Legislature(1993 - 1994)
02/16/1993 09:05 AM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.