Legislature(1999 - 2000)

03/06/2000 01:37 PM Senate CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
    SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE                                                                               
                    March 6, 2000                                                                                               
                      1:37 p.m.                                                                                                 
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Senator Jerry Mackie, Vice Chair                                                                                                
Senator Jerry Ward                                                                                                              
Senator Randy Phillips                                                                                                          
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Senator Tim Kelly, Chair                                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
SENATE BILL NO. 227                                                                                                             
"An Act relating to the limitation of levy of municipal ad valorem                                                              
taxes in home rule and general law municipalities; and providing                                                                
for an effective date."                                                                                                         
                                                                                                                                
     -MOVED SB 227 OUT OF COMMITTEE                                                                                             
                                                                                                                                
SENATE BILL NO. 240                                                                                                             
"An Act relating to the establishment of and accounting for an                                                                  
administrative cost charge for the state's role in the community                                                                
development quota program and to the appropriation of receipts from                                                             
the charge; and providing for an effective date."                                                                               
                                                                                                                                
     -MOVED CSSB 240(CRA) OUT OF COMMITTEE                                                                                      
                                                                                                                                
SENATE BILL NO. 248                                                                                                             
"An Act relating to the financing authority, payment in lieu of tax                                                             
agreements, and tax exemption for assets and projects of the Alaska                                                             
Industrial Development and Export Authority; relating to renaming                                                               
and contingently repealing the rural development initiative fund                                                                
within the Department of Community and Economic Development, and                                                                
establishing the rural development initiative fund within the                                                                   
Alaska Industrial Development and Export Authority; and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
     -MOVED SB 248 OUT OF COMMITTEE                                                                                             
                                                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
                                                                                                                                
SB 227 - No previous Senate action.                                                                                             
                                                                                                                                
SB 240 - No previous Senate action.                                                                                             
                                                                                                                                
SB 248 - No previous Senate action.                                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
Mr. Dick Tremaine                                                                                                               
Central Bering Sea Fisherman's Association                                                                                      
16251 Chasewood Lane                                                                                                            
Anchorage, AK 99516                                                                                                             
POSITION STATEMENT: Supports SB 240.                                                                                            
                                                                                                                                
Mr. Gene Dusek                                                                                                                  
Director of Office of Management & Budget                                                                                       
Municipality of Anchorage                                                                                                       
632 W. 6th Ave.                                                                                                                 
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT: Supports SB 227.                                                                                            
                                                                                                                                
Mr. Harold R. Samuelson, Jr.                                                                                                    
Chief Executive Officer                                                                                                         
Aleutian/Pribilof Island Community Development Association                                                                      
P.O. Box 412                                                                                                                    
Dillingham, AK 99576                                                                                                            
POSITION STATEMENT: Commented on SB 240.                                                                                        
                                                                                                                                
Ms. Bonnie Williams                                                                                                             
Chair of Finance Committee                                                                                                      
Fairbanks/North Star Borough                                                                                                    
P.O. Box 82812                                                                                                                  
Fairbanks, AK 99708                                                                                                             
POSITION STATEMENT: Supports SB 227.                                                                                            
                                                                                                                                
Mr. Ted Smith                                                                                                                   
Mayor of City of Petersburg                                                                                                     
P.O. Box 841                                                                                                                    
Petersburg, AK 99833                                                                                                            
POSITION STATEMENT: Supports SB 227.                                                                                            
                                                                                                                                
Mr. Jeff Bush                                                                                                                   
Deputy Commissioner                                                                                                             
Department of Community & Economic Development                                                                                  
P.O. Box 110800                                                                                                                 
Juneau, AK 99811                                                                                                                
POSITION STATEMENT: Commented on SB 240.                                                                                        
                                                                                                                                
Senator Kim Elton                                                                                                               
Alaska State Capitol                                                                                                            
Juneau, AK 99801-1182                                                                                                           
POSITION STATEMENT: Sponsor of SB 227.                                                                                          
                                                                                                                                
Mr. Keith Laufer                                                                                                                
Alaska Industrial Development & Export Authority                                                                                
480 West Tudor Ave.                                                                                                             
Anchorage, AK 99502                                                                                                             
POSITION STATEMENT: Supports SB 248.                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 00-03, SIDE A                                                                                                              
                                                                                                                                
Number 001                                                                                                                      
                                                                                                                                
VICE-CHAIR JERRY MACKIE called the Senate Community & Regional                                                                  
Affairs Committee meeting to order at 1:37 p.m.  Present were                                                                   
Senators Mackie, Phillips, Ward, and Hoffman.  The first order of                                                               
business to come before the committee was SB 227.                                                                               
                                                                                                                                
                                                                                                                                
         SB 227-MUNICIPAL PROPERTY TAX LEVY LIMITATION                                                                          
                                                                                                                                
SENATOR KIM ELTON, sponsor of SB 227, stated if the initiative                                                                  
passes it will accomplish three things.  It will replace the                                                                    
current 30 mill or 3 percent limitation with a 10 mill or 1 percent                                                             
levy, it will require payments on bonded indebtedness to be                                                                     
included within the tax cap, and it will prohibit local property                                                                
assessments from rising more than 2 percent annually.                                                                           
                                                                                                                                
SB 227 allows local voters the ability to set a tax cap of higher                                                               
than 10 mills in a general election.  SB 227 prohibits people in                                                                
one municipality from setting the mill rate for another                                                                         
municipality.  If the initiative passes municipalities have the                                                                 
ability to lower the mill rate, but can't raise the mill rate above                                                             
10.  SB 227 also exempts school bond debt from the tax cap.                                                                     
                                                                                                                                
SENATOR PHILLIPS asked if SB 227 would change the intent of                                                                     
initiative.                                                                                                                     
                                                                                                                                
SENATOR ELTON stated no.  SB 227 loosens provisions of the                                                                      
initiative, and moves school bond debt out from under the tax cap.                                                              
The Alaska Municipal League agrees that people in one part of the                                                               
State should not govern the tax cap in individual communities in                                                                
other parts of the State.  Each community's voters should have the                                                              
option to determine mill rates and taxes for that community.                                                                    
Financial pressure will be added to municipalities if the                                                                       
initiative passes, and the public doesn't have the option to vote.                                                              
                                                                                                                                
                                                                                                                                
SENATOR ELTON gave examples of property values plummeting.  SB 227                                                              
will not change the initiative, it gives alternative options if the                                                             
initiative passes.  The Alaska Constitution states Alaska should                                                                
act within its powers to "provide for maximum local self government                                                             
with a minimum of local government units, and to prevent                                                                        
duplication of tax levying jurisdictions."  Without an opportunity                                                              
for local governments to set appropriate tax rates,  the initiative                                                             
will discourage consolidation of local government units and local                                                               
taxing authorities.                                                                                                             
                                                                                                                                
Number 174                                                                                                                      
                                                                                                                                
SENATOR PHILLIPS stated local governments should be educated on the                                                             
impacts of the initiative and SB 227.                                                                                           
                                                                                                                                
SENATOR ELTON agreed and stated people in unorganized boroughs                                                                  
should not be allowed to dictate what happens in other                                                                          
municipalities in the State.  The legislature should not focus on                                                               
tactics against the initiative but should create a safety net for                                                               
the people in municipalities.  That is what SB 227 represents.                                                                  
                                                                                                                                
SENATOR PHILLIPS stated SB 227 would be a mechanism to prepare for                                                              
the initiative.                                                                                                                 
                                                                                                                                
VICE-CHAIR MACKIE stated SB 227 gives people more reason to vote                                                                
for the initiative and fall back on SB 227, instead of trying to                                                                
fight the initiative.                                                                                                           
                                                                                                                                
SENATOR ELTON stated SB 227 won't make a difference in voter                                                                    
behavior.  People will vote for the initiative or not, but SB 227                                                               
will go into effect if the initiative passes.                                                                                   
                                                                                                                                
VICE-CHAIR MACKIE asked, if the initiative gets voted down whether                                                              
SB 227 will go into effect.                                                                                                     
                                                                                                                                
SENATOR ELTON stated it will not.  Some cities are contributing                                                                 
more than the 4 mill property tax for their local contribution to                                                               
schools.  A 10 mill tax limit with no safety net will pressure                                                                  
municipalities to lower the 4 mill local contribution to schools to                                                             
still provide for other services.                                                                                               
                                                                                                                                
SENATOR PHILLIPS stated SB 227 isn't a safety net, it represents a                                                              
transition.  He asked how the votes were broken down to represent                                                               
each region of Alaska.                                                                                                          
                                                                                                                                
SENATOR ELTON stated most opinions came from Southcentral Alaska.                                                               
                                                                                                                                
Number 333                                                                                                                      
                                                                                                                                
MS. BONNIE WILLIAMS, Chair of finance committee for Fairbanks/North                                                             
Star Borough, stated support for SB 227.  If the initiative passes                                                              
it will negatively affect Fairbanks' current year budget.  The                                                                  
schools, road service areas, and fire departments would suffer the                                                              
most if the initiative passes.                                                                                                  
                                                                                                                                
The Fairbanks North Star Borough has voted for a revenue cap which                                                              
prohibits the borough from spending above the current year revenue;                                                             
except for inflation, new construction, and new bonds that are                                                                  
voter approved.  Ms. Williams referred to California's tax                                                                      
initiative that went into effect in 1978.  From 1978 to 2000                                                                    
California's population has grown from 22 million to 31 million                                                                 
with no new schools being built to accommodate those children.                                                                  
                                                                                                                                
Number 420                                                                                                                      
                                                                                                                                
MR. TED SMITH, Mayor of City of Petersburg, stated support for SB
227.  SB 227 allows municipalities control over their taxation                                                                  
destiny.  Petersburg already has a 10 mill rate limit that was set                                                              
at the local level and can be changed by a vote of the people.                                                                  
                                                                                                                                
MR. GENE DUSEK, Director, Office of Management & Budget for the                                                                 
Municipality of Anchorage, stated support for SB 227.  Anchorage                                                                
mill rates for 2000 are estimated to be 17.91 mills.  The school                                                                
board is asking the assembly for a mill rate of 8.09 mills.  The                                                                
mill rate for city services differs from area to area, the average                                                              
mill rate is 9.82 mills.  The total debt, excluding debt services,                                                              
is 14.66 mills.  That will need to be cut to 10 mills if the                                                                    
initiative passes.  Mr. Dusek referred to charts given to the                                                                   
committee.                                                                                                                      
                                                                                                                                
SENATOR PHILLIPS moved SB 227 out of committee with individual                                                                  
recommendations.  Without objection, the motion carried.                                                                        
         SB 240-CHARGE FOR COMMUNITY DEVELOPMENT QUOTA                                                                          
                                                                                                                                
MR. JEFF BUSH, Deputy Commissioner, Department of Community &                                                                   
Economic Development, stated the Community Development Quota (CDQ)                                                              
program was developed in 1991 by the federal government.  CDQ                                                                   
allocates a percentage of the ground fish fisheries to Western                                                                  
Alaska and Bering Sea communities that are located within 50                                                                    
nautical miles of the coast.  The communities are organized into                                                                
six CDQ non-profit corporations.  The State has been granted                                                                    
authority to oversee the CDQ program.  The CDQ program generates                                                                
royalties that are granted to the communities, approximately $20-30                                                             
million annually.                                                                                                               
                                                                                                                                
The CDQ program has been funded with $250,000 annually of general                                                               
funds.  SB 240 proposes to stop using general funds and create a                                                                
fee structure to make the CDQ self sufficient.                                                                                  
                                                                                                                                
SENATOR PHILLIPS asked where the northern border lies for the CDQ                                                               
program.                                                                                                                        
                                                                                                                                
MR. BUSH replied at the northern end of Norton Sound.                                                                           
                                                                                                                                
SENATOR HOFFMAN stated he had a proposed amendment.  The amendment                                                              
will give new communities coming into the CDQ program a two year                                                                
grace period to develop and not pay taxes.                                                                                      
                                                                                                                                
TAPE 00-03, SIDE B                                                                                                              
                                                                                                                                
Number 585                                                                                                                      
                                                                                                                                
SENATOR HOFFMAN moved Amendment number 1.  Without objection,                                                                   
Amendment number 1 was adopted.                                                                                                 
                                                                                                                                
MR. DICK TREMAINE, Central Bering Sea Fisherman's                                                                               
Association(CBSFA), stated support for SB 240.  CBSFA is the                                                                    
smallest CDQ group in the State, it has the least amount of                                                                     
communities and revenue strength.  The State provides a service to                                                              
the group that is mandated by the federal government.                                                                           
                                                                                                                                
MR. HAROLD SAMUELSON, President of the Bristol Bay Economic                                                                     
Corporation, stated support for SB 240 without the amendment.                                                                   
Bristol Bay is just building its infra-structure and it has a                                                                   
multi-faceted program.                                                                                                          
                                                                                                                                
Number 520                                                                                                                      
                                                                                                                                
MR. LARRY COTTER, CEO of Aleutian/Pribilof Island Community                                                                     
Development Association (APICDA), stated support for SB 240.  He                                                                
commented that extending the borders beyond the Bering Sea is a                                                                 
complicated issue.                                                                                                              
                                                                                                                                
SENATOR HOFFMAN moved CSSB 240 (CRA) from committee with individual                                                             
recommendations.  Without objection, the motion carried.                                                                        
            SB 248-AIDEA: BONDS & RURAL DEVELOPMENT                                                                             
                                                                                                                                
MR. KEITH LAUFER, Alaska Industrial Development & Export Authority                                                              
(AIDEA), stated support for SB 248.  SB 248 extends AIDEA's bonding                                                             
authority and transfers the rural development initiative fund loan                                                              
program from the Department of Community & Economic Development to                                                              
AIDEA.  SB 248 also makes technical changes to tax provisions                                                                   
concerning AIDEA's projects.                                                                                                    
                                                                                                                                
AIDEA's general bonding authority is subject to a sunset that takes                                                             
place July 1, 2000.  The sunset would prevent AIDEA from issuing                                                                
general obligation bonds under $10 million for projects AIDEA owns,                                                             
and it will prevent AIDEA from issuing conduit revenue bonds.  The                                                              
sunset will have no effect on bonds over $10 million, those bonds                                                               
require specific legislative authorization.                                                                                     
                                                                                                                                
The rural loan program is a small business loan program for rural                                                               
Alaska, for communities with populations under 5000 people, and                                                                 
loans of $200,000 or less.  In 1993 and 1996, the legislature                                                                   
authorized AIDEA to purchase several loan portfolios from the                                                                   
State.  Transferring this program to AIDEA will eliminate the need                                                              
for the periodic recapitalization.  Mr. Laufer referred to changes                                                              
of provisions if SB 248 passed.                                                                                                 
                                                                                                                                
Number 436                                                                                                                      
                                                                                                                                
SENATOR PHILLIPS asked what the public policy was.                                                                              
                                                                                                                                
MR. LAUFER stated the loan program is an enterprise fund and there                                                              
will be no general fund impact.                                                                                                 
                                                                                                                                
VICE-CHAIR MACKIE asked if Mr. Laufer had heard of opposition on SB
248.                                                                                                                            
                                                                                                                                
MR. LAUFER stated no.                                                                                                           
                                                                                                                                
SENATOR HOFFMAN moved SB 248 from committee with individual                                                                     
recommendations.  Without objection, the motion carried.                                                                        
There being no further business to come before the committee VICE-                                                              
CHAIR MACKIE adjourned the meeting at 2:56 p.m.                                                                                 

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