Legislature(2007 - 2008)BELTZ 211
02/22/2007 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
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| Start | |
| SB72 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 72 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 22, 2007
4:23 p.m.
MEMBERS PRESENT
Senator Donny Olson, Chair
Senator Joe Thomas
Senator Thomas Wagoner
MEMBERS ABSENT
Senator Albert Kookesh, Vice Chair
Senator Gary Stevens
COMMITTEE CALENDAR
SENATE BILL NO. 72
"An Act relating to the community revenue sharing program; and
providing for an effective date."
MOVED CSSB 72(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 72
SHORT TITLE: COMMUNITY REVENUE SHARING
SPONSOR(S): COMMUNITY & REGIONAL AFFAIRS
02/02/07 (S) READ THE FIRST TIME - REFERRALS
02/02/07 (S) CRA, FIN
02/13/07 (S) CRA AT 3:30 PM BELTZ 211
02/13/07 (S) Heard & Held
02/13/07 (S) MINUTE(CRA)
02/22/07 (H) CRA AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
KATHIE WASSERMAN, Executive Director
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Supported SB 72.
MELANIE LESH, Legislative Liaison
Department of Natural Resources (DNR)
Juneau, Alaska
POSITION STATEMENT: Answered questions about SB 72.
LISA VON BARGEN
Valdez, Alaska
POSITION STATEMENT: Stated that the City of Valdez was in
support of SB 72.
DAVE TALERICO, Mayor
Denali Borough
Healy, Alaska
POSITION STATEMENT: Spoke in favor of SB 72.
MICHAEL CATSI, Co-Chair
Alaska Municipal League
City of Skagway Council member
Skagway, Alaska
POSITION STATEMENT: Spoke in favor of SB 72.
SCOTT BRANDT-ERICHSEN, Co-Chair
Alaska Municipal League Legislative Committee
Attorney for the City of Ketchikan
Ketchikan, Alaska
POSITION STATEMENT: Spoke in favor of SB 72.
VALERIE MCCANDLESS, Mayor
City of Wrangell
Wrangell, Alaska
POSITION STATEMENT: Spoke in favor of SB 72.
VERNON MARSHAL, Representative
Public Safety Employees Association
Anchorage, Alaska
POSITION STATEMENT: Spoke in favor of SB 72.
BILL ROLFZEN
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions about SB 72.
ACTION NARRATIVE
CHAIR DONNY OLSON called the Senate Community and Regional
Affairs Standing Committee meeting to order at 4:23PM. Senators
Olson, Thomas, and Wagoner were present at the call to order.
SB 72-COMMUNITY REVENUE SHARING
CHAIR OLSON announced that SB 72 would be the only order of
business.
SENATOR WAGONER moved Amendment 1, labeled 25-LS0506\A.1, Cook,
as follows:
25-LS0506\A.1
Cook
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR OLSON
TO: SB 72
Page 1, line 10, through page 2, line 8:
Delete all material.
Insert "year from all mineral lease rentals, royalties,
royalty sale proceeds, federal mineral revenue sharing payments,
and bonuses."
SENATOR THOMAS seconded the motion. Hearing no objection,
Amendment 1 carried.
4:24:41 PM
KATHIE WASSERMAN, Executive Director, Alaska Municipal League
(AML), said the amendment clarifies which natural resources the
revenue will be derived from. The original bill funded
municipalities in a much bigger way than what is being requested
now. Amendment 1 restricts the natural resources to those
defined in Alaska's constitution for the permanent fund. It
doesn't dip into the fund, she said, it simply defines those
resources in the same way. The disbursement under the amendment
is consistent with Alaska's owner-state concept, she explained.
4:26:32 PM
SENATOR WAGONER said he is in favor of municipal assistance and
revenue sharing; he has been a mayor in Alaska. But he is
concerned about the legality of SB 72, because funds can't be
dedicated in the state. Discussions on the POMV (percent of
market value) had the same problem. He asked them to seriously
consider what will get started with SB 72. He noted that the
Governor put $463 million into the budget for PERS/TRS to hold
communities, schools, "and everybody harmless this year."
He said he would not vote against SB 72, but he advised that the
revenues be consistent so revenue sharing doesn't have the same
spikes and valleys it has had recently. He said he doesn't know
if this is the right bill and asked if the budget had other
funding for municipalities.
4:28:43 PM
MS. WASSERMAN replied yes - there was a one-time revenue-sharing
for PERS/TRS, but that funding was not carried forward.
SENATOR WAGONER again asked if anyone had asked about the
legality of SB 72.
MS. WASSERMAN replied that the AML knows dedicated funds are not
allowed in Alaska and they understand that this money should and
must be set aside and then disbursed by the act of the
legislature.
4:29:34 PM
SENATOR WAGONER said he thought there should be a dedicated fund
someplace so future legislators wouldn't cut municipal sharing
in the future. He asked if anyone had asked the governor to
consider setting up an endowment fund similar to what has been
done for power cost equalization where the principle would stay
in place and the interest would provide municipal assistance
instead of putting $1.8 billion into the constitutional budget
reserve. That would take the issue of the legislature's and the
governor's control. SB 72 just didn't do that.
MS. WASSERMAN responded that the AML devised SB 72 last year
because it was told: "It's up to you people to help us decide
where this revenue sharing is going to come from and how it's
going to be funded." She noted that AML came up with other
ideas, but there were always 10 people in opposition. If there
is something that everyone could agree on "you won't find us
pooh-poohing it," she noted.
4:32:01 PM
SENATOR WAGONER said he just now thought about an endowment like
power cost equalization, and he asked how that was done.
MELANIE LESH, Legislative Liaison, Department of Natural
Resources (DNR), said the original endowment of $100 million
came in the form of an amendment from Senator Austerman in the
Finance Committee on the budget bill about six years ago. The
most recent endowment was also in the form of an amendment from
Senator Hoffman in the Senate Finance Committee.
4:33:38 PM
CHAIR OLSON said he believed that the proceeds from the Four-Dam
Pool sale funded the original power cost equalization endowment.
SENATOR WAGONER said he thought that a legislative endowment
could be taken away, because that is what happened to the
science endowment.
CHAIR OLSON explained that that was a foundation.
SENATOR WAGONER said either way, if an endowment is not set up
constitutionally, it can't be protected.
4:34:39 PM
LISA VON BARGEN, Valdez, said the City of Valdez has sent a
resolution in support of SB 72.
DAVE TALERICO, Mayor, Denali Borough, said he wants the bill to
move forward. Over the years the municipalities have been
delivering more services, and revenue sharing is important for
Alaska's future and future generations.
CHAIR OLSON asked his thoughts about the disparity between the
incorporated and unincorporated communities within a borough.
MAYOR TALERICO said, "Our services are delivered borough-wide,
and we certainly have to define those as good as we can." He
added:
We do deliver our services borough wide through
emergency medical services, and our fire departments,
and our educational system. So speaking for the
municipality, it's a very equal split for us. There is
an advantage to us, as well, as we operate our
municipality to have a second class city within our
municipality that deals with a lot of issues too. But
that is a very good question and probably a tough one
to work out. I like the way it's set up right now, and
potentially, in the future, we can figure that out to
make sure that we've done an even distribution for
everyone.
4:37:22 PM
MICHAEL CATSI, economic developer and council member, City of
Skagway, and co-chair of the Alaska Municipal League, said he
would like to reframe the way revenue sharing is discussed. The
state needs to reinvest some of its revenue into its fundamental
core, which is made up of Alaska people and businesses. Using
the term "investment" instead of "revenue sharing" changes the
relationship between the state and the municipalities. He
suggested using 6 percent of Alaska's natural resource revenues
to invest back into its core foundation. He said there would be
an expectation that the municipalities will wisely use the
investment funds to improve basic services, relieving the tax
burden of the taxpayers and move the municipalities away from
having to beg for a dividend.
MR. CATSI said companies that fail to invest in themselves are
subject to failure. The current closure of several communities
is the result of the state not reinvesting in itself. This bill
is a long-term sustainable mechanism that can change that. The
increasing tax burden is a serious concern for small businesses,
and running a business is even more difficult in rural Alaska.
There have been significant increases in fuel and construction
costs, and the increasing property taxes can make a difference
in making it or not.
4:40:22 PM
SCOTT BRANDT-ERICHSEN, Co-Chair, Alaska Municipal League
Legislative Committee, and Borough Attorney for the City of
Ketchikan, said the impact of revenue sharing on Ketchikan is
the same as for other cities. The revenue sharing the Ketchikan
Borough received last year was equivalent to 12 percent of its
general fund expenditures. Over the past 20 years four main
types of transfer payments were received by the borough -
revenue sharing, forest receipts, fish tax receipts, and federal
payment in lieu of taxes - and those equated to about one mil of
property tax savings. He said that last year everyone seemed to
agree on finding a reliable, sustainable funding source for
revenue sharing and the 6-percent solution has a lot of appeal.
It provides for an automatic proportional reduction in revenue
sharing based upon what the state has taken in.
The distribution methods of the revenue have significant issues
and one is payments to unincorporated settlements in the
unorganized boroughs. He explained that it is necessary to
provide some level of funding for services to these areas but it
is also important to retain an incentive for those areas to
develop and organize into cities or boroughs.
4:45:14 PM
MR. BRANDT-ERICHSEN said that there is a difficult balance
because some of the organized boroughs contain unorganized
communities that could benefit from some of these same funds.
But there is a definitional difficulty where some organized
boroughs have regions or neighborhoods that may have all of the
same attributes, and providing funds to some but not all of
those may be difficult. He said the method that SB 72 uses to
address this - providing a larger amount to boroughs than to
cities - allows those boroughs to have their own system for
sharing those funds with the unorganized communities. He
believes that is a good solution to the problem.
The other population question that the bill resolves, he said,
is the question of double-counting if a city is established
inside a borough. He concluded that SB 72 is a good solution to
a long-standing problem.
4:46:16 PM
VALERIE MCCANDLESS, Mayor, City of Wrangell, said she supports
the bill, which has had statewide scrutiny and support.
4:46:59 PM
TIM BECK, Vice President, Alaska Municipal League, and member of
the Fairbanks North Star Borough assembly, said the bill
represents a clearly-defined revenue source and is sustainable.
It shares the state's resource income with local government,
which is the kind of government that is closest to Alaska
residents, and it provides recognition that money invested in
local government is compounded many times over with community
participation.
VERNON MARSHAL, Public Safety Employees Association (ASEA), said
his group supports the restoration of revenue sharing. He
supports the end result of SB 72 but has not analyzed the "means
to get there." He said the association wants safe communities
with good infrastructure, and he noted that "all politics is
local."
4:49:15 PM
SENATOR THOMAS asked if the formula on spreadsheet 3 determines
the per capita distribution and if it is already in statute some
place else.
MS. WASSERMAN replied that the formula is calculated by taking 6
percent of estimated revenues for a year and disbursing it in
the core base amounts and then dividing what is left over among
the population. So, she said the per capita amount would go up
and down each year depending on the amount of resource revenue
available and some years there might be no per capita.
SENATOR THOMAS said the spreadsheets have different numbers.
MS. WASSERMAN said some spreadsheets were done under different
scenarios on how to count people.
4:51:37 PM
SENATOR THOMAS commented that the gross differences between the
Aleutians East Borough spreadsheets 1 and 3 must be a typo,
because there is a 2,600-person difference.
MS. WASSERMAN agreed that was probably a typo.
SENATOR WAGONER said he hoped to establish a revenue program.
But his problem with SB 72 is that separate sums of money go to
boroughs and cities and some major cities in this state have
never funded education to the cap. He had a real hard time
giving those cities revenue-sharing without something being in
this bill that would require them to fill that gap and fund
education to the cap. He emphasized, "It is very unfair for them
to come to us crying for money every year, and not funding
education to the cap."
4:53:39 PM
CHAIR OLSON said there have been a good number of discussions by
legislators that represent both incorporated and unincorporated
boroughs and also those communities within the boroughs,
especially which are unincorporated, about the disparity between
the amounts of money that they are getting compared to the
incorporated ones to run their municipalities.
MS. WASSERMAN responded that the AML knows that is a point that
comes up quite often when revenue sharing is discussed. She
explained that this bill specifically targets municipalities in
boroughs and outside of boroughs. How they're treated in the
bill has been left for the legislators to consider, because
there are differing views. She said, "And I may regret that
answer."
4:55:00 PM
SENATOR THOMAS said he is having trouble understanding the
dramatic difference between the two spreadsheets. The difference
for Fairbanks and the Fairbanks North Star Borough is minor, but
Anchorage goes from $41 million to $55 million.
4:57:08 PM
BILL ROLFZEN, Department of Commerce, Community & Economic
Development, said there were no typos in the spreadsheets and
explained that for borough populations one spreadsheet used the
entire population of the borough including people within the
cities. The other spreadsheet indicates the non-areawide
population which subtracts the city populations from the total
borough number. "So, for instance, the Aleutians East Borough,
if you subtract out Akutan, Sand Point, King Cove, et cetera,
you are left with 72 residents that actually live outside any
city within the borough, which is the population that is used in
SB 72."
SENATOR THOMAS said that answers the question and he asked if
that explains the difference between the Fairbanks and Anchorage
numbers also.
4:58:40 PM
MR. ROLFZEN replied that was exactly correct and added that
Anchorage is a unified municipality so there are no cities
within its boundaries, but the Fairbanks North Star Borough has
the cities of Fairbanks and North Pole; so the population of
those two cities is deducted from the borough to come up with a
number to use in the formula.
SENATOR THOMAS noted that both spreadsheets have Fairbanks and
the Fairbanks North Star Borough, but he was still concerned
about the cumulative number. He then suggested talking to Mr.
Rolfzen later.
5:00:01 PM
SENATOR THOMAS moved CSSB 72(CRA) from committee with individual
recommendations and attached fiscal note(s). There being no
objection, CSSB 72(CRA) passed out of the Senate Community and
Regional Affairs Standing Committee. There being no further
business to come before the committee, Chair Olson adjourned the
meeting at 5:00:33 PM.
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