Legislature(2001 - 2002)
03/19/2001 01:30 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
ALASKA STATE LEGISLATURE
SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE
March 19, 2001
1:30 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Alan Austerman
Senator Randy Phillips
Senator Georgianna Lincoln
Senator Pete Kelly
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
SENATE BILL NO. 1
"An Act relating to the base student allocation used in the formula
for state funding of public education; and providing for an
effective date."
MOVED SB 1 OUT OF COMMITTEE
SENATE BILL NO. 59
"An Act relating to awards of federal funds to municipalities for
road projects; and providing for an effective date."
MOVED CSSB 59 (CRA) OUT OF COMMITTEE
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 13(JUD)
"An Act relating to municipal service areas and providing for voter
approval of the formation, alteration, or abolishment of certain
service areas."
MOVED SCS CSSS HB 13 (CRA) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 24(EDT)
"An Act relating to use of borough revenues from a sales tax levied
upon room rentals for a tourism marketing campaign."
MOVED CSHB 24(EDT) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
SB 1 - No previous action recorded.
SB 59 - See Transportation minutes dated 2/20/01 and
3/13/01.
HB 13 - No previous action recorded.
HB 24 - No previous action recorded.
WITNESS REGISTER
Tom Anderson
Anchorage School Board
Anchorage, AK 99513
POSITION STATEMENT: Testified on SB 1
Ernie Hall
Education Funding Task Force member
State Board of Education
No address provided
POSITION STATEMENT: Testified on SB 1
Eddy Jeans
Finance Director
Department of Education &
Early Development
th
801 W 10 St.
Juneau, AK 99801-1894
POSITION STATEMENT: Testified on SB 1
Mary Jackson
Staff for Senator Torgerson
Alaska State Capitol Room 427
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SB 59
Tom Brigham
Director of Statewide Planning
Department of Transportation &
Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Testified on SB 59
Representative Con Bunde
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 13
Representative Jim Whitaker
Alaska State Capitol Room 41
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of HB 24
Tamara Cook, Director
Legislative Legal and Research Services
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Answered questions on HB 24
Debbie Tilsworth
975 Discovery Drive
Fairbanks, AK 99709
POSITION STATEMENT: Supports HB 24
Frank Rose
Chair of the Alaska Travel Industry Association Legislative
Affairs Committee
No address provided
Fairbanks, AK 99701
POSITION STATEMENT: Supports HB 24
Wanetta Ayers
Director of Community and Economic Development
Kenai Peninsula Borough
43335 K-Beach Road
Soldotna, AK 99669
POSITION STATEMENT: Supports HB 24
ACTION NARRATIVE
TAPE 01-10, SIDE A
Number 001
CHAIRMAN JOHN TORGERSON called the Senate Community & Regional
Affairs Committee meeting to order at 1:30 p.m. Present were
Senators Austerman, Phillips, Kelly and Chairman Torgerson.
The first order of business was SB 1.
SB 1-FOUNDATION FORMULA INCREASE
SENATOR WILKEN, prime sponsor, testified that this bill increases
the base student allocation for educational funding from $3,940 to
$4,085. The bill recognizes that, due to inflation, it costs more
to operate a school today than it did when the base was set in
1998. The $145.00 increase is composed of two components. The first
is a .9 percent increase that recognizes the inflation rate for
FY01 in Anchorage, AK. The second shows the 13.9 percent
inflationary loss of the per student dollar since FY88. He stated,
"SB 1 takes the 13.9 and divides it by five and suggests a five-
year plan to recoup the purchasing power of the student dollar that
has been lost to inflation since 1988. Multiply $3,940 by 2.78 and
you have SB 1."
SENATOR WILKEN commented that increasingly, parents drop their
children at school and expect to have an educated and well-mannered
child at the end of the day. This costs money and resources. As
performance standards become a reality, schools will be held more
accountable for student learning. Additional classes, remedial
opportunities and programs will make a difference in student
performance but they will also have an impact on the financial
resources of local schools.
SENATOR WILKEN maintained that Alaska's children have the right to
be taught by the very best teachers possible who are held to the
same performance standards as their students. It isn't easy to
recruit and retain quality teachers without adequate funding. This
is particularly problematic for schools that are remote and
isolated. Addressing the teacher shortage experienced in Alaska
means offering salaries and benefits that are competitive in the
professional workforce. K-12 education is a number one priority for
Alaska and should be recognized as such in the state budget.
SENATOR PHILLIPS asked for the total on the fiscal note for SB 1.
SENATOR WILKEN said that if it is added to the 2002 requirement for
the foundation formula it's approximately $30 million. It it's
added to the spending for the 2001 foundation formula it's
approximately $20 million.
SENATOR PHILLIPS said that inflation isn't the only thing that
affects the numbers. It's also based on a per capita or per student
enrollment and that's why there is $10 million less in the coming
fiscal year than the current fiscal year.
SENATOR WILKEN said the reason that $10.5 million less is required
this year has nothing to do with student enrollment. It has
everything to do with an $8 million increase in the amount of money
that organized Alaska is asked to pay for their education. This is
assessed value. There's also about $2.5 million more in Public Law
874 money coming from the federal government.
SENATOR PHILLIPS said there is no 10-year plan or vision for the
State of Alaska and although he doesn't mind doing "something like
this," he's disturbed by the lack of planning. It shows no proof of
leadership.
SENATOR WILKEN shares his frustration but contends that SB 1 offers
a five-year plan for funding K-12 education using inflation as the
guiding economic principle. This legislature cannot pass a 10-year
plan binding the next four legislatures; it needs to work at
melding all 60 legislators' plans on a biannual basis. It doesn't
make sense to hold up educational plans for Alaska's children
because we don't have a guiding master plan for the next 10 years.
"This a component of the ten year plan, a five year plan and a two
year plan. And the fact of the matter is, if we shirk our
responsibility to fund K-12 today we surely will have a difficulty
ten years from now with increased costs due to a non-educated
populace.
CHAIRMAN TORGERSON commented that the Senators were talking about
different things. He doesn't see SB 1 as a five-year plan because
it's continued funding for education.
SENATOR PHILLIPS said that passing SB 1 would obligate future
legislatures to fund it. He would like to develop a vision and then
include SB 1 as a part but without a plan he doesn't see how it
will fit. "It can't go by itself."
SENATOR WILKEN said the bill recognizes the increased costs of
education, teacher shortages and increased costs of accountability.
"This is a one year plan with four more years of suggestions on how
to buy back the power of the student dollar."
SENATOR AUSTERMAN said it's an interesting debate that goes to the
heart of the long-range plan issue. He asked where the $30 million
is supposed to come from.
SENATOR WILKEN said he is encouraging the legislature to fund the
things that are important to him and to the people he represents.
This is what the other 59 legislators are doing as well. If the
money must come from the savings account then so be it; it's a good
use for the savings account. When the savings are gone then another
plan will be devised without taking money away from the working
people of Alaska. It's obvious that the legislature is capable of
solving this type of problem when there is need. The current issue
is the priority placed on the education of Alaskan children, not
where the money comes from.
SENATOR AUSTERMAN agrees that this is a good program and it will
eventually force the development of a long-range plan and make
Alaskan citizens more responsible for education. The savings
account cushion should be used before Alaskans must pay.
Number 226
SENATOR KELLY reminded committee members that there are places in
the budget where there is no discussion about more or less funding.
The Health, Education, and Social Services (HESS) Budget has
formulas attached to it that increase every year. Costs are
increasing and the number of people signing up for services is also
going up. This is what drives most of the budget discussion and yet
it isn't ever questioned. It's a mistake to throw the contingency
of a long-range plan in front of high priority needs for two
reasons. "They're high priority needs. We're down here to do just a
couple of things and one of them is to educate our children."
Second, there is no such thing as a long-range plan. There is only
a plan that is in front of each legislature and, two years at a
time, legislators make decisions about what is before them at the
time. It's not possible to devise a long-range fiscal plan that
will solve future needs of the state. Decisions about need will be
based on the situation at hand.
SENATOR LINCOLN said she is pleased to hear discussion about a long
range fiscal plan as the Democratic Minority has been urging. She's
disturbed that the educational plan is being piecemealed when there
should be a package.
She asked what affect this legislation has on the supplemental
funding floor and what the Governor's task force has recommended.
She's in favor of increasing the base student allocation but she
wants to know what else is needed to educate Alaskan students and
get them through the qualifying exams.
CHAIRMAN TORGERSON cautioned that he would allow latitude in
responding to the question but that the Governor's Task Force
wasn't before the committee.
SENATOR WILKEN said SB 1 has no affect on the supplemental funding
floor. He had no comment on the task force.
TOM ANDERSON, Anchorage School Board member, testified in support
of the concept. He pointed out that inflation has increased about
30 percent in the last ten years while state funding has increased
just five percent. Property assessments have increased markedly,
placing an increased burden on property owners in organized
boroughs to pay for education. Assessments have increased over $8
million statewide. Ten years ago the state paid 73.7 percent of the
budget while local taxes paid 23.7 percent. This year the state
will pay 62.5 percent and local tax will pay 3.3 percent.
MR. ANDERSON said teacher and principal salaries are no longer
competitive causing positions to be open in the Anchorage system.
At the same time, there is a significant increase in the need for
special education and English as a second language (ESL) services.
These are both expensive programs to implement and maintain.
Finally, the Learning Opportunity Grant that was given has been
helpful but isn't sufficient to enable them to meet the mandates of
the Quality Schools Initiative. They are also struggling with
changing curriculum to add standards based instructional materials.
This involves increased time and teacher training. He noted the
board supports making education a priority in any plan.
ERNIE HALL, Educational Funding Task Force member and member of the
State Board of Education, testified in support of SB 1. Senator
Wilken covered most of the issues addressed by the funding task
force and SB 1 is a vehicle to fund what they have recommended.
CHAIRMAN TORGERSON asked what the recommendation was for this
year's increase in the foundation formula.
MR. HALL said it was approximately $34 million.
CHAIRMAN TORGERSON said that the fiscal note for the legislation is
$28.945 million and there is a list of what each district
anticipates it will receive.
He asked whether there were any questions for Mr. Jeans.
SENATOR LINCOLN wondered where that money will come from to pay for
the approximately $29 million over the next five years.
EDDY JEANS, Finance Manager for the Department of Education and
Early Development, said the department doesn't know where the money
will come from at this time. On the fiscal note, it's been costed
out as a general fund increase.
SENATOR LINCOLN asked how the department came up with $28.975
million, while the task force figure is $34 million.
MR. JEANS said the task force went through a laundry list of items
that districts haven't received sufficient funding for over the
last several years due to increased costs. When that list was
costed out, it came to $34.6 million.
[Tape malfunction.]
SENATOR AUSTERMAN moved SB 1 and fiscal note from committee with
individual recommendations.
CHAIRMAN TORGERSON said the bill will be heard in the Health
Education and Social Services (HESS) committee but it is primarily
a finance bill. He asked whether there were objections.
SENATOR PHILLIPS objected because there is no vision or long term
plan in place and he feels that is necessary before any large
appropriations are made. He believes policy could be set this year
to be followed by future legislatures.
CHAIRMAN TORGERSON said planning is necessary but educational
funding shouldn't be held up until a long-range plan is
implemented. He supports moving the bill.
SENATOR LINCOLN said she, too, is concerned about the lack of long
range plans but education is a top priority for the state and those
needs must be addressed regardless. It is her hope that the Senate
HESS Committee will delve into the issue further.
SENATOR KELLY asked when the minority was going to put out its
plan.
SENATOR LINCOLN said it has been discussed in open caucus every
year.
CHAIRMAN TORGERSON said there was objection to moving the bill and
asked for a roll call. Senators Lincoln, Austerman, Kelly and
Chairman Torgerson voted yea and Senator Phillips voted nay. The
motion to move the bill passed four to one.
SB 59-FEDERAL FUNDS TO MUNICIPALITIES FOR ROADS
MARY JACKSON, staff to Chairman Torgerson, introduced the bill for
Chairman Torgerson, the prime sponsor.
MS. JACKSON told members that SB 59 establishes a new Municipal
Road Projects Program (MRPP) that directly awards up to $20 million
in federal funds to municipalities for re-construction or
construction projects that are eligible for federal funding.
The Department of Transportation and Public Facilities is
responsible for developing a project application that sets out all
information that will be requested by the department. The
municipality is required to provide the federal match and the
project must qualify for federal funding. The municipality must
comply with all federal requirements for receipt and expenditures
of the funds.
Municipal road projects are prioritized and higher priority is
given to reconstruction projects where the municipality agrees to
accept maintenance responsibility once the project is completed.
The state's road maintenance costs will decrease when roads are
transferred to a municipality.
SENATOR PHILLIPS asked whether Anchorage supports the legislation.
MS. JACKSON said there isn't anything official from the
Municipality of Anchorage.
SENATOR AUSTERMAN asked if the $20 million is per municipality or
total.
MS. JACKSON said it was the total amount awarded statewide.
SENATOR AUSTERMAN thought it should be clarified because the
language leaves a question in his mind.
CHAIRMAN TORGERSON pointed out that ranking or prioritization is
addressed on page 2.
TOM BRIGHAM, Director of Statewide Planning for the Department of
Transportation and Public Facilities, responded to Senator
Austerman's question by saying the department interprets the
language to mean there is $20 million allocated statewide. That
could be one large project or several smaller ones.
CHAIRMAN TORGERSON pointed out that adding the word "statewide"
wouldn't preclude all the money going to one district.
SENATOR PHILLIPS asked how the priorities would be set to determine
where the $20 million goes.
MR. BRIGHAM replied that this would constitute a piece of the
community transportation program.
SENATOR PHILLIPS asked if it would be like Alaska Metropolitan Area
Transportation Plans (AMATS).
MR. BRIGHAM said not exactly, this would be a piece of the program
that goes to fund local community projects. They would develop
selection criteria to prioritize community projects where
communities would take ownership after the project is finished.
SENATOR PHILLIPS asked what would happen if the project cost was
$20 million.
MR. BRIGHAM said there are a number of prioritization factors such
as health and safety and quality of life. If the intent of the
sponsor and legislature was to spread the amount over a number of
small projects then the department would develop criteria to give
points to small projects.
CHAIRMAN TORGERSON said that although the probability is low, all
the money could go to one project so perhaps it would be beneficial
to put a cap on any one project.
SENATOR AUSTERMAN was interested in assuring that all the money
would not go to just one project as it did with the Whittier
Tunnel.
CHAIRMAN TORGERSON suggested inserting "statewide" on page 1, line
8 after the word "awarded" as amendment #1.
SENATOR AUSTERMAN moved amendment #1.
SENATOR KELLY objected for the purpose of discussion asking whether
they'd limited it enough.
CHAIRMAN TORGERSON said he wasn't sure they had.
SENATOR KELLY said there could still be three large projects. He
then removed his objection.
CHAIRMAN TORGERSON agreed.
SENATOR LINCOLN thought it was still confusing. She asked whether
this meant that we couldn't accept any more that $20 million from
the federal government.
CHAIRMAN TORGERSON said that of the total given by the federal
government, $20 million would be earmarked for these projects.
SENATOR LINCOLN asked why the limit was $20 million.
CHAIRMAN TORGERSON said he'd be happy with a larger number but
wasn't sure "how you'd get from here to there."
SENATOR LINCOLN pointed out that on page 2, line 2 it says the
municipality must agree to match federal funds if required by
federal law.
CHAIRMAN TORGERSON said this isn't a give away program. He asked
Mr. Brigham if there is an average cost range for community
transportation programs (CTP).
MR. BRIGHAM estimated they run between two and three million
dollars.
CHAIRMAN TORGERSON asked whether a $3 million cap should be placed
on individual projects.
MR. BRIGHAM responded that it would depend on the objectives but
that a three-mill cap on individual projects would spread the money
around. With the match requirement and the fact that large projects
require more complex engineering, larger communities will be the
first to apply for these projects because they have the money and
the capability. Anchorage could easily use the entire $20 million
in one year. If the intent is to make the funds available to a
number of communities across the state then a cap is reasonable. A
cap of three to four million dollars would catch about 75 percent
of the projects in the state.
SENATOR PHILLIPS suggested inserting "The maximum amount for any
single municipality shall not exceed $3 million." on page 1, line
8, after "$20,000,000." as amendment #2.
CHAIRMAN TORGERSON said amendment #2 would be held until committee
members had a written copy to examine.
MR. BRIGHAM wanted to say that the following concerns aren't
philosophical; they have had a number of prior conversations with
the Chairman and other Senators around the basic concept. They have
no problem with local governments taking additional responsibility
for the design and delivery of local projects. They currently have
a number of small local projects and they have been prioritizing
spending federal funds on local streets.
He explained there's a great deal of difference between the
administration of a federal and a state project. A local community
can take state money and design and implement their project in the
best way they are able. DOT oversight on this type of project is
virtually nonexistent. Federal projects differ greatly. First, the
Code of Federal Regulations must be followed on any federal
project. Although small communities are frequently able to design
and implement their projects, adhering to the federal environmental
and right of way requirements is more that many small communities
can do. DOT consequently spends much time helping these communities
understand and comply with the regulations. Therefore there is
project management time spent at both the local and the state
level. The state is ultimately held responsible for community
compliance with the federal regulations.
Number 548
CHAIRMAN TORGERSON said they'd had this discussion before and he's
waiting for the department to bring him written suggestions to
draft an amendment.
SENATOR LINCOLN asked why the oversight expenses aren't included as
part of the fiscal note.
MR. BRIGHAM said it's impossible to quantify exactly because it's
not an out of pocket cost. It's using more money for administration
and less for construction.
SENATOR LINCOLN said it is difficult if a figure for additional
project management isn't quantified. She suggested following up on
Chairman Torgerson's request for language for an amendment.
MR. BRIGHAM said that if $15-20 million in funding is moved from
state administration to locally administrated projects, then that
reduces some of the state administrative burden. However, there is
still a great deal of state responsibility and therefore additional
cost for those projects that get into trouble and need state
administered oversight. The savings probably cancels the additional
cost.
SENATOR AUSTERMAN observed that it would be difficult to determine
administrative costs because the size of the community receiving
the project monies might influence whether there is additional
administrative cost or not. Larger communities have more personnel
and resources and would be less likely to need more state
oversight.
MR. BRIGHAM said that under perfect conditions, one project manager
could easily handle a years worth of projects but when project
problems occur effort multiplies.
SENATOR LINCOLN asked what impacts, if any, this bill would have on
small communities.
MR. BRIGHAM said that medium to large communities generally have
the capability to manage federal projects so it would be more
difficult for small communities to compete.
SENATOR TORGERSON said this is so unless they hire an engineering
firm like the large communities do. He asked whether Anchorage has
experts on the payroll that can do large federal highway projects.
MR. BRIGHAM said he believes they're able to do that in house.
CHAIRMAN TORGERSON pointed out that small communities do lots of
projects with federal money without in house expertise. In fact
they're not expected to have the expertise, they hire an
engineering firm for that.
MR. BRIGHAM agreed.
SENATOR AUSTERMAN asked if DOT envisions the funds going through
the borough or directly to the community.
MR. BRIGHAM said the money certainly could go through the borough.
They usually have the road powers and would be the recipient and
responsible party. This makes particular sense for small
communities and villages.
CHAIRMAN TORGERSON asked if there were any objections to amendment
#1. (Inserting "statewide" on page 1, line 8 after the word
"awarded")
SENATOR KELLY removed his objection. There were no other objections
to amendment #1.
SENATOR PHILLIPS moved amendment #2. There were no objections.
SENATOR AUSTERMAN asked whether the Chair knew that municipalities
paid up front then received federal reimbursement.
CHAIRMAN TORGERSON said he did know that was the process. Payments
are incremental on larger projects but he wasn't sure about small
projects.
SENATOR PHILLIPS moved CSSB 59 (STA) and fiscal note from committee
with individual recommendations. There were no objections.
HB 13-SERVICE AREAS:VOTER APPROVAL/TAX ZONES
CHAIRMAN TORGERSON said that committee members are familiar with SB
75, which is basically the same as HB 13. He asked Representative
Bunde to outline the differences.
REPRESENTATIVE CON BUNDE, prime sponsor, said HB 13 is about
smaller government, local control and privatization. The difference
between HB 13 and SB 75 is that parks and recreation are included
in SB 75.
CHAIRMAN TORGERSON said he has a committee substitute (CS) to
include parks and recreation service areas.
REPRESENTATIVE BUNDE continued and said that HB 13 and SB 75 both
deal with local control. Dissention arises in how you define local
control, whether it is the voter or a governmental entity. The
Eagle River Community Council, The Anchorage Municipal Assembly and
individuals from some 200 road service areas support the bill. The
legislation settles the debate about who is entitled to vote during
the creation, alteration or abolishment of a service area.
Number 411
SENATOR PHILLIPS said he has two concerns. First, is the lack of
"parks and recreation". Then on page 2, lines 21 & 22 he said he
would like to change "six percent" to "three percent" at the
request of the Chugiak fire department.
REPRESENTATIVE BUNDE said the six percent figure was selected
because fire service areas with few homes would require elections
much too frequently if the threshold is three percent. Other fire
departments in the state have agreed on the six percent figure.
CHAIRMAN TORGERSON didn't see justification for the smaller number.
He called for a brief at ease.
CHAIRMAN TORGERSON called the meeting back to order. He said the CS
before the committee adds parks and recreation to the bill on lines
10, 16 and 8.
SENATOR PHILLIPS moved committee substitute 22-LSO164\L, Cook
3/17/01 as the working document. There was no objection.
SENATOR PHILLIPS moved deleting "six" and adding the word "three"
on page 2, line 22.
CHAIRMAN TORGERSON noted that there was objection.
REPRESENTATIVE BUNDE said that other volunteer fire departments in
the state have agreed on the six percent figure after much
compromise. He asked that the word "six" remain unchanged.
CHAIRMAN TORGERSON said he wasn't going to support the amendment
that day but if good reasons were forthcoming, there was
opportunity for a floor amendment.
He called for a roll call vote. Senators Lincoln, Austerman and
Chairman Torgerson voted nay and Senator Phillips voted yea. The
amendment failed three to one.
SENATOR PHILLIPS moved SCS CSSSHB 13(CRA) and zero fiscal note from
committee with individual recommendations.
SENATOR LINCOLN objected to say that there was question about the
constitutionality of SB 75 and there were two conflicting opinions
given. This could be the case with HB 13 as well. She then withdrew
her objection.
CHAIRMAN TORGERSON said those concerns have been heard previously.
He isn't sure he shares the concern.
CHAIRMAN TORGERSON asked for objections and there were none.
The bill moved from committee.
Number 437
HB 24-BOROUGH REVENUES FOR TOURISM MARKETING
REPRESENTATIVE JIM WHITAKER, prime sponsor, testified that this is
a simple bill that allows a local option with regard to use of
borough revenues for an ongoing tourism marketing effort. He noted
that Tam Cook was present to answer questions.
SENATOR PHILLIPS said he's not opposed to the concept but he wants
to know how it becomes a local option. It says that the money is
collected, put into a general pot and then it's distributed on an
area wide basis. He doesn't believe the wording is specific enough
to ensure that it is local option and asked for interpretation from
Tam Cook.
TAMARA COOK, Director of Legislative Legal Services, said that
existing statute is a simple statement that if a borough collects
revenue on an area wide basis then it must use that money for an
area wide function. If it collects money on a non-area wide basis,
which is the territory within the borough that is outside of cities
within the borough, then it must use it for a non-area wide
function. The bill adds a subsection that says the principle above
doesn't apply in a very narrow case. This means that if the revenue
source at issue is a sales tax upon room rentals that is for a
tourism marketing campaign, then whether the money was raised on an
area wide basis or non-area wide bases is not an issue.
Furthermore, whether the tourism marketing campaign is performed on
an area wide or non-area wide basis is not an issue because time
because tourism marketing campaigns don't need to track the origin
of the revenue. It is assumed that tourism marketing is so general
to the region that identifying it as area wide or non-area wide
function doesn't make sense. It benefits the people of the area
that tourists are attracted to whether they visit the city or are
out in the country.
CHAIRMAN TORGERSON said his understanding of the vote is that it
was area wide and the city of Fairbanks was exempted.
REPRESENTATIVE WHITAKER said he's aware of no vote specifically
related to the legislation.
CHAIRMAN TORGERSON said it wasn't this one in particular; it
occured when they put the bed tax on originally. It was an area
wide vote.
REPRESENTATIVE WHITAKER said he thinks that's probably correct.
CHAIRMAN TORGERSON wondered why there is need for a bill if there
was already an area wide vote.
REPRESENTATIVE WHITAKER said he asked the same question and the
answer from Tam Cook was Title 29 requires a bill.
MS. COOK added, "Assuming that they wish to use it for a non-area
wide function."
CHAIRMAN TORGERSON said they're not making that determination by
calling tourism marketing a non-area wide function.
MS. COOK said, "In the case of Fairbanks, it may be because I think
economic development is a non-area wide function for that borough.
If you take a look at what the powers are of second-class boroughs
you'll see that second-class boroughs can perform economic
development. It's a general power without having to acquire the
power from a city or have a vote on it. It's a granted general
power, but only to exercise on a non-area wide basis."
CHAIRMAN TORGERSON said unless you have an area wide vote.
MS. COOK said, "No, because they would have to have the power
transferred to them to become an area wide power for the borough to
acquire it. They'd have to acquire that power from the cities, all
the cities in the borough."
CHAIRMAN TORGERSON said he understood.
SENATOR PHILLIPS said that basically, the discussion was about
second-class boroughs, not home rule.
MS. COOK said it could possibly apply to a home rule.
SENATOR PHILLIPS said to use Anchorage as an example.
MS. COOK said no, Anchorage is unified; it has no cities. It can't
apply to a unified municipality because there are no cities.
There's no distinction between area wide and non-area wide in a
borough with no cities. There are home rule boroughs that have
cities in them that aren't unified. If those boroughs happen to
have a non-area wide source of revenue but are trying to exercise
an area wide tourism marketing campaign, they would be faced with
the same situation. When you're talking about home rule, what a
borough does area wide versus non-area wide becomes a matter of
their individual charter and wouldn't be reflected in statute.
Therefore, it is theoretically possible to have a home rule borough
that has an area wide tourism marketing power but was collecting
revenue on a non-area wide basis. In that case, this bill would
affect such a borough and allow them to spend that money.
SENATOR PHILLIPS said that with the exception of the unified
boroughs, this bill affects the organized areas of the state.
MS. COOK said, hypothetically it could. "Whether or not a borough
exercises its power on an area wide versus a non-area wide basis is
very specific to that borough. It has to do, if it's general law,
with whether the general law has granted them an area wide power or
whether they have chosen to acquire it or whether they have gotten
it when they filed their original petition for incorporation, they
must list the powers they are going to exercise. So each of these
boroughs, regardless of classification, might have variations in
the relationship between the boroughs and the cities."
SENATOR PHILLIPS asked whether it would still require a vote in
Representative Whitaker's area if the bill is passed and local
option is allowed or whether it just happens automatically.
MS. COOK said it would happen automatically, but a vote is required
in order to get a sales tax imposed originally.
SENATOR PHILLIPS said they've already done that.
MS. COOK said they've done that and apparently they have an area
wide sales tax in that particular borough. This bill will say if
you have an area wide sales tax and it is on room rentals, or that
portion on room rentals, that revenue could be used on a non-area
wide basis for tourism marketing.
REPRESENTATIVE WHITAKER said the key word is could, it's still at
the discretion of the local governing body.
SENATOR PHILLIPS said that's why he's referring to an area wide
vote or through the assembly or city council. Somebody must make
the determination.
MS. COOK said it would be up to the governing body; there is a
prohibition in subsection (a) and this removes the prohibition and
leaves the option open as to whether they chose to act or not.
SENATOR PHILLIPS said that, upon passage, this would be another
decision made at the local level.
CHAIRMAN TORGERSON commented that they would have to adopt the
power by ordinance.
SENATOR PHILLIPS agreed.
CHAIRMAN TORGERSON asked for assurance that this wouldn't give
differential rates between a general law sales tax and a bed tax.
"If they happen to put on a borough wide sales tax of four percent
then they must raise or lower the bed tax to that same figure."
MS. COOK said it doesn't get into any issues of whether a sales tax
rate has to be equal. [Tape indiscernible]
DEBBIE TILSWORTH, President of the Alaska Travel Industry
Association in Fairbanks, testified that the statewide and local
visitor industry supports HB 24. Currently the mayor and the
borough are formulating the budget for FY02. It is important that
destination-marketing funds be built into the budget and passage of
this legislation will allow that.
Number 558
FRANK ROSE, Chair of the Alaska Travel Industry Association
Legislative Affairs Committee, testified that, from their
perspective, the funds for destination marketing should be
available at the option of the local community. One of the issues
in Fairbanks is that there has been considerable migration from
city hotels to borough hotels. This has lowered the bed tax revenue
in the city and increased the revenue available in the borough.
Under current Title 29 provisions, they can't use that money for
destination marketing. There are other communities that could be
similarly affected and this is why they urge passage of the bill.
SENATOR PHILLIPS asked Mr. Rose whether there is any known
opposition to the bill in the community.
MR. ROSE said none that he's aware of but there may be some
assembly members who will wonder what to do. However, since there
is local option, "they're in the drivers seat."
WANETTA AYERS, Director of Community and Economic Development for
the Kenai Peninsula Borough, testified in favor of HB 24. They
currently fund tourism marketing through PILT funds via a contract
with the Kenai Peninsula Tourism Marketing Council, which is a
regional destination marketing organization. The Kenai Peninsula
Borough is in favor of forming options to increase funding for
destination marketing. HB 24 will provide borough governments with
greater options to fund economic development through destination
marketing.
CHAIRMAN TORGERSON commented that it doesn't affect his borough
much since there is no borough wide bed tax.
MS. AYERS said that it might in the future.
SENATOR PHILLIPS moved HB 24 with zero fiscal note from committee
with individual recommendations.
CHAIRMAN TORGERSON adjourned the meeting at 3:15 p.m.
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