Legislature(1993 - 1994)

02/16/1993 09:05 AM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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         SENATE COMMUNITY &  REGIONAL AFFAIRS COMMITTEE                        
                        February 16, 1993                                      
                            9:05 a.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Senator Randy Phillips, Chairman                                             
  Senator Robin Taylor, Vice Chairman                                          
  Senator Rick Halford                                                         
  Senator Ad Adams                                                             
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  Senator Fred Zharoff                                                         
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  SENATE JOINT RESOLUTION NO. 20                                               
  Disapproving  the  Local Boundary  Commission recommendation                 
  regarding the annexation of territory to the City of Palmer.                 
                                                                               
  SENATE BILL NO. 88                                                           
  "An  Act   relating  to  grants  to   municipalities,  named                 
  recipients,  and  unincorporated  communities;  establishing                 
  capital project  matching grant programs  for municipalities                 
  and unincorporated  communities; establishing a  local share                 
  requirement for  capital project  grants to  municipalities,                 
  named  recipients,  and   unincorporated  communities;   and                 
  providing for an effective date."                                            
                                                                               
  SENATE BILL NO. 89                                                           
  "An Act  making appropriations for capital  project matching                 
  grant programs; and providing for an effective date."                        
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
  SJR 20 - See Community & Regional Affairs minutes dated                      
           2/9/93.                                                             
                                                                               
  SB  88 - No previous action to record.                                       
                                                                               
  SB  89 - No previous action to record.                                       
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  Kent Swisher                                                                 
  Alaska Municipal League                                                      
  217 Second St.                                                               
  Juneau, AK 99801                                                             
  POSITION STATEMENT:  Testified in support of SB 88                           
                                                                               
                                                                               
  Senator Jay Kerttula                                                         
                                                                               
                                                                               
  State Capitol                                                                
  Juneau, AK 99801-1182                                                        
  POSITION STATEMENT:  Has concerns with SB 88                                 
                                                                               
  Jack Fargnoli                                                                
  Office of Management & Budget                                                
  Office of the Governor                                                       
  P.O. Box 110020                                                              
  Juneau, AK 99811-0020                                                        
  POSITION STATEMENT:  Offered information on SB 88                            
                                                                               
  Shelby Stastny, Director                                                     
  Office of Management & Budget                                                
  Office of the Governor                                                       
  P.O. Box 110020                                                              
  Juneau, AK 99811-0020                                                        
  POSITION STATEMENT:  Testified on SB 88                                      
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 93-6 , SIDE A                                                           
                                                                               
  Number 001                                                                   
  The Senate Community & Regional Affairs Committee was called                 
  to  order  by  Chairman Randy  Phillips  at  9:05  a.m.   He                 
  introduced  SJR 20  (DISAPPROVE PALMER BOUNDARY  CHANGES) as                 
  the first order of business, noting that the Alaska Boundary                 
  Commission has  recommended  the  annexation,  however,  the                 
  resolution recommends the annexation be disapproved.                         
                                                                               
  Senator Halford moved that SJR 20 be passed out of committee                 
  with individual recommendations.   Hearing no objections, it                 
  was so ordered.                                                              
  Number 025                                                                   
  Chairman Randy  Phillips introduced SB  88 (CAPITAL  PROJECT                 
  GRANTS) and SB 89 (APPROP: CAPITAL PROJECT MATCHING GRANTS)                  
  as the next order of business.                                               
                                                                               
  KENT  SWISHER,  representing  the  Alaska Municipal  League,                 
  stated the League's support for SB 88, however, they do have                 
  some concerns with the legislation.  One concern is with new                 
  restrictions on Section 315 grants which previously have had                 
  neither a matching requirement or administrative rule making                 
  as part of that process.  SB 88 provides both of those items                 
  and  has  the potential  of  creating a  negative situation.                 
  Another concern  is the process  outlined in the  bill which                 
  the League feels is a long and cumbersome process and is one                 
  that has potential for major changes.  He said anything that                 
  can be done to shorten the process would be beneficial.                      
                                                                               
                                                                               
  In   terms  of  the  kind   of  match  required  from  local                 
  governments under  SB 88, the  League suggests that  while a                 
  match is appropriate, perhaps the ratios for  the first year                 
  are high enough.                                                             
                                                                               
  Mr. Swisher suggested that the League would like to have the                 
  flexibility to use 315 monies as the local match.  There may                 
  be circumstances in which the grant provided in SB 88 can be                 
  put to a good  purpose, yet the jurisdiction simply  may not                 
  have the ability to raise cash.                                              
                                                                               
  Number 125                                                                   
                                                                               
  SENATOR KERTTULA said it takes more money in the rural areas                 
  to build these  projects, and he doesn't  think a population                 
  base is necessarily the only criteria that should be plugged                 
  into a matching grant process for making decisions.                          
                                                                               
  Ken Swisher noted that the  Alaska Municipal League supports                 
  the  concept   of  recognizing   a   cost  differential   in                 
  construction in rural areas.  He further noted that the bill                 
  does  not  include  that,  and  its  only  deviation  from a                 
  population  is  the  use  of   a  population  multiplier  in                 
  determining  the  amount of  funding  and in  establishing a                 
  minimum.    The  League  recommends   that  the  minimum  be                 
  increased from $25,000 to $50,000.                                           
                                                                               
  Senator Kerttula  commented that  there is  good reason  for                 
  having  local  matches, but  he  doesn't  feel it  has  been                 
  properly spoken to  in SB 88.    The small rural  areas that                 
  need a project don't  have a chance under this  bill of ever                 
  getting anything of  significance.   Under this program  the                 
  rural areas  don't get  enough dollars  to do  anything with                 
  them, but the urban areas do.   He suggested the legislation                 
  needs amending to get a fairness doctrine.                                   
                                                                               
  Number 218                                                                   
                                                                               
  Senator  Adams moved  to table  SB 88  and SB  89.   Senator                 
  Phillips objected.  A hand vote was taken with the following                 
  result:  Senator Adams voted "yea;" Senators R. Phillips and                 
  Halford voted  "nay."   The Chair  announced the  motion had                 
  failed.                                                                      
                                                                               
  Number 232                                                                   
                                                                               
  JACK FARGNOLI, Office of Management  & Budget, Office of the                 
  Governor, explained the purposes of the proposed program are                 
  two-fold.   One,  essentially  to  help  create a  sense  in                 
  capital projects  on the  part of  the  communities and  the                 
  other is to help leverage  the use of state dollars in  this                 
  time of declining oil revenues.                                              
                                                                               
  The legislation  has two  components:  one  is the  proposed                 
                                                                               
                                                                               
  capital project matching  program that  has been before  the                 
  legislature the  past two sessions;  and the second  is that                 
  the legislation also would extend  the same match provisions                 
  to the existing municipal grant program in the Department of                 
  Administration and the same  to the unincorporated community                 
  grant  program  in the  Department  of Community  & Regional                 
  Affairs.                                                                     
                                                                               
  The  matching   grant  program  treats   municipalities  and                 
  unincorporated communities separately,  and the  legislation                 
  proposes   creating  a   fund   within  the   Department  of                 
  Administration to handle the municipal grants and a parallel                 
  fund within the Department of Community and Regional Affairs                 
  to handle the  unincorporated community grants.   The grants                 
  that go  through those  two programs  would be  allocated by                 
  separate procedures for  each of  them, and the  communities                 
  would provide a  match, either in cash or from  a variety of                 
  in-kind sources.                                                             
                                                                               
  The  municipal  portion  would have  three  tiers  of rates,                 
  depending on the population of the municipality.  Basically,                 
  those rates would be 25 percent for municipalities with over                 
  5,000 population;  15  percent  for  municipalities  between                 
  1,000 and  5,000 population;  and five  percent under  1,000                 
  population.                                                                  
  Those rates, under  the proposed  bill, would go  up in  two                 
  years, counting  this current  fiscal year as  the first  of                 
  those two years, to 50 percent, 25 percent and eight percent                 
  respectively.                                                                
                                                                               
  A  new  element to  this  program  would be  that  under the                 
  extension of the matches  to the existing programs that  are                 
  already   in   place,   named   recipients,   as   well   as                 
  municipalities and unincorporated communities  would also be                 
  subject to the match provision for  their grants.  The match                 
  rates would apply  to the named recipients that  are located                 
  within  those  municipalities,  such that  if  a  named were                 
  within a  municipality of  over 5,000  population, it  would                 
  have the same match as a municipality, i.e., 25 percent.                     
                                                                               
  Those grants  in the municipality side would be allocated by                 
  the  population  to the  individual  accounts that  would be                 
  established  for  each  municipality,   and  the  allocation                 
  procedure would essentially be on a population basis, except                 
  that before the allocation spread is made, there is proposed                 
  in the  legislation a  set of  weighing factors  effectively                 
  enlarging the population of the smaller size municipalities.                 
  They would be  1.0 for municipalities over  5,000 population                 
  and then they go on down  so that the smaller municipalities                 
  would get an  adjustment that would reflect  the differences                 
  they have relative to the  larger municipalities with regard                 
  to access to capital and the cost of doing business.                         
                                                                               
  On the unincorporated side, the  allocations would be spread                 
                                                                               
                                                                               
  equally,  simply  taking  the  total  appropriation  to  the                 
  unincorporated  community grant fund  and then  dividing the                 
  total   appropriation  by   the  number   of  unincorporated                 
  communities.   In that  case, they  would be  spread to  all                 
  unincorporated communities that are eligible for the state's                 
  revenue sharing program.  Mr.  Fargnoli said the distinction                 
  to  keep in mind  is that  it's not  spread among  those who                 
  participate  in the  state's  revenue  sharing  program  but                 
  rather those  who  are eligible.    Basically, it  uses  the                 
  definition  of  the  revenue sharing  program  which  is any                 
  identified entity representing  more than 25 people.   There                 
  are  some communities who  elect not  to participate  in the                 
  state's revenue sharing program, but under this legislation,                 
  they would still be eligible for a grant.                                    
                                                                               
  Number 312                                                                   
                                                                               
  Senator Halford asked  if there is  a minimum grant and  the                 
  requirement  is  only 25  people  to form  an unincorporated                 
  community, why would an area want to form one unincorporated                 
  community if they have a population  of 200 people and could                 
  form four different  entities.  Jack Fargnoli  answered that                 
  under  the  provisions  of  the   bill,  the  Department  of                 
  Community and  Regional Affairs  would work  with the  local                 
  community to identify  a single recipient to  administer the                 
  grant.                                                                       
                                                                               
  Senator Halford responded that if you are using the criteria                 
  of  revenue   sharing  without   any  of   the  ability   to                 
  discriminate in revenue sharing, you may find that there are                 
  three  or four  entities that want  to qualify  by adjusting                 
  their boundaries  so that they don't overlap.  Jack Fargnoli                 
  agreed that it  could be a  problem, but they basically  use                 
  the   same  communities  that  are  designated  for  revenue                 
  sharing.     The  revenue   sharing  program     makes   the                 
  determination of  who is  eligible and they  would use  that                 
  first category.                                                              
                                                                               
  Number 345                                                                   
                                                                               
  Chairman Randy  Phillips referred to the fiscal notes on the                 
  legislation, saying he  has some concerns with  them, and he                 
  cautioned that OMB would have to  justify them when they get                 
  to the Senate Finance Committee.                                             
                                                                               
  Chairman Randy Phillips  said he wanted to have an amendment                 
  prepared that would limit any  local government's take to 10                 
  percent for administrative  costs, because in  his community                 
  in  the past,  the local government  has taken  an excessive                 
  amount of money to implement a program.                                      
                                                                               
  Chairman Randy  Phillips also questioned where  the guaranty                 
  was that  local  governments  would  get a  match  from  the                 
  municipality  for  the  money    that  local  government  is                 
                                                                               
                                                                               
  generating through local  taxes for a working  capital fund.                 
  Jack  Fargnoli  responded  that they  are  working  with the                 
  Department of Community & Regional  Affairs to see if  there                 
  is a solution to this.                                                       
                                                                               
  Number 400                                                                   
                                                                               
  Senator Taylor arrived at the meeting.                                       
                                                                               
  Senator Halford asked  how they  dealt with the  overlapping                 
  jurisdiction of boroughs and cities.  Jack Fargnoli answered                 
  that they have  tried in  the bill  to not  get overlaps  by                 
  basically using the population basis for the distribution of                 
  the  grants  to be  non-overlapping  conceptual areas.   The                 
  borough populations are defined in  the bill as the residual                 
  population after subtracting first the included communities.                 
                                                                               
  Senator Halford commented  that the funding for  the program                 
  is $67 million as a starting point, but if the  funding gets                 
  down to somewhere around $10 million, all it is is a $25,000                 
  grant  to  everybody,  regardless of  size.    Jack Fargnoli                 
  agreed that the legislation does  cover for that eventuality                 
  and that was  correct.  If  the funding were actually  lower                 
  than that, it would be less than even that.                                  
                                                                               
  Number 448                                                                   
                                                                               
  SHELBY  STASTNY,  Director, Office  of Management  & Budget,                 
  referring  to   administrative  costs,  said  it  was  their                 
  intention that all of this money go to projects and he would                 
  support a provision that no money could go to administrative                 
  costs.    He added  that they  changed  the language  in the                 
  matching  portion  of  the bill  to  make  it  clear that  a                 
  municipality couldn't use their administrative costs as part                 
  of their match.   He said he would not oppose going one step                 
  further and  saying that  they couldn't  pay themselves  for                 
  administrative costs.                                                        
                                                                               
  Number 470                                                                   
                                                                               
  Chairman Randy Phillips closed  the public hearing on SB  88                 
  and SB 89 and  stated it would be back  before the committee                 
  at its next meeting or the following week.                                   
  There  being  no   further  business  to  come   before  the                 
  committee, the meeting was adjourned at 9:40 a.m.                            

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