revenue with those communities that
have fish crossing their docks. Although she noted that she
hasn't had an opportunity to analyze Version L, she wasn't sure
that holding harmless those communities that are part of the
program now with the redistribution under [Version L] would
achieve anything different. Without the hold harmless clause,
Kodiak supports HB 25.
9:11:06 AM
WANETTA AYERS, Southwest Alaska Municipal Conference (SWAMC),
informed the committee that SWAMC is the state-recognized Alaska
Regional Development Organization (ARDOR) and federally
recognized economic development district for 54 communities.
Ms. Ayers said that originally she was present to speak against
HB 25 because it would've resulted in the loss of hundreds of
thousands of dollars in municipal revenues to a number of
communities in Southwest Alaska. However, upon reviewing the
CS, Ms. Ayers opined that it goes a long way in correcting what
would've been a significant revenue loss. She requested
additional time to review Version L and obtain comments from the
communities in SWAMC. Ms. Ayers informed the committee that 11
communities in Southwest Alaska have already exercised their
local taxing authority by implementing a raw fish tax on fish
that crosses the dock but is not processed in the community.
The aforementioned is an option for communities to generate
additional municipal revenues, although it hasn't been utilized
by a number of communities that could use it.
9:13:31 AM
JULIE DECKER, Executive Director, Southeast Alaska Regional Dive
Fisheries Association (SARDFA), related SARDFA's support of HB
25. Although she opined that the hold harmless clause seems to
be suitable for communities with populations under 500, she
questioned holding harmless boroughs with a population of up to
3,000. Ms. Decker suggested the need for a sunset clause on the
hold harmless clause, which could be tied to municipal revenue
sharing programs starting again. Ms. Decker concluded by
relating her general belief that the committee is going in a
good direction with this legislation.
9:14:33 AM
VALERY MCCANDLESS, Mayor, City of Wrangell, paraphrased from the
following written testimony [original punctuation provided]:
The main issue of this bill that the City of Wrangell
supports is to provide equity when it comes to
distributing the fish tax from fresh or unprocessed
seafood product. The current method of allocating the
fish tax proceeds not only makes no sense, but it
unfairly distributes these tax collected monies.
It is our understanding that the current formula takes
all of the fish tax from fresh or unprocessed product
and divides it equally between the general fund and
the DCCED. The portion that goes to DCCED is then put
into a pool and is distributed based on the percentage
of processed product. In other words, if a community
has 10% of the processed fish tax in the state, they
would then get 10% of the fresh or unprocessed fish
tax, regardless of how much fresh or unprocessed fish
they actually handle.
This seems to be an unfair practice to communities
that may offer a high quality fresh and live product.
Communities landing fresh product or product to be
processed both require infrastructure development and
provide jobs for the industry. National and
international markets are demanding more fresh and
live seafood. The State of Alaska is encouraging
markets of high quality fresh and live product - yet
then penalizes communities on the fish taxes they pay.
HB 25 will bring back those dollars to the communities
in which the unprocessed or fresh or live seafood is
actually landed.
In a time when high-end fresh products are encouraged
and demanded, it is self defeating to those
communities that are trying to develop those type of
fresh markets when it comes to fish taxes. There is
more fish tax paid, but it goes to other communities.
The City of Wrangell endorses HB 25 as a fair solution
to the current allocation method of fish tax from the
so-called unprocessed (or fresh) seafood.
The following example is only used to illustrate the
flaw in the current method of allocating the
unprocessed fish tax:
Assume you had two communities in the state that
processed the state's entire seafood product. One
community processed the entire processed product and
one that handled and prepared the entire fresh or
unprocessed product; each handling/processing equal
amounts. Under the current method of allocation, the
community that had processed product only would
receive 100% of fish tax distributed to communities.
The community with just fresh or unprocessed product
would receive nothing, yet logic would tell us both
should get 50%.
Both communities need an investment in infrastructure,
marketing, transportation and other issues to make
their particular industry work regardless of whether
it was shipped out processed under the state's
definition or whether it is shipped out under the
unprocessed label. Both deserve an equal portion of
the fish tax distributed to the communities.
Although in the real world, there are many communities
in Alaska that have both processed and fresh or
unprocessed product, this example should hit home how
unfair the current system is and the need for it to be
fixed.
The City of Wrangell endorses HB 25 as a fair solution
to the current allocation method of fish tax from the
so-called unprocessed seafood.
Thank you for allowing me this opportunity to speak on
behalf of the City of Wrangell.
9:18:06 AM
REPRESENTATIVE NEUMAN returned to the suggestion that there be a
sunset clause tied to municipal funds. He pointed out that all
communities would receive municipal revenue sharing. Therefore,
he didn't know why a sunset clause would be necessary because it
would take away from these [losing communities] even more.
9:19:06 AM
WILLARD DUNHAM, Member, Seward City Council, City of Seward,
related that the City of Seward is in favor of HB 25. He
informed the committee that Seward is a high-volume landing port
for both halibut and several other species of fish. Mr. Dunham
highlighted that hundreds of thousands of pounds of fish are
preliminarily processed in the state, but then shipped out of
state. He hoped the aforementioned will be taken into
consideration for future [legislation].
9:20:48 AM
CLARK CORBRIDGE, Interim City Manager, City of Seward,
reiterated the City of Seward's strong support of HB 25 and
Version L, primarily because it's a far more equitable
distribution method than the current method.
9:21:39 AM
DEAN BAUGH, Finance Director, City of Homer, related the City of
Homer's support for HB 25. Mr. Baugh highlighted that the City
of Homer, like many other port communities, has invested heavily
in port infrastructure. However, the current distribution
method has resulted in Homer having to subsidize some of its
docks through other fees. Mr. Baugh informed the committee that
11 million pounds of halibut came across Homer's dock last year,
but Homer received no fish tax for that halibut because the fish
is placed on ice and sent to market as a fresh fish. Mr. Baugh
related that Homer has discussed instituting a landing tax, but
the surrounding markets are so tight that institution of a
landing tax may place Homer in a situation in which it loses a
large portion of its volume.
9:23:17 AM
CHRIS MOSS surmised that the committee has to determine whether
this proposed change is necessary. He reminded the committee
that the original intent of the [fisheries business tax] was to
redistribute the funds [collected from the fisheries business
tax] to various communities impacted by processing activities.
The aforementioned was appropriate at the time because every
community had its own processing facility. However, the fishing
industry is changing as fresh fish are being shipped out. He
indicated the need to realize that fresh fish is the highest
value and those communities where fresh product is shipped out
for processing still incur port [infrastructure] costs, although
the definition of processing isn't met in those communities.
Mr. Moss expressed concern with Version L [because] the winners
and losers of it are not very obvious. Mr. Moss opined that
it's appropriate to distribute the money based on the landing
place rather than where the most fish are landed. He also
opined that the hold harmless clause based on population size
should be phased out.
9:25:38 AM
BUCK LAUKITIS, President, North Pacific Fisheries Association,
testified in support of HB 25, which corrects a poorly
structured tax statute. He related that Homer is participating
in a market segment, fresh product, that is absolutely essential
to the economic health of Alaska's fisheries. He discussed the
growing trend of fresh fish, which is where the value lays. Mr.
Laukitis commented that although the hold harmless clause in
Version L is well intentioned, it merely results in a 40 percent
dilution and doesn't fully correct the problem.
9:27:29 AM
JOHN VELSKO related his support of HB 25. He informed the
committee that Homer is the leading halibut landing port because
the city decided to invest in and maintain the necessary harbor
infrastructure, such as the ice making plant, modern fish stock,
and security patrol of the harbor. Although the Homer general
fund has helped pay for the aforementioned for a number of
years, the loss of state revenue sharing is making finances
tight. [In attempts to address the lack of state funds], the
city recently raised property taxes, and is discussing raising
the sales tax. Mr. Velsko opined, "HB 25 attempts to right a
fundamental wrong in the distribution of the fish tax, I don't
see why communities that have not invested in maintaining the
necessary fishery infrastructure should receive fish tax revenue
that rightfully belongs to responsible communities that have."
Although Mr. Velsko said he believes the hold harmless clause is
a good idea, he didn't believe it should come from the fish tax
revenues. "The State of Alaska does have a commitment to the
rural communities, but the rightful place to fund that is
through the general fund, not through taking fish tax revenues
from legitimate fishing ports," he stated.
9:29:07 AM
ROLLO POOL, Executive Director, Southeast Conference, related
that the Southeast Conference hasn't taken a position on HB 25.
However, he opined that the organization believes the
legislature needs to review the cost-sharing component of this
statute. He mentioned the different economies throughout the
state. Mr. Pool said the Southeast Conference is willing to
work with the legislature and other groups to find equitable
solutions.
9:30:29 AM
CHRIS HLADICK, Manager, City of Unalaska, highlighted that it
appears that Homer would receive a substantial amount under this
proposal in HB 25. Under this legislation, there will be
inequity. Homer will have an advantage because it's located on
the road system, and therefore can deliver fresh fish. However,
other communities, such as Unalaska, would have to pay to have
its fresh fish shipped out. "So, I'm not understanding exactly
how this would make it fair." Mr. Hladick related [the City of
Unalaska's] opposition to HB 25.
9:31:51 AM
REPRESENTATIVE CISSNA inquired as to Mr. Hladick's view of
Version L.
MR. HLADICK said he understands that many of the small
communities need money, but he said he hasn't seen how [Version
L] impacts the total picture and thus can't comment at this
time.
9:32:34 AM
CO-CHAIR THOMAS closed public testimony.
9:32:56 AM
REPRESENTATIVE LEDOUX moved to report CSHB 25, Version 24-
LS0169\L, Utermohle, 3/1/05, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 25(CRA) was reported from the
House Community and Regional Affairs Standing Committee.
The committee took an at-ease from 9:33:29 AM to 9:37:49 AM.
HB 133-LOCAL BOUNDARY COMMISSION REGS & POWERS
9:37:52 AM
CO-CHAIR THOMAS announced that the final order of business would
be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 133, "An Act relating
to incorporation of boroughs and to regulations of the Local
Boundary Commission to provide standards and procedures for
municipal incorporation, reclassification, dissolution, and
certain municipal boundary changes; and providing for an
effective date."
9:38:24 AM
REPRESENTATIVE NEUMAN moved that the committee adopt the
following amendment:
Page 2, line 4,
Delete "one"
Insert "three"
REPRESENTATIVE NEUMAN related that often after one of these
public hearings, the community notices the issue. He opined
that three public hearings would be better, especially in some
of the larger areas.
REPRESENTATIVE KOTT objected.
9:40:01 AM
REPRESENTATIVE JOHN COGHILL, Alaska State Legislature, sponsor,
explained that he used the language "at least one public
hearing" because some areas are small enough that one hearing
would be sufficient. He said he expected that the LBC would
have the latitude to have more hearings if they were necessary
due to geographical size or economic units in the area. He said
that mandating three hearings in the smaller areas could be less
useful. However, he indicated that he is open to providing
direction for more hearings if the geography of the area
dictated such.
9:41:29 AM
REPRESENTATIVE NEUMAN commented that "two" public hearings could
be okay. He reiterated that often the first meeting in a
community is the "wake up call" and people then become
interested in being involved.
REPRESENTATIVE COGHILL said that he is more amendable to
changing the language to "two".
9:41:59 AM
CO-CHAIR THOMAS asked if there was objection to the amendment,
as amended. There being no objection, the amended amendment was
adopted.
9:42:48 AM
DAN BOCKHORST, Staff to the Local Boundary Commission (LBC),
Department of Commerce, Community, & Economic Development
(DCCED), said that Representative Coghill's belief that the LBC
would take into consideration the geographic area in terms of
[the number of public hearings] is already the practice of the
LBC. He informed the committee that in virtually every [case
that comes before the LBC] a public hearing [is held] in or near
the area of the proposed [annexation]. Where the area includes
multiple communities in a large region, the LBC typically holds
multiple hearings. Mr. Bockhorst said that he didn't believe
the LBC would oppose requiring an additional meeting.
9:44:21 AM
CO-CHAIR OLSON moved to report SSHB 133, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSSSHB 133(CRA) was
reported from the House Community and Regional Affairs Standing
Committee.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:44:39 AM.
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