Legislature(1995 - 1996)
02/14/1996 01:37 PM Senate CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE
February 14, 1996
1:37 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chairman
Senator Randy Phillips, Vice Chairman
Senator Tim Kelly
Senator Fred Zharoff
Senator Lyman Hoffman
COMMITTEE CALENDAR
Report of the Local Boundary Commission
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 20
"An Act establishing the Alaska municipal basic services program,
relating to certain programs of state aid to municipalities and
recipients in the unorganized borough; and providing for an
effective date."
SENATE BILL NO. 207
"An Act authorizing the issuance and sale of revenue bonds to fund
public wastewater systems, non-point source water pollution control
projects, including solid waste management systems, and estuary
conservation and management projects; authorizing the use of the
Alaska clean water fund to pay and secure the bonds and to pay
costs related to issuance and administration of the bonds;
authorizing certain measures to secure payment of the bonds; and
amending Alaska Rule of Civil Procedure 3."
PREVIOUS SENATE COMMITTEE ACTION
SB 20 - See Community & Regional Affairs minutes dated 2/22/95 and
2/7/96.
SB 207 - See Community & Regional Affairs minutes dated 2/5/96.
WITNESS REGISTER
Darroll Hargraves, Chairperson
Local Boundary Commission
Department of Community & Regional Affairs
333 W. 4th Ave., Ste. 220, Anchorage, AK 99501¶(907)269-4500
POSITION STATEMENT: testified on the Local Boundary Commission
Report
Dan Bockhorst, Staff
Local Boundary Commission
Department of Community & Regional Affairs
333 W. 4th Ave., Ste. 220, Anchorage, AK 99501¶(907)269-4500
POSITION STATEMENT: testified on the Local Boundary Commission
Report
Joe Murdy
Alaska Municipal League President
Anchorage Assembly Member
P.O. Box 196650, Anchorage, AK 99519-6650¶(907)343-4431
POSITION STATEMENT: supports SB 20
Dennis Egan, Mayor
City & Borough of Juneau
155 So. Seward St., Juneau, AK 99801¶(907)586-5240
POSITION STATEMENT: supports SB 20
George Weurtz, Assembly Member
Municipality of Anchorage
P.O. Box 196650, Anchorage, AK 99519-6650¶(907)343-4431
POSITION STATEMENT: supports SB 20
Drew Scalzi, President
Kenai Peninsula Borough Assembly
144 North Binkley, Soldotna, AK 99669¶(907)262-4441
POSITION STATEMENT: supports SB 20
Kevin Ritchie, Executive Director
Alaska Municipal League
217 Second St., Ste. 200, Juneau, AK 99801¶(907)586-1325
POSITION STATEMENT: supports SB 20
Thomas Greene, Mayor
City of Nondalton
P.O. Box 89, Nondalton, AK 99640¶(907)294-2235
POSITION STATEMENT: supports SB 20
Judith Slajer, Chief Financial Officer
Fairbanks North Star Borough
P.O. Box 71267, Fairbanks, AK 99707¶(907)459-1370
POSITION STATEMENT: supports SB 20
Patrick Cole, Mayor's Staff
City of Fairbanks
800 Cushman St., Fairbanks, AK 99701¶(907)459-6850
POSITION STATEMENT: supports SB 20
Lamar Cotten, Deputy Commissioner
Department of Community & Regional Affairs
P.O. Box 112100, Juneau, AK 99811-2100¶(907)465-4700
POSITION STATEMENT: supports SB 20
Bill Rolfzen
Division of Municipal & Regional Assistance
Department of Community & Regional Assistance
P.O. Box 112100, Juneau, AK 99811-2100¶(907)465-4750
POSITION STATEMENT: supports SB 20
Representative Don Long
State Capitol, Juneau, Alaska, 99801-1182¶(907)465-4833
POSITION STATEMENT: testified on SB 20
Donald Moore, Manager
Matanuska-Susitna Borough
350 East Dahlia Ave., Palmer, AK 99645-6488¶(907)745-4801
POSITION STATEMENT: supports SB 20
Keith Kelton
Department of Environmental Conservation
410 W. Willoughby, Ste. 105, Juneau, AK 99801-1795¶(907)465-5135
POSITION STATEMENT: representing governor-prime sponsor of SB 207
Lee Sharp
420 L St., Ste. 400, Anchorage, AK 99501¶(907)276-1969
POSITION STATEMENT: testified on SB 207
Bob Evans, Lobbyist
Municipality of Anchorage
2822 Iliamna Ave., Anchorage, AK 99517¶(907)586-6252
POSITION STATEMENT: testified on SB 207
George Keeney
City Planner & Public Works Director
City of Cordova
P.O. Box 1210, Cordova, AK 99574¶(907)424-6200
POSITION STATEMENT: supports SB 207
ACTION NARRATIVE
TAPE 96-6, SIDE A
Number 001
CHAIRMAN TORGERSON called the Senate Community & Regional Affairs
Committee meeting to order at 1:37 p.m. The chairman informed
everyone that he didn't intend the Local Boundary Commission's
report to be turned into a debate on whether or not Lake Louise
should be in or out of the Mat-Su Borough. As a matter of
protocol, the legislature has 45 days to accept or reject the
boundary commission's report. He then invited the chairman of the
Local Boundary Commission to the table to make his presentation.
Number 030
DARROL HARGRAVES, Chairperson, Local Boundary Commission,
introduced Dan Bockhorst and Gene Kane, staff of the Department of
Community and Regional Affairs and support staff for the Local
Boundary Commission. He also introduced Pat Poland and Michael
Cushing of the Department of Community & Regional Affairs. Also in
attendance was Attorney Bob Hicks and former State Senator Vic
Fischer.
Number 064
CHAIRPERSON HARGRAVES introduced the other members of the Local
Boundary Commission: Kathleen Wasserman-Vice Chairperson from
Sitka, Nancy Cannington from Unalakleet, H. Toni Salmeier from
Anchorage, and William Walters from Fairbanks. The annual report
from the commission was filed with the legislature on January 17.
Copies were provided to all legislators. If additional copies are
needed, please contact Dan Bockhorst. Chairperson Hargraves
informed the committee that the remarks made today reflect the
information in the report.
Number 080
CHAIRPERSON HARGRAVES remarked on the content of the Annual Report
from the Local Boundary Commission (LBC).
Number 278
CHAIRMAN TORGERSON stated it was his opinion that the LBC's
recommendation that Lake Louise incorporate goes beyond the
authority of the commission, in that the mandatory borough and the
mandatory forming of a community rests with the Legislature, and
not with commissions thereof. He agreed that the constitution
clearly gives the boundary commission the opportunity to change
boundaries, but he doesn't see anything that gives the commission
the authority to mandate the formation of a local government. In
committee members' bill packets are two letters from Tamara Brandt
Cook, Director of Legislative Legal Services. The first one, dated
January 27, 1996 answers the question of whether the Legislature
can line-item veto a provision in the LBC's report: it cannot. In
the second letter, dated February 13, 1996, Ms. Cook states:
"I can find nothing that suggests that a court is likely to
find that (the) LBC has acted beyond its power.... The court
has recognized that the LBC is charged by statute (AS
44.47.567) with developing proposed standards and procedures
for changing local boundaries.... The court has recognized
that the purpose for creating the boundary commission was to
deal with controversies over municipal boundaries that cannot
be settled at the local level.... I expect that a court would
find that the condition of incorporation imposed by the LBC in
this case is in keeping with the purpose the commission
serves."
CHAIRMAN TORGERSON stated that letter didn't really answer his
question as directly as he would have liked. He thought her
response was basically that, it's never happened before, but it
probably would be alright. He raised this point of issue, and he
will probably pursue it through Legislative Legal Services, more
for the precedence that it sets for other communities that think if
they want to get out of a borough, all they have to do is form a
second-class city. He still maintains that particular authority
rests with the Legislature or with the people if they want to vote
for it. Chairman Torgerson asked if there were any questions of
the LBC.
Number 315
SENATOR RANDY PHILLIPS asked how, mechanically, this $160,000 will
work.
DAN BOCKHORST, Local Boundary Commission Staff, replied it is an
obligation that a future city of Lake Louise or the future Copper
River Basin Borough would assume, and they would have to have the
taxation power to generate the funds to repay the obligation. It
would be a debt that the municipal government would have.
SENATOR RANDY PHILLIPS stated he understands that, but he wants to
know who will enforce it.
MR. BOCKHORST responded that the matter has been discussed with the
Department of Law, and it is an enforceable obligation.
SENATOR RANDY PHILLIPS asked if DCRA, through Department of Law,
would be able to enforce payment within two years.
MR. BOCKHORST replied that the Department of Law envisions that the
Matsu Borough could, and certainly the State of Alaska could
attempt to do so as well, enforce that obligation.
Number 333
SENATOR KELLY asked if it would be correct to say the money would
be collected by forming a second-class city, and then having that
second-class city collect property taxes.
MR. BOCKHORST replied that is correct.
SENATOR KELLY asked if the Lake Louise area has been paying
$160,000 per year to the Mat-Su Borough.
MR. BOCKHORST responded they have been paying approximately that
much money.
SENATOR KELLY commented that obviously there is a tax base there.
His only question about the Lake Louise situation, is how the
school scenario has been working. Is it correct that students
haven't been going to Mat-Su schools?
MR. BOCKHORST responded that is correct. The students have been
attending school in the Copper River Basin. The Copper River Basin
has been funded directly for those students through the education
foundation program. The Mat-Su Borough is not even involved in the
education of those students.
SENATOR RANDY PHILLIPS commented it is only three or four students.
SENATOR KELLY asked if nothing would change in that regard.
MR. BOCKHORST responded that is correct. One change, in terms of
the education funding, is that the Matsu Borough is making a local
contribution in support of its schools that includes property
within the Lake Louise area. And that Lake Louise area will be
moving into the unorganized borough, so there will be a loss of
local contribution on the part of the Matsu Borough, which is
described in the LBC report.
Number 354
CHAIRMAN TORGERSON asked the record to show that Senator Hoffman
joined the committee meeting. The chairman remarked that the
committee is going to start having hearings on the mandatory
borough act. He knows that some of the concerns of the LBC have to
do with workload, and he knows if the mandatory borough act does
pass the Legislature, it will create a substantial amount of work.
Chairman Torgerson asked the LBC to review that. If they have
comments on that today, he would certainly hear those comments. He
asks that the LBC begin preparing information on the mandatory
borough act.
Number 365
SENATOR RANDY PHILLIPS asked how real the Copper River Basin
Borough is.
CHAIRPERSON HARGRAVES responded that one of the things that became
clear to the LBC is that when we put the requirement for the
borough, we put Lake Louise folks in kind of an untenable
situation: we judged that Lake Louise was an area that needed to be
detached from the Mat-Su Borough, but when we required that they
form a borough, that was a likely impossibility for them. We've
not been petitioned out of the Copper River Area to create a
borough. Yet, if you look at the total entity, it looks like a
nice, compact area for a borough. We don't anticipate petitions
from them in the near future.
CHAIRMAN TORGERSON stated that the legislation he's introduced
mandating boroughs uses LBC's 1993 report.
CHAIRMAN HARGRAVES noted those are the model-borough boundaries the
LBC set up.
CHAIRMAN TORGERSON stated it is his understanding that those
boundaries were penciled in such a way that a local government
could operate within that tax base. Is that true?
MR. BOCKHORST responded that in terms of economic viability, that
was the one issue that the LBC didn't really consider with respect
to the model borough boundaries. But prior to that, in 1988 and
1989, DC&RA had done a number of borough feasibility studies
throughout the state in the unorganized borough. There were a
great many of the areas that were determined to be viable, at least
for a minimal form of government. The regions in the western part
of Alaska might be an exception to that.
CHAIRMAN TORGERSON thinks the Copper River Borough is one of the
richer boroughs, because of the pipeline.
SENATOR ZHAROFF asked if there is something already in place
specifying formation of boroughs.
CHAIRMAN TORGERSON replied he's introduced legislation.
SENATOR ZHAROFF asked if there was anything predating that.
CHAIRMAN TORGERSON and CHAIRPERSON HARGRAVES responded the
constitution specifies the formation of boroughs.
SENATOR ZHAROFF asked, then why do we have to have legislation to
do that?
CHAIRMAN TORGERSON stated it was to spur things along.
SENATOR ZHAROFF commented that things are only going to move so
fast anyway.
SENATOR RANDY PHILLIPS said it would be a reminder.
SENATOR ZHAROFF stated that seems redundant.
CHAIRMAN TORGERSON stated he would be right behind Senator Zharoff
in enforcing the constitution. If we don't need the legislation,
he will be the first to pull it.
Number 395
CHAIRMAN TORGERSON, hearing no other questions, thanked the LBC for
their presentation.
SB 20 ALASKA MUNICIPAL BASIC SERVICES PROGRAM
Number 400
CHAIRMAN TORGERSON brought up SB 20 as the next order of business.
The committee began by hearing an overview by the Alaska Municipal
League (AML). The chairman stated that SB 20 is an attempt to
rewrite the municipal assistance and revenue sharing programs that
the State of Alaska has in place. The original intent of the bill
was to come up with a creative formula that all the municipalities
in the State of Alaska would think was a wonderful thing. Over the
years, that hasn't been achieved without creating winners and
losers. The intent is to prioritize services deemed necessary,
which the state will reimburse municipalities for performing. The
state will reimburse for mandated services. We will do this
without actually changing much of the formula. The formula is
maintained the same. There will be some changes in allocation of
funds, because we are raising the minimum entitlement up to
$40,000.
Number 415
SENATOR KELLY asked if there is a fiscal note for SB 20.
CHAIRMAN TORGERSON responded there is not a fiscal note for SB 20.
We are making the changes within the funds appropriated to
municipal assistance and revenue sharing. There is a spreadsheet
in members' bill packets showing that. He has asked the AML to
give approximately a 15 minute overview of how things are now, and
how SB 20 would change things.
JOE MURDY, Alaska Municipal League President, Anchorage Assembly
Member, thanked Chairman Torgerson for his work on SB 20. Mr.
Murdy introduced Mayor Tom Green, Vice-President of the Alaska
Conference of Mayors. Mr. Murdy stated that Mayor Mystrom of the
Municipality of Anchorage, President of the Alaska Conference of
Mayors, was not able to attend, but he sends his greetings and
urges support of SB 20. Mr. Murdy noted that a letter from Mayor
Mystrom had been distributed to committee members. Other members
of the Alaska Conference of Mayors assisting in the presentation
were: Mayor Dennis Egan of the City & Borough of Juneau, George
Weurtz, Assembly member from the Municipality of Anchorage and Co-
Chairperson of the AML Legislative Committee, Drew Scalzi,
President of the Kenai Peninsula Borough Assembly, Kevin Ritchie,
Executive Director of the AML, and Tom Greene, Mayor of Nondalton,
Vice President of the Alaska Conference of Mayors, and 1st Vice
President of the AML. Other municipal officials were on-line via
teleconference to offer comments and support, as well as in the
audience today. Between the AML and the Conference of Mayors, the
group represents over 135 municipalities, and over 95 percent of
Alaska's population. The issue in SB 20 is fully supported by the
members of both groups. Most of the concepts in SB 20 were
proposed by a committee of the Alaska Conference of Mayors.
Number 468
MAYOR DENNIS EGAN, City & Borough of Juneau, stated SB 20 is a
critical goal of both state and local governments. The safe
communities fund legislation is one of the first steps in what will
be a long process to create stability in taxation and services for
citizens. Mayor Egan explained some charts which give an overview
of the partnership between state and local governments in providing
services. The first chart shows that municipal budgets together,
are approximately the same size as the state operating budget. The
main overlap is the provision of education services, which is a
constitutionally mandated responsibility of state government, but
is largely administered on the local level. The second and third
charts show an overview of state and local government services.
Please note that a large number of the state services overlap with
the services of local governments, for example: public safety,
transportation, health and social services, and education. These
charts show that there is no clear distinction between the state
and local responsibilities. The fourth chart shows how state and
local government is paid for in Alaska. People who assert that
Alaska has very few or no personal taxes are clearly wrong. Alaska
funds over 40 percent of it's services from personal taxes and
fees, and the vast majority of those are collected by local
governments. Alaska's fiscal crisis is the wedge of the pie chart
marked "state reserves, 10 percent." He added that although
Alaska's municipalities are proud of our role in supporting
Alaska's budget, we have been given little choice in the matter.
Number 508
MAYOR EGAN stated that since 1986, when oil revenues began
decreasing, the state has cut municipal assistance and revenue
sharing by over 60 percent, without generation of new revenue by
the state nor significantly decreasing the overall dollar amount of
its' budget. He noted that the State of Alaska and municipalities
share the same citizens. It simply doesn't matter whether a tax or
a fee is a local tax or fee, or a state tax or fee: the cost is
still the same to our citizens. However, how taxes and fees are
structured may be of critical importance to all taxpayers in terms
of equity and affordability. If the State of Alaska continues to
ignore the impact of its actions on local services and local taxes,
our ability to offer safe communities to our citizens will be
threatened. We believe that rebuilding the relationship between
the state and local governments is absolutely critical. The
framers of the state constitution felt so strongly about the future
relationship between state and local governments, it specified that
there must be a local government agency in the executive branch.
This is the only executive branch agency specified in the
constitution. He asks that it be remembered that cutting revenue
sharing is not cutting the state budget, it is a new sales tax or
property tax increase to the taxpayers of Alaska, and should be
represented to the public as such.
Number 532
SENATOR RANDY PHILLIPS commented that Hillside people would debate
the question that services provided by troopers and city police are
indistinguishable.
MAYOR EGAN replied that there are some situations like that. He
thinks that if there was a debate like that in Juneau, they would
finally distinguish between troopers and city police. There is
only one trooper in Juneau anyway.
Number 539
SENATOR KELLY asked how much state money Juneau has received for
schools between 1986 and 1996.
MAYOR EGAN responded that there has been no percentage increase in
that period.
SENATOR KELLY asked if Juneau was not receiving more money today.
MAYOR EGAN replied Juneau is receiving more money, but the
population has gone up a tremendous amount.
SENATOR KELLY said the Conference of Mayors has good numbers on
revenue sharing, and he asked if the conference has any numbers on
education funding. He doesn't discriminate between education and
road service at the local level. He asked how much money Juneau
has received for education, on a percentage basis, since 1986.
MAYOR EGAN responded that he didn't have that information in front
of him, but he would get those figures for Senator Kelly. He
pointed out that the local school district's budget is $40,000,000,
and over 50 percent of that comes from local tax payers.
SENATOR KELLY asked then if half came from the state.
MAYOR EGAN replied that it comes from the state and from the
federal government. 5.8 mills of property tax increases were due
directly to decreases in state shared revenue and municipal
assistance.
SENATOR KELLY stated he is trying to make the point that there has
been a tremendous increase in the amount of money that the state
has sent to municipalities to fund education. The state considers
that as one pot of money. Mayor Egan would like to differentiate
between municipal revenue sharing and education. The state thinks
education funding is also assisting local governments. That is his
point.
Number 560
GEORGE WEURTZ, Assembly Member, Anchorage Municipal Assembly,
commented that the education issue is a dispute whether it is added
up as local or state. According to the state constitution,
education is a state responsibility. As the state becomes
increasingly concerned with finding ways to balance its own budget,
shifting more budget problems to local taxpayers increases. The
governor's proposed budget for this year includes direct cuts
estimated to be in excess of $15,000,000. In addition to the 8%
cuts to municipal assistance and revenue sharing, there are direct
cuts to school transportation, elimination of funding for the state
senior citizen tax, and cuts to many other programs. Mr. Weurtz
itemized some of the cuts. He contended that little or no
consideration has been given by the state to the escalating and
cumulative effects of these cuts on local taxes and local public
services. He thinks SB 20 is a good step in the direction of a
win-win solution for everyone.
SENATOR RANDY PHILLIPS asked, regarding the language on page 4,
line 17--[end of Side A]
TAPE 96-6, SIDE B
--communities, versus municipal assistance; isn't it the same cat,
only a different color?
MR. WEURTZ responded that the issue is the priority of where the
money needs to be spent. These dollars are focused on the
functions that create a safe community for our citizens.
CHAIRMAN TORGERSON informed Senator Phillips that there would be a
presentation on that subject by DCRA that will explain in more
detail what we're doing.
Number 582
SENATOR HOFFMAN stated, "The problem that I see is that that was
the governor's proposed cuts, and [interference] even further cuts
and those haven't been delineated by the budget subcommittees yet,
but it is my vision that what's going to happen is we're going to
see substantially higher cuts than what the governor asked from
this legislature."
MR. WEURTZ responded that is a point they're aware of and concerned
about. SB 20 brings us to the table to talk about equity and
fairness.
Number 575
SENATOR ZHAROFF stated that his concern is that as communities
dissolve, services will still be needed, and somebody is going to
have to provide services.
CHAIRMAN TORGERSON stated that is the main driving force behind
raising the minimum entitlement up to $40,000, in order to try to
shore up some of the communities that have been prorated down by
cuts. It should be higher, but what we're trying to do by changing
this formula is take the money out of existing communities. So
we're taking money out of tax-base communities. This approach has
the support of all the mayors and the assemblies. They recognize
that if we don't shore up local governments in rural Alaska, we're
not going to have local governments in rural Alaska.
Number 562
DREW SCALZI, President, Kenai Peninsula Borough Assembly, stated SB
20 is about stabilization. The state and municipalities need to
get revenues and expenditures stabilized in order to have safe and
prosperous communities. Mr. Scalzi explained three charts to the
committee: the first one illustrates how we fared; the second chart
gives proof of the correlation between local sales and property tax
increases and municipal assistance and revenue sharing; the third
chart illustrates the history of funding for municipal assistance
and revenue sharing programs. Sharing revenues with municipalities
is done in all 50 states, and Alaska is below the average in the
western states, even if one considers the education funding as part
of the revenue sharing. The major advantage of municipal
assistance and revenue sharing is that it gives municipalities
their share of Alaska's oil wealth without strings and the high
administrative costs, like most other state and federal programs.
However, the same flexibility is a disadvantage to municipalities,
which is a factor in determining why it has been cut so much.
Number 530
KEVIN RITCHIE, Executive Director, Alaska Municipal League, stated
that SB 20 would make six major changes:
1) change the name municipal assistance to safe communities;
2) tie funding to safe community types of issues;
3) the minimum entitlement for incorporated communities would
be set at $40,000;
4) the program retains the former allocation formulas, but
allows for a more equitable proration;
5) funding will be distributed on July 31;
6) only six communities would actually receive less funding if
a decrease in revenue sharing occurred.
MR. RITCHIE stated that the Alaska Municipal League and the Alaska
Conference of Mayors view SB 20 as a good first step in building a
revenue-sharing program that will continue to evolve and improve.
Number 485
MAYOR THOMAS GREENE, City of Nondalton, stated that municipal
governments have always been the leaders in finding creative ways
to meet community needs. A survey of members conducted by the AML
and the Alaska Conference of Mayors showed that all but two
communities responding reported significant service cuts and or tax
increases. Mayor Greene related some of the remarks from
communities. He stated that passing SB 20 will cost the state
almost nothing, but it will be an important step in improving the
process and ensuring accountability of funds.
Number 408
JUDITH SLAJER, Chief Financial Officer, Fairbanks North Star
Borough, testifying from Fairbanks, stated she was speaking on
behalf of the Mayor Jim Sampson. Ms. Slajer stated that the
Fairbanks North Star Borough supports SB 20.
CHAIRMAN TORGERSON asked Ms. Slajer to put the borough's support in
writing and submit that to the committee.
Number 390
PATRICK COLE, Mayor's Staff, City of Fairbanks, stated he was
representing the Mayor. He stated that the city supports SB 20.
CHAIRMAN TORGERSON informed everyone that SB 20 will not be passed
out of committee today, because not everyone has had a chance to
review it yet. It will probably be held for a week.
Number 382
LAMAR COTTEN, Deputy Commissioner, Department of Community &
Regional Affairs (DCRA), stated that the department supports SB 20.
DCRA sees three essential features of SB 20:
1) no longer holding harmless the base amount;
2) a minimum grant of $40,000;
3) the funds would be distributed in July, instead of
February.
CHAIRMAN TORGERSON asked DC&RA to explain the spreadsheet
distributed to committee members. The intent of the spreadsheet is
to show last years' funding levels, what the hold-harmless is, and
the effect of removing the hold-harmless.
Number 340
BILL ROLFZEN, Division of Municipal & Regional Assistance,
Department of Community & Regional Affairs, explained the
spreadsheets distributed to the committee.
SENATOR KELLY asked if, under the current system, everyone would
get a check for the third column amount in February.
MR. ROLFZEN responded that is not correct. The first column, the
revenue sharing payments, go out on July 31 of each fiscal year.
The municipal assistance payments, the second column, go out
February 1.
CHAIRMAN TORGERSON stated that under SB 20, those payments would be
lumped together, because we're consolidating the program.
SENATOR KELLY asked if the state has currently been adding that
interest revenue on their own books.
CHAIRMAN TORGERSON responded, more than likely.
SENATOR KELLY commented that if it is a plus here, it's got to be
a minus somewhere else.
CHAIRMAN TORGERSON replied he is sure it would be. He asked how
much money that would be.
MR. ROLFZEN responded the municipal assistance distribution this
year was $31,900,000.
CHAIRMAN TORGERSON asked how much revenue sharing was.
MR. ROLFZEN responded it was approximately $26,000,000.
CHAIRMAN TORGERSON thinks that interest revenue would probably be
in the fiscal note from the department, when those become
available.
DC&RA staff responded that it would be roughly in the neighborhood
of $600,000.
CHAIRMAN TORGERSON noted that amount would only be for a yearly
basis, when we're referring to a six-month period. So he doesn't
think it will be that high. However, Senator Kelly is correct in
that there will be some impact somewhere.
There was a discussion on how accrual of interest would possibly
affect the amount of money available.
Number 264
SENATOR ZHAROFF asked about communities not included.
MR. COTTEN responded that Metlakatla participates in the revenue
sharing program as an unincorporated community, but they
participate in the municipal assistance program as a municipality.
That's why they're not included in the general spreadsheet.
Egegik, based on the date of incorporation, was not eligible for
the FY 96 revenue sharing program but was eligible for the FY 96
municipal assistance program.
It is noted that there is an attempt to take care of Metlakatla's
problem through other legislation.
MR. ROLFZEN stated that under SB 20, all of the municipal
assistance money will now have to be spent on priority public
services, whereas in the past, it could be spent by the
municipality for any public purpose for which they were legally
authorized to spend funds. This bill does not tinker with the
revenue sharing formula. It would take about 60% of the total
money and designate it for specific public services.
CHAIRMAN TORGERSON notes the existence of another spreadsheet
listing the hold-harmless portion, and how that is applied. The
chairman called Representative Long to testify.
Number 205
REPRESENTATIVE DON LONG, former mayor of Barrow and president of
the AML, stated he spent most of the last year working on this
subject. Currently, small communities are unincorporating because
there is no support from the state. Citizens of small communities
need support, just as do people of larger communities. He had no
specific statement to make relating to SB 20 at this time.
DONALD MOORE, Manager, Matanuska-Susitna Borough, stated he is
conveying support from the borough and Mayor Lacher for SB 20.
Right now, revenue sharing and municipal assistance is at about the
same level as it was in the late 1970's. The guessing game that
goes on from year to year is as much a hazard to us as the decline,
so we appreciate the work that's gone into the development of this
formula and this proposal.
CHAIRMAN TORGERSON, seeing that there was no further testimony,
stated that SB 20 would be held in order to receive further
comment.
SB 207 REVENUE BONDS: WATER & WASTE PROJECTS
Number 138
CHAIRMAN TORGERSON brought up SB 207 as the next order of business
before the Senate Community & Regional Affairs Committee. He
stated it is his intent today to concentrate on the cap level we
want imposed. There are several recommendations in members' bill
packets.
Number 114
SENATOR ZHAROFF asked which communities would actually be affected
by SB 207.
CHAIRMAN TORGERSON thinks that would depend on the language we put
in the bill now. Currently, he thinks everyone supports that every
municipality must have a revenue stream. Senator Hoffman has asked
the committee to expand this and look at housing authorities. If
we do get into housing authorities, the scope of this bill will be
changed to bring in things that aren't a municipality. There are
currently 162 municipalities in the State of Alaska.
KEITH KELTON, Department of Environmental Conservation, stated, in
answer to Senator Zharoff's question, that in members' bill packets
is a list of the communities that DEC has made loans to in the six-
year history of this program. They are primarily larger, urban
communities that have a dedicated revenue stream. This does not
preclude a smaller community with a revenue stream from entering in
to this program. Any incorporated community with a revenue stream
is eligible. He believes there have been 24 loans to date. One
third of which have gone to Anchorage; that third represents about
60% of the money that has been loaned. It is anticipated that some
of the smaller communities will participate in this program. But
it is fair to say that the program is predominately designed to aid
the larger communities.
Number 070
CHAIRMAN TORGERSON asked Mr. Kelton if he's reviewed the amendment
that Mr. Sharp sent to the committee defining "other qualified
entity" and changing the name from state agencies. It goes on to
say "regional housing authority". Do you support that amendment?
What would the impact of that amendment be?
MR. KELTON responded that he sees no problem with that amendment.
He really doesn't see an impact to the program with that amendment.
The amount to be loaned will depend upon the ability to repay the
loan. For a regional housing authority to qualify, it is his
understanding that this can only happen if they're tied in with a
municipal government, and the municipal government remains
responsible for repaying the loan. The government would remain the
responsible entity. He asked for verification of his analysis of
the amendment.
CHAIRMAN TORGERSON thinks Mr. Kelton's analysis is correct. The
chairman asked Mr. Sharp if he would like to make a statement.
Number 030
LEE SHARP, testifying from Anchorage, thinks that once there is an
agreement, the regional housing authority could exercise all of the
authority of the municipality with respect to that particular
facility. However, the state would still be in control of which
entity they're going to lend the money to.
TAPE 96-7, SIDE A
Number 001
MR. SHARP stated that the municipality is the entity that would
ultimately be responsible for repaying the loan.
Number 010
CHAIRMAN TORGERSON asked Mr. Sharp how he reads the agreement
between a municipality and a service area. Is that covered in the
interagency language? Or is the intent to include a service area?
MR. SHARP responded that there is no intent to include a service
area. He still thinks that ultimately, it is the borough that
would be the responsible agency. You could have a service area for
the purpose of establishing a sewer system. But it would still be
the borough that would be responsible for establishing fees to be
charged and ensuring repayment of the loan.
Number 040
CHAIRMAN TORGERSON asked if there could be a service area and a
mill rate levied instead of a fee. Also, if the municipality could
then dedicate that money as a revenue source.
MR. SHARP responded there would have to be a vote to do something
like that.
CHAIRMAN TORGERSON asked if that could be done on just the service
area level.
MR. SHARP responded that it could.
CHAIRMAN TORGERSON asked, would the creation of a service area,
with the intent of entering into this agreement, establish that?
He thinks it would. He asked if a municipality would have the
power to raise taxes for one service area, or if it would have to
be voted on by residents of the area.
MR. SHARP replied that unless it is a home-rule municipality, there
are some additional restrictions on the formation of service areas.
The borough assembly can create a service area, then once it's
approved by the voters in the service area, the assembly then has
the authority to raise taxes in that area. The assembly does need
the voters' approval if they're going to raise the sales tax just
in that area.
Number 109
CHAIRMAN TORGERSON stated he does not want municipalities to be
precluded from entering into service area agreements with areas.
The chairman stated that the amendment needs to cite federal
statute USC 1383. The chairman has no idea what that is.
MR. SHARP replied that is the Clean Water Act.
CHAIRMAN TORGERSON asked how many regional housing authorities
there are in the State of Alaska right now.
MR. KELTON thinks there are 12 or 13.
Number 155
SENATOR KELLY asked who Government Finance Associates, Inc. is.
MR. KELTON responded that they are the financial advisors to the
State Bond Committee in the Department of Revenue. That company
was used as bond counsel to develop SB 207.
Number 188
CHAIRMAN TORGERSON stated that the Municipality of Anchorage had
submitted some suggested amendments, but he thinks they want to
withdraw those amendments.
SENATOR KELLY asked Mr. Evans if the municipality still wants the
amendments adopted, or if they want them withdrawn.
BOB EVANS, Lobbyist, Municipality of Anchorage, thinks they are,
but he hasn't talked to them recently. There are a number of
committees to which the bill still will go, so he thinks there will
be opportunities to address that later.
SENATOR KELLY thinks maybe they just don't want to submit them in
the C&RA committee because of committee member opposition.
CHAIRMAN TORGERSON stated it is the committee's intent to work out
most of the problems before releasing SB 207 from committee.
Number 199
GEORGE KEENEY, City Planner and Public Works Director, City of
Cordova, testifying from Cordova, stated he supports SB 207. It
will give municipalities another option for funding these projects.
CHAIRMAN TORGERSON asked Mr. Keeney if he would like to see any
amendments to the bill, or if he is happy with it as it is.
MR. KEENEY responded he is happy with the way it is, except he
would like to know about the ceiling on the bonds.
CHAIRMAN TORGERSON replied that is currently not in the bill, but
it is something the committee is discussing. He stated that SB 207
will be held over for one more meeting, and he asked committee
members to think about what kind of cap they'd like to see. He is
hopeful that a couple of the other committee referrals will be
waived if the problems can be resolved in this committee.
SENATOR ZHAROFF asked if the cap wasn't simply determined by the
funds available.
CHAIRMAN TORGERSON stated there is no cap now. They could sell as
many revenue bonds as there is demand.
MR. KELTON added that it would depend on what the market would
bear.
SENATOR KELLY stated that one assumption is that it would be
stretched out quite a ways.
CHAIRMAN TORGERSON responded that's where we might start.
SENATOR ZHAROFF stated his concern with a cap would be that smaller
communities might be edged out of the running for funds.
CHAIRMAN TORGERSON replied that one suggested option would be to
put a $250,000,000 cap and sunset it, so it comes back before us.
There are members who think this program is circumventing the
appropriations process.
SENATOR ZHAROFF is concerned that some communities might not be
able to get involved if the cap has been reached.
CHAIRMAN TORGERSON thinks the division has criteria and a point
system in use.
SENATOR KELLY asked if they have had the ability to do this in the
past.
Number 255
MR. KELTON responded the way it's worked in the past is that DEC is
under some federal requirements for the administration of the
program. One of those is that we have to go out and solicit input
on an annual basis from those communities interested in the
program. We then rank those projects, put them out for a public
hearing, and develop an annual intended use plan. So it's unlikely
that there will be a need that we haven't anticipated. The only
problem he can foresee is if there is a rapid increase in demand
above the current level of demand, the cap might cause a problem.
If you set the cap on a gross amount, say it can't go over
$100,000,000 on an annual level, or put some kind of an upset limit
on an annual basis, if we get one large project--normally we could
fund $15,000,000 a year, with an upset provision on a single year
base of another $5,000,000 or something, he thinks they could
handle any of the concerns he can foresee happening in the
immediate future. So he does not think it's a significant problem.
SENATOR ZHAROFF asked if the committee could get something along
those lines drawn up.
CHAIRMAN TORGERSON asked Mr. Kelton if he could draw up something
like that.
MR. KELTON responded he would certainly give it a try.
SENATOR KELLY commented that if this were a grant program, there
would be no shortage of applicants, however, since it's a loan
program, DEC doesn't anticipate such a big rush of applicants.
MR. KELTON stated DEC has seen an increase. The first four years
of the program, it was averaging about $7,000,000 per year. The
last two years it's been 12-13 million. As the general fund
capital budget gets harder to produce, he anticipates an increase.
But he doesn't think it will be a dramatic amount. As the chairman
has pointed out, DEC would have the opportunity to come back to the
committee with problems. He doesn't see it as a problem that can't
be taken care of.
CHAIRMAN TORGERSON asked Senator Zharoff what exactly he wanted
drafted up.
Number 270
SENATOR ZHAROFF responded that if there is any type of a safety
measure that could be put in SB 207 allowing some flexibility, he
would like to see that.
CHAIRMAN TORGERSON asked if the federal 80/20 match for this
program was gone.
MR. KELTON responded that is a good question, and until they
reauthorize the Clean Water Act, they won't know for sure. DEC
expects the Act to be reauthorized, even though they think it will
be at a lower rate.
CHAIRMAN TORGERSON stated he would get together with Senator
Zharoff on the language and intent. He will reschedule SB 207 as
soon as possible.
SENATOR KELLY sees what Senator Zharoff is worried about: one of
the larger cities taking all the money.
CHAIRMAN TORGERSON shares that concern. In the past, DEC has
handled that through their ranking system.
SENATOR KELLY thinks that a lot of the communities getting the
80/20 money now won't be eligible for the loan money.
CHAIRMAN TORGERSON also thinks there would be different
requirements than the federal requirements.
MR. KELTON noted that the requirements become less, as the money
cycles through.
CHAIRMAN TORGERSON adjourned the Senate Community & Regional
Affairs Committee meeting at 3:32 p.m.
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