Legislature(1999 - 2000)
03/23/2000 09:08 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 23, 2000
9:08 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Joe Green
Representative Jim Whitaker
Representative Bill Hudson
Representative Beth Kerttula
Representative Hal Smalley
Representative Scott Ogan
MEMBERS ABSENT
All members present
OTHER HOUSE MEMBERS PRESENT
Representative Carl Moses
COMMITTEE CALENDAR
HOUSE BILL NO. 137
"An Act relating to the municipal dividend program; and providing
for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 137
SHORT TITLE: MUNICIPAL DIVIDEND PROGRAM
Jrn-Date Jrn-Page Action
3/15/99 454 (H) READ THE FIRST TIME - REFERRAL(S)
3/15/99 454 (H) CRA, STA, FIN
2/03/00 (H) CRA AT 8:00 AM CAPITOL 124
2/03/00 (H) Moved CSHB 137(CRA) Out of Committee
2/03/00 (H) MINUTE(CRA)
2/04/00 2085 (H) CRA RPT CS(CRA) 1DP 4NR 1AM
2/04/00 2085 (H) DP: KOOKESH; NR: MURKOWSKI, HALCRO,
2/04/00 2085 (H) DYSON, JOULE; AM: HARRIS
2/04/00 2085 (H) 2 ZERO FISCAL NOTES (DCED, REV)
2/04/00 2085 (H) REFERRED TO STATE AFFAIRS
2/17/00 (H) STA AT 8:00 AM CAPITOL 102
2/17/00 (H) Heard & Held
2/17/00 (H) MINUTE(STA)
3/16/00 (H) STA AT 8:00 AM CAPITOL 102
3/16/00 (H) Scheduled But Not Heard
3/21/00 (H) STA AT 8:00 AM CAPITOL 102
3/21/00 (H) Heard & Held
3/21/00 (H) MINUTE(STA)
3/23/00 (H) STA AT 9:00 AM CAPITOL 102
WITNESS REGISTER
PHIL YOUNKER, SR.
121 Spruce
Fairbanks, Alaska 99709
POSITION STATEMENT: Testified in support of HB 137.
DUANE UDLAND, Chief
Anchorage Police Department
Municipality of Anchorage
Anchorage, Alaska 99519
POSITION STATEMENT: Commented on HB 137.
FRANK KELTY, Mayor
City of Unalaska
PO Box 610
Unalaska, Alaska 99685
POSITION STATEMENT: Testified in support of HB 137.
PAM KARALUNAS
PO Box 73893
Fairbanks, Alaska 99707
POSITION STATEMENT: Commented on HB 137.
MIKE O'BRIEN, Mayor of
Bethel
PO Box 2215
Bethel, Alaska 99559
POSITION STATEMENT: Commented on HB 137.
JIM BALDWIN, Assistant Attorney General
Civil Division (Juneau)
Department of Law
PO Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Provided information on HB 137.
DAVID VEAZEY, Assembly Member
Fairbanks North Star Borough
1996 Red Leaf
Fairbanks, Alaska
POSITION STATEMENT: Commented on HB 137.
JIM TURNER, Assembly Member
Matanuska-Susitna Borough
350 East Dahlia Avenue
Palmer, Alaska 99645
POSITION STATEMENT: Commented on HB 137.
LEO RASMUSSEN, Mayor
City of Nome
PO Box 281
Nome, Alaska 99762
POSITION STATEMENT: Testified in support of HB 137.
HENRY GUINOTTE, Mayor
City of Palmer
231 W. Evergreen Avenue
Palmer, Alaska 99645
POSITION STATEMENT: Commented on HB 137.
DARIO NOTTI, City Council Member
City of Bethel
PO Box 388
Bethel, Alaska 99559
POSITION STATEMENT: Commented on HB 137.
DAN KELLY, Assemblyman
Matanuska-Susitna Borough
350 East Dahlia Avenue
Palmer, Alaska 99645
POSITION STATEMENT: Testified in support of HB 137.
ACTION NARRATIVE
TAPE 00-23, SIDE A
Number 0001
CHAIR JEANNETTE JAMES called the House State Affairs Standing
Committee meeting to order at 9:08 a.m. Members present at the
call to order were Representatives James, Hudson, Kerttula,
Smalley and Ogan. Representatives Green and Whitaker arrived as
the meeting was in progress.
HB 137-MUNICIPAL DIVIDEND PROGRAM
Number 0022
CHAIR JAMES announced the first order of business is HOUSE BILL
NO. 137, "An Act relating to the municipal dividend program; and
providing for an effective date."
CHAIR JAMES first remarked that second class boroughs have become
somewhat of an issue; she is doing research to resolve the issue
and it will be discussed at another meeting.
Number 0160
PHIL YOUNKER, SR., said he is representing himself as a taxpayer
who lives in the Fairbanks North Star Borough. He stated that he
supports HB 137 and understands the difficulties of second class
boroughs. He explained that he was serving on the assembly when
50 percent of the population did not have emergency medical
services (EMS) or fire protection. He thinks that while HB 137
needs some adjustment, he would be opposed to just sending a
blank check to local government. As a taxpayer living in
Fairbanks, he knows it took years to build adequate fire service
areas with state and local money and just plain hard work by
volunteers. He commented that road services are in the same
position. While the committee may have to make some adjustments,
he hoped that the committee would keep a large portion of HB 137
dedicated to the four basic services that taxpayers all need to
maintain safety and quality of life. He emphasized that HB 137
covers the most people according to the way it is written and
covers the most basic services. He urged the committee to move
HB 137 and he hopes it passes.
CHAIR JAMES remarked that since volunteers spend many, many hours
in community work, the least the legislature can do is provide
equipment, education, and tools for volunteers to do their job.
MR. YOUNKER said he has been involved in opposition to the ten-
mil tax-cap initiative both at home and around the state. He
said he is scared that the initiative possibly could pass, and if
it does, he believes local service areas will feel the first
cuts. He noted that the scary thing is that what he saves in
[property] taxes under the tax cap will not pay the difference on
his home fire insurance, and he can guarantee that is what will
happen. He commented that the tax-cap initiative is bad, and he
hopes it can be killed. He acknowledged that it is going to be
difficult to get people to vote to raise their own taxes, and
that is how people are going to see the tax-cap initiative. He
remarked that if HB 137 stays close to what it is today, at least
it keeps basic services in service areas that otherwise would be
lost if the initiative did pass.
Number 0504
DUANE UDLAND, Chief, Anchorage Police Department, said he also
represents the Alaska Association of Police Chiefs. He noted
that one of the primary concerns for police chiefs is the issue
of public safety and as a chief, he is worried about funding. He
explained that municipal assistance and revenue sharing as a
means of allocation is a difficult subject for the public to
understand. He acknowledged that nobody really understands the
formula and what he likes about HB 137 is that it is simple and
addresses the basics, though he is sure there will be much
discussion about what dollar amount should go where.
MR. UDLAND indicated that when he had talked with legislators in
the past, they had told him that they were not sure where revenue
sharing money was going when it goes to cities. He emphasized
that he thinks that HB 137 does give the legislature a feeling
that they are buying something [tangible] because it outlines
where the money goes and what it is for. He remarked that every
police chief and city in the state would be able to make long-
range plans under the formula presented in HB 137 instead of
thinking year to year. He reminded the committee that just as
the committee wrestles with long term funding issues, police
chiefs do that also at the local level. He said that HB 137 will
go a long way toward addressing funding issues, and it would
certainly make it easier for the public to understand just where
their tax dollars are going because right now he thinks the
public does not understand revenue sharing. He urged the
committee to make their adjustments to HB 137 and move it out.
Number 0686
FRANK KELTY, Mayor, City of Unalaska, testified via
teleconference from Unalaska in support of HB 137 and urged the
committee to move it forward.
Number 0727
PAM KARALUNAS said she is testifying for herself as a lifelong
Alaskan. She noted that it has been frustrating to her to see
nothing happening probably as a result of the September 14, 1999,
[advisory vote on the permanent fund issue] and so she is excited
about HB 137. She commented that HB 137 is a step in the right
direction and agrees that a combination of more efficient
government and citizen responsibility, including [taxes], is the
right way to go. She indicated she likes the basic concept of HB
137 and the clear delineation of funds, even though there are
some things that will need adjustment. She mentioned that the
reality is that people will pay for services one way or another
either by increased taxes at home or by costs that are incurred
when services do not exist.
Number 0846
MIKE O'BRIEN, Mayor of Bethel, indicated that for the Bush
communities, HB 137 is going to end up being a matter of economic
survival. He informed the committee that Bethel serves as the
"Anchorage" of southwestern Alaska because it has a great many
small communities that surround the area. Due to cuts to
municipal assistance and revenue sharing, small community
governments may very well dissolve in the next few years. He
acknowledged that a great deal of business comes into Bethel and
when those small governments go by the wayside, it will cause
severe economic impact on the city of Bethel. Bethel has a
plethora of woes just like everybody else in the state, for
example, roads that are still silty sand, a water and sewer
system that only serves 30 percent of the people, and [the
remaining population] still haul water and sewer. He is not so
naive as to believe that HB 137 will solve everyone's problems,
but he believes this is the best start that has been presented in
years. Ultimately other things will have to be attached to HB
137 to make this whole plan work.
Number 0952
CHAIR JAMES said she had invited Jim Baldwin here today because
there was a concern by one of the representatives about
constitutionality of HB 137 as to how it relates to dedicated
funds.
Number 0969
JIM BALDWIN, Assistant Attorney General, Civil Division (Juneau),
Department of Law, said he had reviewed both versions of the work
draft for HB 137, and they appear to be the same in regard to use
of the permanent fund (PF) earnings reserve account. He would
interpret this provision similarly to what the state is doing now
with inflation proofing and the permanent fund dividend (PFD)
that goes to individuals. He indicated that the constitutional
way to implement HB 137 would be through appropriation in the
budget process, consequently there cannot be an automatic
dedication of funds. He acknowledged that the department had
wrestled with that issue at the time the PFD was created. He
remarked that the PFD was [first] established as an automatic
budget transfer and then the department switched it to an
appropriation because of [constitutional] concerns. He observed
that if HB 137 operates through an appropriation he does not see
a constitutional issue.
MR. BALDWIN suggested that HB 137 can be improved by clarifying
the word "transferred" that appears in section 7, page 5, line
12, of the "K" draft and in section 11, page 13, line 25, the
phrase "transfers under (b) and (c)." He said that the
clarification should say that HB 137 is subject to appropriation
and that it is not a dedicated fund. He explained that transfers
are made at the end the fiscal year, and he does not know whether
the committee is looking at the amount that would be made
available in one fiscal year to fund revenue sharing for the next
fiscal year.
Number 1183
CHAIR JAMES stated that was the intent of HB 137. She reiterated
that the $125 from each dividend is counting the previous year's
dividends already distributed.
MR. BALDWIN said according to AS 37.13.145, the determinations
are made at the end of the fiscal year, and if the committee is
"forward funding," that is fine. However, if inflation-proofing
the PFD and amounts reserved for the municipal dividend year are
to [occur] in the same year, there may be a debt-to-cash-flow
problem. He commented that he did not know if the HB 137
drafters had thought of that or not.
Number 1247
CHAIR JAMES indicated that what the drafters intended to do was
identify the money and then "forward fund" it. She said the
drafters will make that completely clear in the language.
REPRESENTATIVE OGAN reiterated that the legislature has a ban on
dedicated funds as directed by the constitution, and the
legislature gets around that by subjecting things to
appropriation every year. He asked if Mr. Baldwin is suggesting
that the committee put language into HB 137 that says this
particular transfer is subject to appropriation on a yearly
basis.
Number 1311
MR. BALDWIN said he would not accept Representative Ogan's
characterization that Mr. Baldwin or the committee is trying to
get around the dedicated fund prohibition. He stated that he
believes what is at work here is a means to preserve the
legislature's power of appropriation over funds, as required by
the Alaska State Constitution. He noted that Representative Ogan
had correctly indicated that only in certain instances are
dedications permitted in the state system. However, he added,
municipal systems are different in that respect.
REPRESENTATIVE OGAN stated that he thinks the legislature does
try to get around the dedicated fund prohibition by simply adding
that language. He reiterated that by reviewing the list of
things that are appropriated every year, it is clear that
dedicated funds are there if it were not for yearly
appropriations.
Number 1372
REPRESENTATIVE KERTTULA asked how HB 137 would impact the PFD.
MR. BALDWIN replied that the PFD is calculated based on a rolling
average so any effect would be delayed by the working of that
formula. He said that the PF Corporation has sought some relief
from the legislature in the way that net income is calculated.
He noted that the way net income is calculated now, it would seem
that the effect of HB 137 would not be magnified. However, HB
137 will have some effect, but it will not be a sharp effect from
year to year. Beyond that he cannot be specific.
CHAIR JAMES explained she had checked what the effect would be on
the PFD. She indicated that the $71 million subtracted from the
PF earnings reserve would not be earning money to be calculated
in the five-year average upon which the PFD calculation is based.
She agreed there would be an effect upon the amount of growth of
the PF after $71 million is withdrawn. She acknowledged that the
income that is produced off of the earnings reserve is a lesser
percentage generally than what is in the PF itself because of the
restriction of investment. She reminded the committee that the
earnings reserve has to be available for appropriation whereas
funds in the PF itself have no restrictions and can be invested
differently. She explained that an average eight percent income,
for example, of the $71 million divided by 571,000 PFDs results
in about a $4 reduction in growth of the PFD. Essentially, she
added, HB 137 has such a minimal effect on the PFD that it would
almost be negligible in the long term.
Number 1607
DAVID VEAZEY, Assembly Member, Fairbanks North Star Borough, said
he was representing the borough. He noted he had observed that
the assembly and the legislature do not get along very well. He
explained that the legislature in many ways gets blamed for
making cuts and does not get credit for the money that is sent to
Fairbanks. He commented that all that Fairbanks has been getting
lately is less of expected money and so the legislature is to
blame. However, he added, that is unfortunate because it does
not help the assembly get along with the legislature. By the
same token, the assembly finds it difficult to develop a positive
working relationship when conversations the assembly has with the
legislature mean nothing in a caucus. He indicated that the
assembly is out of the [caucus] loop which does not engender a
positive working relationship. He does not know how to get
around that because everybody says that is just how things are
done.
Number 1733
MR. VEAZEY suggested that HB 137 is none of the above; rather, it
is truly an incremental solution to the long-range fiscal plan.
He remarked that he thinks the long-range fiscal plan that
everybody talks about is one of those things where small "bites"
out of the problem are better than one big legislative effort.
If an entity tries to take a big bite, too many people are
opposed to little things in a piece of legislation and it goes
nowhere. Therefore, he does not know how a long-range fiscal
plan will work or how it will be put together, but he does
believe that incremental change is the way to go. He means
incremental change in which both the legislature and local
elected officials are working together in that solution.
MR. VEAZEY said that HB 137 is the work of municipalities of the
Alaska Municipal League and courageous legislators who are
willing to step up and do something. He hoped that HB 137 can be
moved out of committee, move it on to Finance [Committee], and
get it rolling. He noted that the committee would find support
for HB 137 throughout the state; it is really a local control
issue. He explained that service areas have gone from $2000 a
mile down to $500 a mile, and HB 137 restores [road service] back
to $2000. He indicated that service areas are being severely
damaged, and some services are going out of business in
Fairbanks. He emphasized that he really believes HB 137 is a
positive thing and maybe a first step in developing a very
positive relationship with local elected officials and the state
legislature.
Number 1793
REPRESENTATIVE OGAN said that Mr. Veazey's comments were well
taken. He noted that the problem with HB 137 is another use of
PF earnings which he does not think the public is going to accept
until there is some sort of constitutional protection for the
existing PFD program. He explained that [establishing
constitutional protection] is the first step. Until the public
trusts the legislature to keep their hands off the PFD, attempts
like HB 137 are futile [in trying] to utilize the PF earnings.
He mentioned that he thinks that it is appropriate at some point
to use the PF earnings, but HB 137 is "the cart before the horse"
as far as public acceptance is concerned.
Number 1859
MR. VEAZEY said that he and Representative Ogan probably come
from different philosophical camps, but he can respect that. He
suggested that people do expect the government to use PF
earnings, in fact that is what it was set up for. He has three
properties in Fairbanks, and he pays property tax. He receives
about $10,000 per year from PFDs because he has a wife and three
children. He is not going to complain about taxes being too high
[when he is receiving $10,000 free money each year]. He
indicated that he thinks Alaska is an investment state, and it is
time to tap that resource responsibly. He emphasized that
handing out money at a time when Alaska has a huge fiscal gap is
lunacy, and he thinks people in the state recognize that, but if
the legislature takes money away from the people, the people will
never like it. Nevertheless, somebody has to be brave and strong
at some point and take that risk.
Number 1981
JIM TURNER, Matanuska-Susitna Borough, testified that there have
been other schemes (better said "ideas") for setting up dedicated
funds for the PF. He reminded the committee that a couple of
years ago [a scheme] was called the "educational permanent fund."
He can understand some hesitancy on the part of the legislature
to go forward with an idea like this at this time, but the
problem needs to be solved. He recognized that municipalities in
the last few years have had a 70 percent decrease from the
legislature in municipal sharing. He stated whether this
particular solution is it, whether it can be part of a
comprehensive plan where other interests of the state are taken
into consideration when using the PF, is a question that the
legislature is going to have to decide.
Number 2087
MR. TURNER stated that he did know that when he works on the
borough budget this spring, and municipal sharing comes in less
than last year, the borough is going to have to either cut
services or raise taxes. On a municipal level, the borough is
facing the property tax cap, and he knows that one of the things
that fueled that initiative was the idea that the state was
increasing taxes surreptitiously through the localities. In
other words, the state cut funding to municipalities and
municipalities raised taxes. The tax cap initiative is an effort
by some people to stop [surreptitious taxes], and that is what
these people have said publicly. Consequently, when facing the
tax cap initiative next fall, [keep in mind that] people are
observing what individual municipalities have done to the
people's taxes and services, and he thinks that people will vote
in favor of the tax cap. He explained that he thinks there is
some culpability on the part of the legislature regarding the tax
cap initiative, therefore, constructive solutions and dialogue
should go forward, and HB 137 could be part of it. He wanted the
committee to be aware of the connection that he sees and that he
thinks the voters will see when they have to consider what needs
to be done.
Number 2170
CHAIR JAMES said she had heard from Matanuska-Susitna folks that
they did support the concept of HB 137.
LEO RASMUSSEN, Mayor, City of Nome, testified, noting that he is
a member of the Alaska Municipal League. He said that over time
the legislature and municipal governments have tended to agree
that a partnership is advisable in order to move the state
forward wherever that might be. He noted that HB 137 might begin
to reinstate some partnership. He wanted to offer to the
committee the opportunity to reinstate partnership with the
Alaska Municipal League (AML), which represents 200 some
municipal governments that fall under AML jurisdiction and
underneath legislative authority. By working together, the
Alaska Municipal League and the legislature can come up with
something that will benefit everybody in the end. He
acknowledged that both entities are facing a tax cap because
neither entity has been working together very much, and it has
forced the situation to this point [of a tax cap initiative].
Municipal assistance and state-shared revenue reached its peak at
$166 million and now municipalities are looking at $28 million
with an 11 percent cut this year, which represents an 84 percent
reduction. He reminded the committee that if every institution
in the state had taken that same reduction, there would have been
"an awful gob" of money to spend on developing other sources of
revenue which is not happening currently. He recognized that
municipalities are faced with a situation where they must raise
revenue because municipalities and the legislature are no longer
partners.
MR. RASMUSSEN reiterated that municipalities face a tax cap now
which is going to force an even further situation of embroiling
the legislature in redistribution of the total wealth of this
state to accommodate something that is not really needed since
[tax cap] is a local option at this time. He noted that if the
tax cap takes place, a whole restructuring of the way people live
in Alaska will occur to make sure that they fall underneath the
two percent clause. There will be very little exchange of
property because the minute a title changes on property, the
property goes back to full value. Another redistribution of
wealth will happen in trying to accommodate or trying to stop
[return to full value]. He mentioned that because of fall off of
revenue, especially in the Bush, disillusionment with government
is observable. It is not unrealistic to think that dissolution
could be considered for Douglas or Eagle River so that they would
not have to fall under certain terms that come with the ten-mil
tax cap, and they would play a different game. He indicated
maybe they [Douglas, Eagle River, etc.] could become a profit
corporate entity which would fall totally outside
[municipalities' tax authorization reach], and municipalities
would still have to face the issue of servicing things for the
unincorporated city because [the unincorporated cities] would no
longer fall within a legitimate government.
Number 2381
MR. RASMUSSEN said it is ridiculous that municipalities are at
this point because had municipalities and the legislature
partnered, there would be no issue of whether HB 137 passes or
not. He agreed that HB 137 would bring some stability back,
which would stop the disillusionment with government in the
state. He emphasized that some time ago municipalities and the
legislature could have moved with a stable platform of funding
the partnership. He is 100 percent for HB 137, he said, and
thinks that HB 411 finally is beginning to set a plan. He
remarked that the last plan was the PF, and the state has had no
plan since then, though there have been attempts, but no one has
had the "guts" to stand up and say "do something if we are going
to move into the future." He hesitates to say that Nome may go
back to the "honey bucket," but the final call, if no decisions
are made soon, is that Nome residents will have a PFD check, and
they will be using a "honey bucket" all over again. He stated
that he came basically to speak in favor of the fact that
municipalities and the legislature are finally beginning to do
something with HB 137.
Number 2479
HENRY GUINOTTE, Mayor, City of Palmer, said he'd had a
conversation with Rick Mystrom [Mayor of Anchorage,] who could
not be here today, and that Mr. Mystrom would like to hang out a
"carrot." Mr. Guinotte noted that revenue sharing in the House
side, at least, has been cut by 10 percent again, which is better
than being cut by 30 percent. Mr. Guinotte quoted Mr. Mystrom as
saying that regarding the "carrot," should the legislature take
some action to restore funding to the municipalities at the end
of this session, he would send a note out to every taxpayer in
Anchorage saying, "The legislature has responded to the needs of
the borough, and I foresee no reason to increase taxes, possibly
a very slight decrease in taxes." Mr. Guinotte said that Mr.
Mystrom had told him that Mr. Mystrom would like to send such a
postcard out because he would like to support his legislators.
Mr. Guinotte commented he had talked with Darcie Salmon from the
Matanuska-Susitna Borough and Mr. Salmon said he would do the
same thing [as Mr. Mystrom].
MR. GUINOTTE mentioned that HB 137 would be a good way of
responding to the needs of communities. He is from
Representative Ogan's district, but Mr. Guinotte does not believe
that everyone in his district distrusts the legislature. He
acknowledged that there are some people who distrust any form of
government, but he thinks that if people can recognize how the
money is being used, they will not object. He reminded the
committee that it has HB 137 before it that designates how money
from the state will be used. He said that Palmer needed money to
upgrade its wastewater treatment system, the assembly put it to
the voters, and a 75 percent "yes" vote was submitted because the
people trust their assembly. He stated that if the legislature
will release to municipalities, through HB 137 or however it
comes eventually, municipalities would use the money
appropriately and would be able to give better services in
Palmer; while at the same time, the legislature would be heroes
in the eyes of the people of the Mat-Su Borough.
MR. GUINOTTE said that he wished that the State of Alaska would
get to the point where the legislature would make the rules and
the government in this state would not be run by initiative or
referendum. He commented that he would like to hope that trust
can be built with the legislature so these initiatives and
referendums will not have to appear on the ballot. He explained
that "decently and in order" means that the legislature makes the
rules since state government is not a pure democracy, rather it
is a republic where elected people are supposed to make
decisions. He will support the legislature all the way, and he
has spoken heavily against the ten-mil cap, even though it does
not affect the city of Palmer. Palmer is a town of about 4,800
people, and its income comes from sales tax. He added that
Palmer has only a moderate property tax, but he can see economic
chaos for his borough and for the entire state [because of the
tax cap]. He asked the committee to give some support for local
government so that it can even more strongly oppose the ten-mil
cap. He reminded the committee that he would like to hold them
up as heroes when he gets back home.
Number 2695
CHAIR JAMES said she has talked to people around the state and
one of the things that people did say was that they did not trust
the legislature with a big pot of PF money. She noted that she
believes HB 137 would meet most people's concerns about this
because the money HB 137 takes is identified, and people know
where it is going to be spent. She explained that HB 137 is a
good step in the right direction. She had also found out that
there are people out there who do not want one cent taken out of
their existing PFD. There are also some people out there who
want taxes instead of taking the PFD, and there are some people
who do not want either taxes or discontinuance of the PFD. In
general the problem is that people did not like the plan because
the plan balanced the fiscal problem with PF earnings and nothing
else. As an accountant, she can tell the committee that right
now the legislature could not close the fiscal gap enough by
taxation, and there will not be enough money in the PF earnings
reserve to fill the gap if the legislature does not get an idea
of what it is going to spend. She emphasized that the government
that is closest to the people is the best government, and the
more the legislature can get done on the municipal level as
opposed to the state level is better for the people. She
acknowledged that is her conservative view, and one of the
reasons why she strongly supports HB 137.
Number 2784
MR. GUINOTTE asked the committee to tweak HB 137 so that it is
constitutionally acceptable.
REPRESENTATIVE GREEN asked if Mr. Guinotte felt that citizens in
his community really got involved.
MR. GUINOTTE replied that he knows that people want services such
as roads, better police protection, and good fire protection and
EMS. He has heard that the legislature was sent to Juneau to
cut, but when somebody says that to him, he asks that person "how
much road service do you want to cut?" He noted that the people
in the city of Palmer have confidence in their government. As
mayor, he makes sure that he never pushes the truth. As a
result, [the people] have a great trust for the city government
in Palmer. He guaranteed that if the legislature will give HB
137 money to [Palmer], it will be used as outlined in HB 137 and
no other way. He also guaranteed that the people will not object
if they see better police service and more roads. Many of the
people in Palmer are retired, and they would be happy to see a
little of the PF be used for HB 137 so long as the dividend
remains in place. He mentioned that many of them had told him
that they would be happy with a PF cap at $1500, but he cannot
speak for everybody.
Number 2899
DARIO NOTTI, City Council Member, City of Bethel, said that when
he comes back from fishing and leaves the fish uncovered, the
seagulls start flocking around, and they think the fish is
theirs, but it is still his fish. He noted that it is time that
the legislature hauls in some of those "fish" and starts using
them. He said that it is time for the legislature to start using
some of the PF. He commented that he had voted against the [use
of PF earnings] in the [September 14, 1999 initiative] because he
thinks it is time to tax the people. He mentioned that
municipalities are "children" of the legislature and need to be
fed and encouraged.
TAPE 00-23, SIDE B
Number 2992
DAN KELLY, Assemblyman, Matanuska-Susitna Borough, said that his
borough has a large group of individuals who certainly voted
against attacking the PF in any form. There are many wise,
intelligent people in the [Mat-Su] valley who are concerned about
the state of the state, and he believes that all should be aware
of what HB 137 offers the people. He commented that he thinks HB
137 is a good document, and it should succeed, but he also needs
to advise the committee that those who do not want their PFD
attacked in any way, shape or form need to be given a chance to
say so. He mentioned that HB 137, or some form of it, actually
ought to go before voters for approval so that voters can say
what they really want. He agreed [that idea] was a big bite.
MR. KELLY indicated that there are some problems in HB 137 and he
referred to page 7, section 29.60.720. He informed the committee
that he had much experience with the Department of Transportation
and Public Facilities (DOT&PF) since he was an employee for 26
years, therefore, he is sensitive to DOT&PF issues. He quoted
from section 29.60.720(a) as follows: "Road maintenance and
driver usage entitlements. ...the department shall distribute
road maintenance entitlements to municipalities to be used for
road maintenance." He emphasized that when he first read that he
thought maybe that was where DOT&PF was coming from when they go
back to the municipalities and want the municipality to pick up
maintenance of roads, including some of the projects that are on
state roads. On the bottom of the same paragraph he quoted:
"excluding ... as defined by regulations of the Department of
Transportation and Public Facilities." In other words, it is
clear here that HB 137 is saying that maintenance money does not
apply to state highway roads. He asked why is DOT&PF coming to
the municipalities and asking municipalities to take over
maintenance of state projects. He reminded the committee that
his question is just an example of [road maintenance] needs. For
instance, the Parks and Glenn Highways intersection across to
Knik Arm needed lighting along the road. It was his
understanding that the state would not [install lighting] unless
the municipality picked up maintenance [of the lighting].
Consequently, there is a conflict in ideology, and he is
concerned about that part of HB 137.
MR. KELLY reiterated that he thinks that HB 137 is a wonderful
document and is on the right track. He will support HB 137, and
he will encourage his constituents to support it as well.
Nevertheless, HB 137 needs to be put before the voters to give
them an opportunity to speak because [voters] really do want to
be aware of where their state is going and what is happening to
their PFD.
Number 2760
CHAIR JAMES acknowledged that for quite some time DOT&PF has been
wanting municipalities to care for roads. Because Alaska is such
a large state, managing all of the things from Juneau is very
expensive. She noted that the cost or benefits are not
necessarily felt by people out in the districts. Not having
roads plowed, having potholes in the roads, and all of those
kinds of things are very difficult to service because at a state
level, the legislature has to get the votes of every district in
the state before anything [money] can be sent out there [to the
people]. She personally believes that services would be less
expensive and more responsive to the public if administered by
municipalities, provided they are given funds to do their job.
She envisioned taking a pot of money from DOT&PF and giving it to
municipalities so that municipalities can do road maintenance
that DOT&PF used to do. Her idea will not sell overnight, but
she thinks that if municipal officials will talk with their folks
back home, it might be a possibility in the future. She said
that DOT&PF is working on that issue, and she supports it, even
though she knows it will take a long time to get there. She
noted that at least the idea needs to be discussed now as a
potential. Such an idea is not going to be taken on with
existing funds, but it would be taken on if the legislature
provided money to municipalities.
CHAIR JAMES noted that the other issue is that HB 137 only goes
to service areas. For example, if a town does not have power
over the roads in its borough, then money under HB 137 goes to
service areas to take care of roads that are already being cared
for. [HB 137 was heard and held.]
ADJOURNMENT
Number 2606
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 10:05
a.m.
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