03/10/2006 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB291 | |
| SB246 | |
| SB247 | |
| SB193 | |
| SB248 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 193 | TELECONFERENCED | |
| += | SB 291 | TELECONFERENCED | |
| += | SB 247 | TELECONFERENCED | |
| += | SB 246 | TELECONFERENCED | |
| += | SB 248 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
March 10, 2006
1:35 p.m.
MEMBERS PRESENT
Senator Bert Stedman, Chair
Senator Gary Stevens, Vice Chair
Senator Thomas Wagoner
Senator Johnny Ellis via teleconference
Senator Albert Kookesh
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 193
"An Act relating to an optional deferral of municipal property
taxes on certain primary residences owned and occupied by
individuals with incomes at or below federal poverty guidelines
for the state."
MOVED CSSB 193(CRA) OUT OF COMMITTEE
SENATE BILL NO. 291
"An Act relating to the municipal harbor facility grant program;
and providing for an effective date."
MOVED CSSB 291(CRA) OUT OF COMMITTEE
SENATE BILL NO. 247
"An Act relating to the revenue sharing program; and providing
for an effective date."
MOVED CSSB 247(CRA) OUT OF COMMITTEE
SENATE BILL NO. 246
"An Act making a special appropriation from the Alaska capital
income fund to the revenue sharing fund; and providing for an
effective date."
MOVED CSSB 246(CRA) OUT OF COMMITTEE
SENATE BILL NO. 248
"An Act relating to administrative boroughs; relating to
municipal school districts; relating to standards for
incorporation of boroughs and unified municipalities;
eliminating obsolete provisions relating to a third class
borough and making technical changes to statutes relating to
regional educational attendance areas; and relating to new
borough grants for certain newly incorporated boroughs and
unified municipalities."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 291
SHORT TITLE: MUNICIPAL HARBOR FACILITY GRANTS
SPONSOR(s): SENATOR(s) STEDMAN
02/14/06 (S) READ THE FIRST TIME - REFERRALS
02/14/06 (S) CRA, FIN
03/06/06 (S) CRA AT 1:30 PM BELTZ 211
03/06/06 (S) Heard & Held
03/06/06 (S) MINUTE(CRA)
03/10/06 (S) CRA AT 1:30 PM BELTZ 211
BILL: SB 247
SHORT TITLE: REVENUE SHARING PROGRAM
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS BY REQUEST
01/23/06 (S) READ THE FIRST TIME - REFERRALS
01/23/06 (S) CRA, FIN
02/22/06 (S) CRA AT 1:30 PM BELTZ 211
02/22/06 (S) <Bill Hearing Postponed>
03/06/06 (S) CRA AT 1:30 PM BELTZ 211
03/06/06 (S) Heard & Held
03/06/06 (S) MINUTE(CRA)
03/10/06 (S) CRA AT 1:30 PM BELTZ 211
BILL: SB 246
SHORT TITLE: APPROP TO REVENUE SHARING FUND
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS BY REQUEST
01/23/06 (S) READ THE FIRST TIME - REFERRALS
01/23/06 (S) CRA, FIN
02/22/06 (S) CRA AT 1:30 PM BELTZ 211
02/22/06 (S) <Bill Hearing Postponed>
03/06/06 (S) CRA AT 1:30 PM BELTZ 211
03/06/06 (S) Heard & Held
03/06/06 (S) MINUTE(CRA)
03/10/06 (S) CRA AT 1:30 PM BELTZ 211
BILL: SB 193
SHORT TITLE: DEFERRAL OF MUNICIPAL PROPERTY TAXES
SPONSOR(s): SENATOR(s) BUNDE
05/04/05 (S) READ THE FIRST TIME - REFERRALS
05/04/05 (S) CRA, FIN
01/30/06 (S) CRA AT 1:30 PM BELTZ 211
01/30/06 (S) -- Rescheduled to 02/08/06 --
02/08/06 (S) CRA AT 1:30 PM BELTZ 211
02/08/06 (S) Heard & Held
02/08/06 (S) MINUTE(CRA)
02/15/06 (S) CRA AT 1:30 PM BELTZ 211
02/15/06 (S) Scheduled But Not Heard
02/22/06 (S) CRA AT 1:30 PM BELTZ 211
02/22/06 (S) Heard & Held
02/22/06 (S) MINUTE(CRA)
03/06/06 (S) CRA AT 1:30 PM BELTZ 211
03/06/06 (S) Heard & Held
03/06/06 (S) MINUTE(CRA)
03/10/06 (S) CRA AT 1:30 PM BELTZ 211
BILL: SB 248
SHORT TITLE: ADMINISTRATIVE BOROUGHS/BOROUGH GRANTS/
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS BY REQUEST OF ADVISORY
COMM ON LOCAL GOVT
01/23/06 (S) READ THE FIRST TIME - REFERRALS
01/23/06 (S) CRA, FIN
02/15/06 (S) CRA AT 1:30 PM BELTZ 211
02/15/06 (S) Scheduled But Not Heard
03/08/06 (S) CRA AT 1:30 PM BELTZ 211
03/10/06 (S) CRA AT 1:30 PM BELTZ 211
WITNESS REGISTER
KEVIN RITCHIE, Executive Director
Alaska Municipal League
217 Second Street
Juneau, Alaska 99801
POSITION STATEMENT: Supported the concept embodied in SB 246
and SB 247; testified on version F CS for SB 193 and said that
AML policy is to oppose anything that would take revenue away
from communities; and commented on SB 248
MELANIE MILLHORN, Director
Division of Retirement and Benefits
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Testified on SB 246 and SB 247
VALERIE McCANDLESS, Mayor
City of Wrangell
P.O. Box 531
Wrangell, AK 99929
POSITION STATEMENT: Supported the idea embodied in SB 246 and
SB 247
DEBBIE KENUKTOOK, Mayor
City of Koyuk
P.O. Box 53029
Koyuk, AK 99753
POSITION STATEMENT: Testified on SB 246 and SB 247 and
supported revenue sharing
SHANE HORAN, Assessor
Kenai Peninsula Borough
144 North Binkley Street
Soldotna, AK 99669
POSITION STATEMENT: Opposed version F CS for SB 193
CLYDE BAXLEY
Anchorage, AK
POSITION STATEMENT: Opposed version F CS for SB 193
AL SUNQUIST
Anchorage, AK
POSITION STATEMENT: Opposed version F CS for SB 193
ART GRISWOLD
Delta Junction, AK
POSITION STATEMENT: Opposed version F CS for SB 193
MARTY McGEE, Assessor
Municipality of Anchorage
4501 South Bragaw
Anchorage, Alaska 99508
POSITION STATEMENT: Provided facts related to version F CS for
SB 193
STEVE VAN SANT, State Assessor
Division of Community Advocacy, Department of Commerce,
Department of Commerce, Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Made clarifications related to version F CS
for SB 193
MERYL THOMPSON
Wasilla, AK
POSITION STATEMENT: Opposed version F CS for SB 193
MARIE DARLIN
Capital City Task Force for AARP
Juneau, AK 99801
POSITION STATEMENT: Opposed version F CS for SB 193
MIKE BLACK, Director
Division of Community Advocacy
Department of Commerce, Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Supported the concept of SB 248
ALAN LEMASTER
Gakona, AK
POSITION STATEMENT: Testified on SB 248
JOHN HOZEY, Representative
Alaska Municipal League Task Force on Borough Formation
Valdez, AK 99686
POSITION STATEMENT: Suggested amendment to SB 248
DAVE TRANTHAM, Council Member
City of Bethel
P.O. Box 1388
Bethel, AK 99559
POSITION STATEMENT: Reported little support for SB 248 in his
area
ACTION NARRATIVE
CHAIR BERT STEDMAN called the Senate Community and Regional
Affairs Standing Committee meeting to order at 1:35:32 PM.
Present were Senators Gary Stevens, Thomas Wagoner, Albert
Kookesh, and Chair Bert Stedman. Senator Johnny Ellis
participated via teleconference.
SB 291-MUNICIPAL HARBOR FACILITY GRANTS
CHAIR BERT STEDMAN announced SB 291, version Y, to be up for
consideration.
1:36:54 PM
He recapped the history of harbor transfers from the state to
municipalities. Since the transfers began ten years ago, there's
been an ongoing debate regarding the condition under which the
harbors were transferred and the amount the state paid the
municipalities to assume ownership and operation of those
harbors.
To address the issue legislators met with municipal harbor
administrators and as a result the Alaska Association of
Harbormasters and Port Administrators brought forward a proposal
for a 50/50 matching grant program for harbor upgrades and
renovations. That would allow municipalities to use the 50
percent state match and other appropriate funds with the
provision that other state grant money could not be used.
SB 291 would establish the municipal harbor facility grant fund
to which the Legislature would make an annual appropriation from
the watercraft fuel tax account and from the state portion of
the fisheries business tax. Both sources come from the marine
industry so harbor users would generate the revenue for the
program. The bill caps the funds that can be used per community
per year at $5 million so that a large community couldn't take
all the available funds in any given year. Communities could
apply for the capital match for any particular harbor just once.
The expectation is that communities would establish, maintain,
and run an enterprise fund into perpetuity.
As currently designed the program would run for between 8 and 10
years and at the end of that time the harbors around the state
should be up to a fairly good standard.
CHAIR STEDMAN announced that public testimony had previously
been taken on SB 291 and he would like a motion to move it from
committee.
1:41:15 PM
SENATOR GARY STEVENS motioned to report CSSB 291(CRA), version
Y, with attached fiscal note(s) and individual recommendations.
There being no objection, it was so ordered.
SB 246-APPROP TO REVENUE SHARING FUND
1:42:04 PM
SB 247-REVENUE SHARING PROGRAM
1:42:49 PM
CHAIR BERT STEDMAN announced SB 246 and SB 247 to be up for
consideration. He noted that public testimony was taken at the
previous hearing and that this day the committee would consider
committee substitutes (CS) for each bill.
Version Y CS for SB 247 establishes the municipal public
employees' retirement system unfunded liability relief account.
Version G CS for SB 246 appropriates $29,300,000 from the
general fund to the relief account to make up the difference
between what employers will pay in FY07 and the actuarial
calculated rate.
At-ease from 1:44:06 PM to 1:45:16 PM.
CHAIR STEDMAN asked for a motion to adopt version G.
SENATOR GARY STEVENS moved version G CS for SB 246.
CHAIR STEDMAN objected for discussion purposes. He explained
that the Alaska Retirement Management Board ("ARM Board") was
created last session to review the issue of the roughly $6
billion unfunded liability for PERS and to present a report to
the Legislature this session. It has asked for additional time
to make recommendations regarding long-term solutions.
Employers are required to adhere to a payment schedule to pay
off the liability that ticks on as a solution is sought. Because
the employers' contribution rate isn't at the rate that the
actuaries calculate it ought to be to pay off the liability, a
special appropriation is to be established to fund the
difference between where municipalities are on their funding
schedule and where the actuary requires them to be. The goal is
to stop the growth of the unfunded liability until such time as
the ARM Board can submit its report and some long-term action is
undertaken.
He removed his objection and announced that version G CS for SB
246 was adopted.
1:49:06 PM
SENATOR GARY STEVENS stated that this combines two important
issues and should address a number of problems that communities
face.
CHAIR STEDMAN clarified that version G doesn't change the
special appropriation from the Alaska Capital Income Fund. That
fund is commonly referred to as Amerada Hess and it resides
within the Alaska Permanent Fund, but isn't counted toward the
annual dividend that citizens receive.
1:50:37 PM
KEVIN RITCHIE, Executive Director of the Alaska Municipal League
(AML), thanked the committee for the work it had done. He
advised that AML hadn't had time to give the bill full review,
but it would get the information out to municipalities.
Obviously, he said, the concept of putting the liability into a
holding pattern is significant.
At-ease from 1:51:18 PM to 1:52:14 PM.
CHAIR STEDMAN asked for a motion to adopt version Y.
SENATOR GARY STEVENS moved version Y CS for SB 247.
CHAIR STEDMAN objected for explanation purposes. He advised that
SB 247 is the revenue sharing bill and state aid for certain
municipalities' under-funding of PERS and providing for an
effective date. Language in Section 2 on page 3 establishes that
in FY07 the funds will be used to make up the shortfalls between
the PERS contributions from municipal employers and the
actuarial calculated rate for the contributions. The communities
that will receive funds are listed on page 3, line 24 through
page 5, line 2. Communities that aren't on the list are either
funding at the required actuarial calculated rate or they are in
a funding surplus. He noted that the under funded amounts range
from $11 for the City of Egegik to a high of $14,134,590 for the
Municipality of Anchorage.
He removed his objection and announced that version Y was
adopted.
1:55:42 PM
MELANIE MILLHORN, Director, Division of Retirement and Benefits,
commended Senator Stedman for the work he had done on SB 247,
version Y. She recapped the bill and said it provides that
appropriations will be made to the various accounts to pay the
difference between what the actuary has calculated as their rate
to be for FY 07 compared to what their contribution rate is as
capped by regulation to AAC 35.900. The division would make the
appropriations to the various accounts by January 1, 2007.
CHAIR STEDMAN added if the appropriations aren't made, the money
lapses into the general fund.
SENATOR GARY STEVENS referenced the spreadsheet in the packet
and asked what the $204,976 appropriation for the City of Seward
represents.
MS. MILLHORN replied it represents the difference between the
24.26 percent actuarial calculated rate found in column 5 and
the 18.74 percent employer's FY07 rate found in column 3.
CHAIR STEDMAN asked her to include the 5 percent cap in her
explanation.
MS. MILHORN responded a regulation in PERS places a 5 percent
annual cap on the contribution rate increase that the board
adopts. That regulation is scheduled for repeal, but when the
ARM Board adopted the FY07 rate it was operative until repealed.
The valuation itself sets forward an average calculated employer
rate, but the PERS supplement report that accompanies the
valuation has an individual employer calculated rate based on
the individual liabilities. She told the committee to note that
each liability is different based on the FY07 rate compared to
the actuarial calculated rate.
SENATOR GARY STEVENS asked her to use the City of Seward as an
example to explain each of the columns in the spreadsheet.
MS. MILLHORN replied column 1 has FY07 estimated earnings. It
shows that the City of Seward has a FY07 payroll base of $3.7
million. Column 2 shows the FY07 rate at 18.74 percent. She
noted that the supplement report indicates that the rate is
capped at 18.74 percent. Column 3 indicates the actual
contribution amount of $695,880, which is calculated by
multiplying column 2 times column 1. Column 4 is the actuarial
calculated rate at 24.26 percent. Column 5 is the required
contribution according to the actuarial calculated rate, which
is calculated by multiplying column 4 times column 1. Column 6
total is $204,976, which is the difference between the actual
contribution in column 3 and the actuarial required contribution
in column 5.
2:00:54 PM
CHAIR STEDMAN summarized that the City of Seward has an annual
payroll of $3.7 million and it should be contributing $900,856
per year into the retirement system, but because of the cap it
is only contributing $695,880. Version Y makes up the $204,976
difference. This is a one-time appropriation because the idea is
that by next year there will be a long-term solution.
SENATOR KOOKESH mentioned that the cap would be eliminated.
SENATOR THOMAS WAGONER asked when the cap would be removed.
MS. MILLHORN replied the regulation is scheduled for repeal in
the next several months and will impact the FY08 rate.
2:02:24 PM
KEVIN RITCHIE stated that this is a positive step and he
reiterated that AML would get the information out to its
members.
2:03:27 PM
VALERIE McCANDLESS, Mayor of the City of Wrangell, voiced
support for the effort represented in SB 246 and SB 247. She
said she would follow the legislation to see how it would affect
her community.
2:04:35 PM
DEBBIE KENUKTOOK, Mayor of the City of Koyuk, reported that the
city financial situation is bleak and she strongly encouraged
the Legislature to reinstate a revenue sharing program.
CHAIR STEDMAN observed that Koyuk isn't the only community in
Western Alaska that is facing financial strains in the last
several years.
He noted there was no further testimony and asked for motions to
move SB 246 and SB 247.
2:08:49 PM
SENATOR WAGONER motioned to report CSSB 247(CRA), version Y, and
attached fiscal note(s) from committee with individual
recommendations. There being no objection, it was so ordered.
2:09:18 PM
SENATOR WAGONER motioned to report CSSB 246(CRA), version G,
from committee with individual recommendations. There being no
objection, it was so ordered.
CHAIR STEDMAN called an at-ease from 2:09:42 PM to 2:11:54 PM
SB 193-DEFERRAL OF MUNICIPAL PROPERTY TAXES
CHAIR STEDMAN announced SB 193 to be up for consideration. He
reminded members that the committee previously heard the
presentation on version F committee substitute (CS). He
highlighted the following: AS 29.45.030(b) doesn't provide tax
assessors clear direction to exempt properties owned by non-
profit religious organizations that are used to house educators
in private or parochial schools; individual educators living in
their own homes do not benefit; privately owned residences are
not applicable; version F only clarifies existing statutes
regarding the tax exempt status of properties owned by non-
profit religious organizations; version F is appropriate under
the original bill because it deals with the same statutory
section.
He advised that he would take public testimony even though the
committee had previously heard the bill.
SENATOR THOMAS WAGONER asked for a brief at-ease.
2:13:55 PM
SHANE HORAN, Assessor for the Kenai Peninsula Borough, stated
that version F CS for SB 193 would establish an unfunded mandate
that could cause the borough to lose between $20 and $30
thousand in revenue. The potential loss would be greater if the
various service areas were considered. He expressed the view
that the language is broad and might not exclude coaches, for
example, who are oftentimes looked upon as educators. He further
questioned whether volunteer teachers, substitute teachers,
part-time or seasonal teachers might be included. He said he
assumed that Sunday school teachers would be excluded. He asked
the committee to keep in mind that most educators in private,
religious or parochial schools are compensated for their
services. Finally, he said, this would be an additional program
that would require administering and monitoring.
SENATOR THOMAS WAGONER said this is permissive so it isn't an
unfunded mandate.
CHAIR STEDMAN clarified that just one section of the bill is
discretionary and that is the original section that allows
certain citizens to apply to a municipality for property tax
deferral. The other section is new and it cleans up language
dealing with non-profit religious organizations.
2:16:48 PM
CLYDE BAXLEY, Anchorage resident, stated opposition to version F
committee substitute (CS) for SB 193 describing it as a huge tax
giveaway to the Anchorage Baptist Temple. He urged the committee
to return to the original bill as sponsored by Senators Bunde,
Dyson and Ellis because the CS opens the floodgates to lawsuits
for discrimination against public schoolteachers in favor of
private schoolteachers.
MR. BAXLEY asserted that the legislation would violate Article
1, Section 15 of the Alaska State Constitution because it's a
special bill for special people. It also violates Article 2
Section 9 and Article 1, Section 1. This is a special act and it
only favors teachers working for religious organizations.
Taxpayers around the state are looking for ways to reduce their
property taxes and this bill does the opposite, he said.
Furthermore the proposed definition of "minister" is designed to
expand the list of titles conferred on members of a church
organization for the purpose of qualifying properties for a tax
exemption. No state criterion governs how a church titles its
members so title decisions are left to the principle church
leader. That, he said, is a flimsy basis for determining whether
or not a church property qualifies for tax-exempt status.
He suggested that if the committee really wants to quiet the
complaints from taxpayers then it should amend the statute to
make it clear that no church shall be entitled to more than one
tax-exempt residence that is occupied by one church leader.
Doing so would satisfy the Alaska State Constitution and put to
rest the squabbles that have plagued Anchorage for last three
years.
MR. BAXLEY urged the committee to return to the original version
of SB 193.
CHAIR STEDMAN reiterated that the CS clarified existing statute
and it fits under the original version of the bill title.
2:22:45 PM
AL SUNQUIST, Anchorage, spoke in opposition to version F CS for
SB 193. He said that he's aware that many church properties are
in violation of existing laws according to the tax assessor and
he supports efforts to crack down on what he refers to as "black
collar crimes." He stated that the issue before the committee
represents an entanglement of church and state and should be
resisted.
2:24:42 PM
ART GRISWOLD, Delta Junction, testified in opposition to version
F CS for SB 193. He acknowledged that the area did not have a
property tax yet, but that it was a possibility. He noted that
the state doesn't currently fund tax exemptions for senior
citizens or disabled veterans in the organized boroughs and this
bill represents an additional exemption. He reported that in his
area there are three major church farms with huge homes that
will be completely exempt from taxes if the area is forced into
a borough. He said he would like to see legislation that
clarifies that religious organizations receive tax exemption on
just one building where services are held.
CHAIR STEDMAN asked that the record reflect that Delta Junction
does not pay property tax.
2:27:01 PM
MARTY McGEE, Assessor for the Municipality of Anchorage,
provided the following facts: Anchorage Baptist Temple currently
owns 24 pieces of property; 20 of the properties are residences
of some kind; 10 of the residences are currently tax exempt; 6
of the residences will soon move to taxable status leaving just
4 residences in exempt status.
If this bill moves forward in its current form it would
represent about $80,000 of tax revenue that would be exempted
from income. He emphasized that whenever a property is moved to
exempt status, it's the remaining taxpayers who have to make up
the lost revenue. With that in mind, he said, the Municipality
of Anchorage does not support version F CS for SB 193.
2:28:46 PM
SENATOR WAGONER asked if there are other parochial schools in
Anchorage.
MR. McGEE replied there are about 10 parochial schools, but only
Anchorage Baptist Temple has an exempt status issue with regard
to housing for teachers. "No other teachers of any kind, in
Anchorage, have any exempt status on homes," he said.
SENATOR WAGONER asked if the other parochial schools own any
homes.
MR. McGEE replied he couldn't answer directly. The Catholic
Church owns a number of homes in Anchorage and he thought all
were residences of ministers or church officials. He didn't
believe that any of those individuals are educators, but his
investigation of all religious exempt property is ongoing.
2:30:33 PM
STEVE VAN SANT, State Assessor, Division of Community Advocacy,
Department of Commerce, Community & Economic Development
(DCCED), said he would like to make several clarifications.
First the bill really doesn't clarify anything because the
Alaska Supreme Court has said that educator's homes are not
exempt under statute. As currently written the bill would expand
the statutes to include residences of educators, but the meaning
of that particular term is somewhat unclear, he said.
He advised that he has been polling assessors across the state
to get an idea of what this unfunded mandate might cost other
taxpayers and he believes it would be about $200,000 statewide.
2:32:10 PM
SENATOR GARY STEVENS referenced the section on tax deferral for
primary residences on page 2, line 24 and asked whether a
surviving spouse would immediately be responsible for paying the
deferred property taxes.
MR. VAN SANT responded it's his understanding that under the
existing language the surviving spouse wouldn't have to pay the
deferred taxes. Subparagraph (C) on line 24 speaks to combined-
income. If one spouse were to pass away the survivor would then
fall under subparagraph (C) on line 16, which relates to income
that is less than three times the federal poverty level.
2:33:42 PM
SENATOR ELLIS participated via teleconference from Anchorage. He
said he would like to hear Mr. Ritchie with the Alaska Municipal
League (AML) comment on version F committee substitute.
2:34:16 PM
KEVIN RITCHIE, Executive Director for the Alaska Municipal
League (AML), thanked the committee and Senator Ellis in
particular for asking for an additional hearing to provide
opportunity for the assessors to report on the impacts. As a
policy, he said, AML is against anything that would take revenue
away from communities. He noted that the committee heard from
assessors around the state today and he couldn't add to that.
2:35:02 PM
CHAIR STEDMAN asked for a motion.
SENATOR ELLIS stated that the testimony has been completely one-
sided in opposition to version F and he has heard no
justification in favor of the most recent change. He reported
that he had spoken to Tam Cook about the rules governing his
participation via teleconference and that she advised that he is
allowed full participation with the exception that he is not
allowed to vote on a motion to move a bill from committee.
SENATOR ELLIS moved to return to the original version of SB 193.
At-ease from 2:35:40 PM to 2:36:05 PM.
CHAIR STEDMAN acknowledged that he hadn't run into this
situation before and asked Senator Ellis if his staff could
present any verifying information from Tam Cook.
SENATOR ELLIS replied he spoke with Ms. Cook very recently and
she advised that he is allowed to participate, to make motions,
and to vote telephonically. He is allowed to object to a motion
to move a bill from committee, but he is not allowed to vote on
moving the bill.
2:37:19 PM
CHAIR STEDMAN asked Senator Ellis to repeat his motion.
SENATOR ELLIS motioned for the committee to return from the CS
to the original version of SB 193.
CHAIR STEDMAN objected and asked for a roll call vote.
SENATOR ELLIS reiterated that justification is lacking in the
public record and the testimony in opposition has been
overwhelming. Senator Bunde had a great idea, he said, and he
and Senator Dyson signed on as co-sponsors. Public testimony is
on my side of the argument, he concluded.
The motion to return to the original version of SB 193 failed
with Senator Kookesh and Senator Ellis voting yea and Senator
Gary Stevens, Senator Wagoner and Chair Stedman voting nay.
CHAIR STEDMAN called an at-ease from 2:38:41 PM to 2:39:15 PM.
2:39:28 PM
MERYL THOMPSON, Wasilla, testified that in its original form the
bill was good, but that he is totally against version F CS for
SB 193. This is an attempt to give the Anchorage Baptist Temple
a tax break and it's a slippery slope and a can of worms that
you're opening up. He could find no support for the bill other
than a Baptist Temple official and some of the committee
members. He said he would imagine that if this received a proper
public hearing you would hear overwhelming opposition because it
simply isn't right or fair.
2:41:20 PM
MARIE DARLIN, Capital City Task Force for AARP, announced that
AARP did not support Section 1 of version F CS for SB 193, but
it did support the original version. The issue of property tax
deferral needs to be addressed and AARP appreciates Senator
Bunde's leadership in this area.
2:44:08 PM
SENATOR WAGONER commented that this is the second or third
hearing on the bill so he didn't agree that there hadn't been
proper public hearings. He acknowledged that the testimony had
been negative and he was surprised that people who supported the
amendment hadn't come forward to testify. He noted that the next
committee of referral is the Finance Committee and Senator Bunde
could deal with it there.
2:45:07 PM
SENATOR KOOKESH clarified that no action was taken on the bill
at the last meeting because people testifying from the LIOs and
from off net didn't have a copy of the CS. There had been no
public hearing on the new CS, but there was plenty of testimony
on the original version.
CHAIR STEDMAN agreed with Senator Kookesh's statement, but that
the hearing today was thorough and under no time constraint. He
asked for a motion.
2:45:40 PM
SENATOR GARY STEVENS motioned to report version F CS for SB 193
and attached fiscal note(s) from committee with individual
recommendations.
SENATOR KOOKESH objected.
SENATOR ELLIS voiced objection and advised that he had tried to
keep an open mind and had been looking forward to someone
stepping forward to justify the current changes. That didn't
happen, which made him uncomfortable moving the bill forward. He
announced that he would remove his name as a co-sponsor if the
bill continued in its current form.
CHAIR STEDMAN said he appreciated his position.
SENATOR ELLIS said he would restate his previous comment that if
this had been the intent of the majority members on the
committee then it would have been more respectful and proper for
the CRA Committee to introduce a committee bill rather than
taking Senator Bunde's bill.
2:47:14 PM
SENATOR WAGONER acknowledged that it would be a burden to
Anchorage taxpayers to make additional properties tax exempt,
but he takes a different view because the parochial schools save
municipalities and cities in terms of educational expenditures.
At last estimate Kenai had between 600 and 800 parochial
students and that is a tremendous burden lifted from the
taxpayer, he said.
CHAIR STEDMAN restated the point that the changes in the CS fit
under the same section of the statutes.
CHAIR STEDMAN asked the clerk to call the roll.
CSSB 193(CRA), version F, moved from committee with Senators
Wagoner, Gary Stevens, and Chair Stedman voting yea and Senator
Kookesh voting nay.
At-ease from 2:49:48 PM to 2:51:38 PM.
SB 248-ADMINISTRATIVE BOROUGHS/BOROUGH GRANTS/
2:51:40 PM
CHAIR BERT STEDMAN announced SB 248 to be up for consideration.
2:52:03 PM
SENATOR GARY STEVENS explained that since the first borough was
formed in 1962, 15 additional boroughs have been established so
that 43 percent of the land and 87 percent of the population in
Alaska falls within the 16 boroughs. Meanwhile, he said, 57
percent of the land and 83,000 people live outside of organized
boroughs.
An advisory commission on local government was appointed last
session and SB 248 is the result of that commission's
recommendations. It creates a new class of borough government
called administrative boroughs and it encourages borough
formation.
Administrative boroughs would provide an elected assembly that
would have powers for planning, platting, and land use
regulation. They would also have the power to levy sales taxes,
use taxes and fees, but they wouldn't have the power to levy
property tax or to provide education. Any other powers the
assembly might adopt would have to be in accordance with Title
29. To cover organizational expenses, SB 248 would provide
grants of $250,000 for the first three years. The money would be
used to elect an assembly, establish ordinances and organize an
administrative office.
The advisory commission recognizes that a lack of available
land, which helps to sustain borough government, is a major
hindrance to new borough formation. Therefore, SB 248 would
allow boroughs that are unable to select a minimum of 15,000
acres the ability to receive a $15 million grant and boroughs
that do have the ability to select 15,000 acres or more could
receive a $12.5 million grant. Grant funds would only be
available to new boroughs that are formed within four years of
the effective date. Furthermore, only the interest could be used
to run the government; none of the principle could be spent.
Forming an administrative borough is completely voluntary, but
doing so would offer the opportunity for sustainability into the
future.
2:56:24 PM
MIKE BLACK, Director of the Division of Community Advocacy,
Department of Commerce, Community & Economic Development, stated
support for the concept embodied in SB 248 because it's in the
state's interest to have regional governments. He advised that
borough formation is a voluntary process and in recognition of
that, SB 248 provides incentives.
The responsibilities associated with this new form of government
are minimal, but the department believes that administrative
boroughs will provide a first step or bridge to a higher level
of responsibility embodied in 2nd class, 1st class or home rule
boroughs. The department further believes that the benefits to
the state will far outweigh the costs of the financial
incentives offered in SB 248. He noted that administrative
boroughs would be prohibited from providing education, but they
would have limited powers to tax.
The department believes that SB 248 will remove much of the
consistent objection to borough formation that has been seen in
the past and will promote formation of regional governments, he
concluded.
3:00:30 PM
SENATOR GARY STEVENS asked Mr. Black if he knows of any region
that is considering this transitional phase.
MR. BLACK replied more areas have expressed interest in borough
formation since the advisory commission began meeting, but he
isn't sure what class of borough the various areas are
considering.
SENATOR GARY STEVENS remarked movement toward forming any class
of borough would be a step in the right direction.
3:02:53 PM
ALAN LeMASTER, Gakona, testified that he lives in the
unorganized borough and is happy to have the Legislature sit as
the assembly. He suggested that SB 248 offers a brighter light
than has been seen in the past, but residents of the Copper
Valley will probably continue to oppose borough formation at
this time.
3:04:45 PM
SENATOR GARY STEVENS reiterated this is voluntary. SB 248 offers
an opportunity and no one will be forced to take advantage of
it.
MR. LeMASTER responded there is some apprehension that at the
end of the four-year period areas would be forced to form a
borough. A major problem in this area, he said, is how to
support a borough even with the grant money that's offered. He
said the idea that the school board would act as the borough
commission is a little scary.
SENATOR GARY STEVENS said he certainly couldn't promise that the
area wouldn't be forced into becoming a borough at some time.
Many areas were forced into boroughs under the Mandatory Borough
Act, but SB 248 doesn't deal with that. With regard to the
school board he clarified that the responsibilities of the REAAs
wouldn't change under SB 248.
3:07:26 PM
JOHN HOZEY, City Manager for the City of Valdez, testified as a
representative of the Alaska Municipal League (AML) task force
on borough formation. He explained that the idea for the task
force stemmed from community frustration at not gaining headway
in efforts to incorporate. He listed the following communities
that have been unsuccessful in their various attempts to
incorporate: City of Toksook Bay, City of Hoonah, City of
Valdez, City of Wrangell, City of Petersburg, City of Thorne
Bay, City of Cordova, Municipality of Anchorage, Denali Borough,
City of Coffman Cove, City of Emmonak, City of Skagway, and City
of Klawock.
On behalf of the task force he asked that the committee consider
an amendment to SB 248 to address the "stranglehold on the
process called the model borough boundaries." The amendment
would require that each petition to incorporate be reviewed on
merit. It would also expand the authority of the Local Boundary
Commission (LBC) to modify petitions to act in the state's best
interest.
He asked the committee to keep the amendment language in mind
for incorporation in other appropriate legislation in the event
that SB 248 doesn't move forward.
3:11:18 PM
SENATOR GARY STEVENS advised that the commission carefully
considered the comments and recommendations that came from the
task force and as a result there will be an amendment to SB 248.
3:12:13 PM
DAVE TRANTHAM, Council Member for the City of Bethel, stated
that there is little support for SB 248 in his area. Model
borough boundaries don't meet the needs of the people in the
area and offer no flexibility, he said. As currently proposed 25
small communities in the Bethel area fall within the model
borough boundary and the closest state land is off the road
system and about 50 miles away. In this area, he said, it's
unlikely that there will ever be a tax base to support an
additional tier of government.
3:15:39 PM
SENATOR GARY STEVENS responded one bill can't solve every
problem. SB 248 is optional and it will solve problems for some
areas and therefore move the state forward. Perhaps, he said,
the discussion of the LBC and model boroughs should take place
in another bill.
3:16:45 PM
KEVIN RITCHIE, Executive Director for the Alaska Municipal
League (AML), thanked the legislative members of the advisory
commission for the important work that was done.
He stated that AML believes that government that is closest to
the people is best because it empowers people at the local level
to solve problems and provide self-regulation. As the
representative of the task force mentioned, there have been a
number of changes to the economy and patterns in Alaska since
the model borough boundaries were formed in 1989 so it makes
sense to take another look at those boundaries. He said his
final point is that the provision for the $12.5 million and $15
million grants is truly sustainable revenue sharing. If the
money is managed to allow a 4-5 percent annual withdrawal it
will naturally adjust for inflation. 5 percent of $15 million
would provide $750,000 per year and that would be a significant
base for providing adequate public services for an area.
CHAIR STEDMAN announced he would hold SB 248 in committee.
There being no further business to come before the committee,
Chair Stedman adjourned the meeting at 3:21:26 PM
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