Legislature(1995 - 1996)

02/28/1996 01:35 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE                         
                       February 28, 1996                                       
                           1:35 p.m.                                           
  MEMBERS PRESENT                                                              
 Senator John Torgerson, Chairman                                              
 Senator Randy Phillips, Vice Chairman                                         
 Senator Tim Kelly                                                             
 Senator Fred Zharoff                                                          
 Senator Lyman Hoffman                                                         
  MEMBERS ABSENT                                                               
 All members present                                                           
  COMMITTEE CALENDAR                                                           
 SENATE BILL NO. 280                                                           
 "An Act relating to the mandatory incorporation of certain boroughs           
 in the unorganized borough."                                                  
 SENATE BILL NO. 287                                                           
 "An Act relating to the unincorporated community capital project              
 matching grant program; and providing for an effective date."                 
 SENATE BILL NO. 293                                                           
 "An Act relating to municipal capital project matching grants for             
 a municipality organized under federal law as an Indian reserve;              
 and providing for an effective date."                                         
  PREVIOUS SENATE COMMITTEE ACTION                                             
 SB 280 - No previous action to record.                                        
 SB 287 - No previous action to record.                                        
 SB 293 - No previous action to record.                                        
  WITNESS REGISTER                                                             
 Senator John Torgerson                                                        
 State Capitol                                                                 
 Juneau, Alaska 99801-1182                                                     
 POSITION STATEMENT:  Prime sponsor of SB 280.                                 
 Senator Fred Zharoff                                                          
 State Capitol                                                                 
 Juneau, Alaska 99801-1182                                                     
 POSITION STATEMENT:  Prime sponsor of SB 293.                                 
 Kim Metcalfe-Helmar, Special Assistant                                        
 Department of Community & Regional Affairs                                    
 PO Box 112100                                                                 
 Juneau, Alaska 99811-2100                                                     
 POSITION STATEMENT:  Supported SB 293.                                        
 Bill Rolfzen, State Revenue Sharing                                           
 Division of Municipal & Regional Assistance                                   
 Department of Community & Regional Affairs                                    
 PO Box 112100                                                                 
 Juneau, Alaska 99811-2100                                                     
 POSITION STATEMENT:  Answered questions.                                      
 Jack Fargnoli, Senior Policy Analyst                                          
 Office of Management & Budget                                                 
 Office of the Governor                                                        
 PO Box 110020                                                                 
 Juneau, Alaska 99811-0020                                                     
 POSITION STATEMENT:  Answered questions.                                      
 Sal Atkinson, Member                                                          
 Metlakatla City Council                                                       
 PO Box 8                                                                      
 Metlakatla, Alaska 99926                                                      
 POSITION STATEMENT:  Answered questions.                                      
  ACTION NARRATIVE                                                             
 TAPE 96-12, SIDE A                                                            
 Number 001                                                                    
  CHAIRMAN TORGERSON  called the Senate Community & Regional Affairs           
 Committee meeting to order at 11:35 a.m.                                      
 GRANTS) would not be heard by the committee until some additional             
 information, which has been requested, is received.                           
          SB 280 MANDATORY INCORP OF CERTAIN BOROUGHS                         
 SENATOR TORGERSON, Prime Sponsor, introduced  SB 280  as the next             
 order of business before the committee.  He said that he intended             
 to have the committee look at adopting a CS which would place a               
 time line in the bill.  The time line would provide better                    
 direction to Community & Regional Affairs as well as to the Local             
 Boundary Commission; the original bill said that everything must              
 occur by 1998.  That probably cannot be accomplished.  He and the             
 committee staff had been in contact with the Local Boundary                   
 Commission staff and others in order to place the time line in the            
 bill. Senator Torgerson invited the committee staff to come to the            
 table for an explanation of the CS.                                           
 Number 040                                                                    
 SENATOR RANDY PHILLIPS moved that CSSB 280(CRA) be adopted for                
 purposes of discussion.  Hearing no objection, the CS was adopted.            
 DEB DAVIDSON, Staff for the Senate Community & Regional Affairs               
 Committee, explained that the bill directs the Department of                  
 Community & Regional Affairs to submit second-class borough                   
 incorporation proposals for all areas of the unorganized borough.             
 The proposals are to be based upon the 1995 "Model Borough                    
 Boundaries" report.  Once the Local Boundary Commission accepts the           
 proposals, elections will be held in order to elect assembly                  
 members and to determine which of the non-areawide borough powers             
 are wanted.  Boroughs would automatically be formed upon the                  
 certification of the election.  In addition to those directives,              
 the CS would direct the state assessor to estimate the true value             
 of the property in the unorganized borough.  Then a guideline is              
 established for the department to submit the proposals to the Local           
 Boundary Commission.  Borough proposals for those areas with a full           
 and true value of at least $550 million should be submitted to the            
 commission by July 1, 1997.  Ms. Davidson pointed out the                     
 restrictions for the following years which as listed on page 2,               
 lines 24-29 of the CS.  The Local Boundary Commission has six                 
 months from the time each proposal is submitted to determine if the           
 borough was feasible and could work.  She informed the committee              
 that there is a copy of the Model Boundary Report as well as                  
 information illustrating which new boroughs would be formed and               
 those that could be expanded if the commission deemed it so and               
 submitted it to the legislature.  There is also information                   
 indicating which boroughs would most likely be proposed each year,            
 as based on the 1994 value.   The department does not believe those           
 would change with the 1997 estimate.                                          
 Number 090                                                                    
 In response to Senator Torgerson, DEB DAVIDSON said that no letter            
 of support had been received from the Administration.   The                   
 Administration appears to be neutral.  Ms. Davidson said that the             
 department has expressed a willingness to work with the committee             
 on this matter.                                                               
 SENATOR TORGERSON asked if there was any discussion on the adoption           
 of the CS.  Hearing none, the CS was before the committee.  Senator           
 Torgerson explained that he had intended to adopt the CS and then             
 distribute it across the state.  The bill would be heard again in             
 about two weeks.                                                              
 SENATOR ZHAROFF inquired as to how these boundaries come into play.           
 SENATOR TORGERSON explained that the Local Boundary Commission                
 began a Model Boundary in 1989 and was completed in 1992.                     
 According to the commission, each model borough boundary can                  
 sustain a local government.  DEB DAVIDSON interjected that there              
 would be 19 new boroughs including Annette Island.                            
 Number 142                                                                    
 SENATOR HOFFMAN pointed out that most of those boundaries follow              
 the last election districts; many of those boundaries have changed            
 as a result of the 1990 reapportionment.                                      
 SENATOR TORGERSON believed that the commission, or whoever did the            
 report, took into account the social, cultural, and economic                  
 activities of each region in order to ensure their compatibility.             
 The report stated that it basically followed the existing REAA                
 boundaries of that time.  Perhaps, some REAA districts have changed           
 since that time.                                                              
 SENATOR HOFFMAN mentioned that many of the same requirements for              
 the election districts are the same as those for reapportionment.             
 SENATOR TORGERSON noted that if there are adjustments to be made,             
 the Local Boundary Commission would do so per the commission's                
 constitutional responsibility.  In Senator Torgerson's opinion,               
 this should have been before the committee years ago.                         
 SENATOR KELLY asked if mandatory boroughs were established, would             
 that obviate the need for the REAAs?                                          
 SENATOR TORGERSON assumed so.  Currently, there are 54 school                 
 districts in Alaska and this would consolidate the school districts           
 to one per borough as is the case in organized areas.  SB  280 does           
 not address that, SB 280 provides the means for the equalization              
 between organized and unorganized areas.                                      
 SENATOR HOFFMAN noted that the unorganized areas encompass the                
 districts represented by Senator Zharoff, Senator Adams, Senator              
 Lincoln, and himself; who have travelled extensively through those            
 areas.  One of the primary reasons for not organizing these areas             
 is that these areas feel uncomfortable with local government.  To             
 place another layer of government on an ill-functioning existing              
 government seems to indicate that the next layer of government                
 would be even more ill-functioning.  Many of these communities have           
 unique needs and their local governments are struggling to                    
 determine whether second-class city status would be preferable over           
 organization under tribal organizations.  He informed the committee           
 that many of these communities are choosing tribal organizations              
 like Metlakatla.  Senator Hoffman expressed concern that SB 280               
 would not allow boroughs to function well and create divisiveness.            
 Number 218                                                                    
 SENATOR TORGERSON believed that Alaskan communities should start              
 out equal, especially before taking revenues from tax based                   
 communities to provide services for unorganized communities or                
 communities that are not tax based.   Recognizing 226 other nations           
 within Alaska is an entirely different subject.  Senator Torgerson            
 hoped that Alaska did not recognize these nations nor that the                
 tribal status would drive Alaska to eliminate Native lands and                
 create areas that are no longer called Alaska.                                
 SENATOR HOFFMAN pointed out that only one percent of Alaska's lands           
 are held privately, those holdings are in urban Alaska.  In rural             
 Alaska, the largest land holding is held in trust with Native lands           
 which encompasses more than 20 percent of Alaska's land.  Those               
 lands held in trust cannot be taxed.                                          
 SENATOR TORGERSON interjected that those lands are only in trust              
 until they are developed.  Once the area is developed, the area               
 becomes taxable if in a tax based area.  This is almost a different           
 subject than whether or not Alaska should have an equalization of             
 services across the state.                                                    
 SENATOR RANDY PHILLIPS stated that all the legislators are the                
 local government for the unorganized areas: does the legislature              
 have the power to tax for schools in the unorganized areas?                   
 SENATOR TORGERSON had asked that question of legal services who               
 indicated that the legislature cannot dedicate the funds for                  
 schools, but the legislature has the authority to tax and place it            
 in the General Fund and distribute as seen fit.  A tax could not be           
 instituted and dedicated to education, but the legislature can                
 place a mill rate with or without the mandatory borough act.                  
 SENATOR ZHAROFF mentioned that much of the undeveloped land does              
 generate a significant amount of revenue through PL874 monies of              
 which a good portion is placed in education.  If the entire borough           
 boundary system is to be restructured, then the notion that                   
 everything should be erased and started over should be considered.            
 SENATOR TORGERSON agreed that could be considered, however, that is           
 not before the committee.  SB 280 adopts a plan by the Local                  
 Boundary Commission which is their responsibility under Alaska's              
 constitution.  The bill merely establishes a few guidelines                   
 regarding when the report should be presented to the legislature.             
 Senator Torgerson emphasized that the legislature does have the               
 authority to mandate the incorporation of a borough, but not                  
 annexation.  With regards to revenue that may be lost or gained due           
 to federal money, the fiscal notes will have to be reviewed                   
 carefully.  Certainly, there will be a transfer of revenue in the             
 portions of unorganized areas which have the pipeline or oil and              
 gas properties.  Those are currently taxed at the maximum rate of             
 20 mills, local governments can tax up to the 20 mill rate.  If the           
 unorganized areas choose to form a borough, that money would shift            
 from the state to the local government.  The amendment which                  
 establishes a time line would encourage agencies to produce their             
 fiscal notes in order to determine the actual shift of monies.                
 SENATOR ZHAROFF asked if there are any requests before the                    
 commission regarding the formation of boroughs.  SENATOR TORGERSON            
 specified that there are some requests for annexation, but not for            
 the formation of boroughs.                                                    
 SENATOR TORGERSON held SB 280 in order that all the pertinent                 
 information could be distributed across the state.                            
        SB 293 CAP PROJ MATCHING GRANT FOR INDIAN RESERV                      
 SENATOR TORGERSON introduced  SB 293  as the next order of business           
 before the committee.                                                         
 Number 305                                                                    
 SENATOR ZHAROFF, Prime Sponsor, explained that SB 293 would clarify           
 an ambiguity in the statute with regard to how Metlakatla is                  
 treated under the Capital Matching Grants program.  Senator Zharoff           
 discussed the following sponsor statement:                                    
 SB 293 would amend the Capital Matching Grants program to clarify             
 that the Metlakatla Indian Community can participate in the program           
 as a municipality rather than as an unincorporated community.                 
 The Capital Matching Grants program became effective in FY 1994.              
 The prior administration adopted regulations to implement the                 
 Capital Matching Grants program that allowed Metlakatla to receive            
 Capital Matching Grants as both a municipality and unincorporated             
 community.  Last year, Legislative Legal Services determined that             
 Metlakatla could not legally receive a Capital Matching Grant as a            
 municipality and without an amendment to the Capital Matching                 
 Grants statutes, could only receive funds under the unincorporated            
 portion of the program.                                                       
 This bill corrects what I believe was an oversight in the original            
 legislation that created the Capital Matching Grants program to               
 specifically allow Metlakatla to receive their Capital Matching               
 Grants under the municipal portion of the program rather than as an           
 unincorporated community.                                                     
 Senator Zharoff said that since Metlakatla was not listed as a                
 municipality, Metlakatla only received $25,000.  As a municipality,           
 Metlakatla would be eligible for $50,000.  In discussions with the            
 Administration and the Department of Community & Regional Affairs,            
 there is no objection to SB 293.  He hoped that SB 293 would be               
 viewed as a housekeeping measure.                                             
 SENATOR RANDY PHILLIPS clarified that SB 293 would be recognized as           
 an incorporated area, as a municipality which would allow                     
 Metlakatla to be eligible for $50,000.  SENATOR ZHAROFF agreed with           
 that assessment.  SENATOR RANDY PHILLIPS asked why Metlakatla was             
 not currently receiving that amount.  SENATOR ZHAROFF explained               
 that Metlakatla was omitted from the legislation that established             
 the Capital Matching Grants Program in 1994; that was an oversight.           
 SENATOR TORGERSON pointed out that the additional money, $14,910,             
 is needed to upgrade Metlakatla.  Perhaps the department could                
 inform the committee from where this money would come.                        
 Number 354                                                                    
 KIM METCALFE-HELMAR, Special Assistant for the Department of                  
 Community & Regional Affairs, supported SB 293 which the department           
 views as a housekeeping measure.  SB 293 would clarify an ambiguity           
 in current law by establishing Metlakatla as a municipality for the           
 purposes of the Municipal Capital Project Matching Grant Program.             
 She requested that Bill Rolfzen from the department to come forward           
 to answer specific questions.                                                 
 SENATOR RANDY PHILLIPS inquired as to how Metlakatla operated.                
 BILL ROLFZEN, State Revenue Sharing for the Department of Community           
 & Regional Affairs, explained that the Metlakatla Indian Community            
 operates similarly to a municipality organized under state law.               
 Metlakatla has a City Council, a Mayor, and it provides basic                 
 community services for Annette Island.  As far as Mr. Rolfzen knew,           
 the Mayor and the City Council are elected by the people in                   
 Metlakatla.  Mr. Rolfzen clarified that the Metlakatla Community              
 Development Corporation must be established as required under the             
 Municipal Assistance Legislation which was amended in 1986 as well            
 as under the National Forest Receipts Program.  The corporation has           
 been formed.  Within the charter of the corporation, the election             
 of the board of directors must be open to all members of the                  
 community regardless of race.  Once the money is received, a                  
 determination regarding how the money would be spent would be made            
 and then the money would be given to the Metlakatla Indian                    
 Community.  The Metlakatla Indian Community is basically the local            
 government that provides all the local services.  The expenditure             
 of the fund would be documented in the financial statements the               
 department receives; those monies are audited and tracked.                    
 Number 382                                                                    
 SENATOR KELLY asked if SB 293 was site specific to Metlakatla.                
 SENATOR TORGERSON replied yes.                                                
 SENATOR TORGERSON pointed out that the fiscal note is zero,                   
 although the transition would require $14,910.  He assumed that               
 money would be taken from other communities in order to make the              
 JACK FARGNOLI, Office of Management and Budget for the Office of              
 the Governor, said that the funding issue is before the                       
 legislature.  One option would entail the extra money being added             
 to the total amount of money being appropriated to both programs or           
 money could be taken from one side and moved to the other side.               
 Once the funding decision is made for the municipal program, that             
 money would be spread by formula.  Therefore if money were added to           
 that side, it would come out of the CRA side.  If money were added            
 to the CRA side, the money would come from Community & Regional               
 Affairs.  Including Metlakatla in this funding would be another               
 community for which the municipal funding would have to be spread             
 by formula.  Mr. Fargnoli pointed out that there are two choices,             
 either add more money or let the allocations follow the formula.              
 SENATOR TORGERSON asked if the Administration's position was to               
 leave it to the legislature.  JACK FARGNOLI noted that the Governor           
 has proposed a net cut of the Metlakatla decision.  Mr. Fargnoli              
 assumed that the total funding level would remain the same                    
 and Metlakatla would be included with the municipalities.                     
 Number 415                                                                    
 SENATOR TORGERSON handed out a breakdown of where this money would            
 come from and listing each municipality in the current program.  He           
 assumed that this would create zero impact to the budget.  This               
 report was provided by Municipal Grants in the Administration.                
 JACK FARGNOLI said that original intent was to include Metlakatla             
 as a municipality which was echoed in regulations through a                   
 definition including Metlakatla as a municipality.  The way the               
 local revenue sharing program was written, the unincorporated side            
 of the program, meant that Metlakatla had to be included as an                
 unincorporated entity as well.  Last year, Senator Halford pointed            
 out that a different prevailing statute's definition of                       
 municipality, Metlakatla did not fall under that.  The only                   
 recourse was to allow Metlakatla to remain on the unincorporated              
 side of the program.                                                          
 SENATOR RANDY PHILLIPS asked if there was a tax base in Metlakatla.           
 JACK FARGNOLI replied yes and deferred to Mr. Rolfzen.                        
 Number 449                                                                    
 SAL ATKINSON, member of the Metlakatla City Council, informed the             
 committee that he was present to represent the mayor and the                  
 council.  He thanked Senator Zharoff for introducing SB 293.  Mr.             
 Atkinson explained that last year, Metlakatla missed some matching            
 grant funds through some technical error.  After reviewing the                
 situation, the community discovered that it qualified under the               
 definition of unincorporated community as well as the definition of           
 a municipality.  Metlakatla has its own constitution, law and order           
 code, police force, judicial system, 12 councilmen, judges, and all           
 the services provided by other communities.  Mr. Atkinson                     
 emphasized that Metlakatla wants to build a closer working                    
 relationships with the State of Alaska.  SB 293 would draw                    
 Metlakatla closer to this goal.                                               
 SENATOR RANDY PHILLIPS inquired as to how many members were there             
 on the Metlakatla council.  SAL ATKINSON said there were 12                   
 members.  The town engineer is elected separately.  In response to            
 Senator Randy Phillips' question regarding Metlakatla's tax base,             
 Mr. Atkinson stated that Metlakatla does not have a tax base.                 
 There are some timber lands and that money is used to provide                 
 services to the people.  For instance, services are provided for              
 senior citizens in Metlakatla beyond what is provided in other                
 SENATOR RANDY PHILLIPS asked if the monies that Metlakatla has for            
 the government comes entirely from timber sales.  SAL ATKINSON                
 informed the committee that Metlakatla does receive grants from the           
 State of Alaska.  At one time, Metlakatla received money from the             
 Bureau of Indian Affairs, but that money is shrinking.  Therefore,            
 Metlakatla wants to diversify its economy.  Currently, Metlakatla             
 does not have a tax base, but eventually that may happen.  Mr.                
 Atkinson noted that research is being done on the possibility of a            
 sales tax.  Metlakatla has a population of 1,826.                             
 In response to Senator Kelly's question regarding the location of             
 Metlakatla, SENATOR RANDY PHILLIPS said that Metlakatla is south of           
 Ketchikan.  SENATOR KELLY asked if all of Annette Island was                  
 Metlakatla, is the community called Metlakatla?  SAL ATKINSON                 
 replied yes.  Mr. Atkinson explained that when the area was set               
 aside by presidential proclamation, the area was set aside for the            
 Indians of Metlakatla living on Annette Islands.                              
 Number 495                                                                    
 SENATOR RANDY PHILLIPS asked if the people of Metlakatla had                  
 decided not to participate in the Native Land Claims in lieu of               
 title to the land and a way of life.  SAL ATKINSON agreed that the            
 people of Metlakatla decided not to participate in the Native Land            
 Claims.  Mr. Atkinson explained that all the land of the Annette              
 Islands belongs to the federal government, a parcel of land can be            
 leased for a maximum of 50 years renewable.                                   
 SENATOR KELLY asked if homes were built on that leased land.  Are             
 homes bought and sold on leased land?  SAL ATKINSON said that homes           
 were built on the leased land, but rarely is a house on leased land           
 sold.  These homes are in private ownership.                                  
 SENATOR RANDY PHILLIPS thought that the tribe decided that the land           
 belongs to the people collectively, but that is not the case.  Why            
 did the tribe opt out of the Native Land Claims Act?  SAL ATKINSON            
 expressed gratitude that the tribe had chosen not to participate in           
 the Native Land Claims Act.  A subsistence lifestyle is still                 
 present and no commercial fishery is allowed within any of the                
 waters surrounding Annette Island.  For instance, if someone                  
 proposes a shellfish harvest or other commercial harvest,                     
 Metlakatla can refuse.                                                        
 SENATOR HOFFMAN asked if members of the tribe could go commercial             
 fish in those waters.  SAL ATKINSON replied yes.                              
 SENATOR KELLY inquired as to how far from the island are commercial           
 fisheries not allowed.  SAL ATKINSON informed the committee that it           
 extended 3,000 feet from the land.                                            
 SENATOR KELLY asked if any of the people in Metlakatla belonged to            
 any of the regional corporations.  SAL ATKINSON said no, they are             
 not allowed; although, the ANSCA amendments would allow the people            
 of Metlakatla to inherit stock, but not a controlling amount.                 
 In response to Senator Randy Phillips, SAL ATKIINSON said that the            
 elders of Metlakatla made the decision not to participate in the              
 Native Land Claims Act.  SENATOR RANDY PHILLIPS asked what the                
 elders of Metlakatla saw that other elders did not with regard to             
 the Native Land Claims Act.  SAL ATKINSON said that the elders of             
 Metlakatla looked at the way of life they had; they did not want to           
 change their lifestyle which still prevails today.                            
 SENATOR TORGERSON asked if anyone else would like to testify.                 
 Hearing none, Senator Torgerson said that he was tempted to hold              
 SB 293 until Wednesday for a corrected fiscal note.  He did not               
 believe that the Administration was being honest with the zero                
 fiscal note when money, $14,000, will be taken from tax based                 
 communities to spread around.  Senator Torgerson explained that his           
 opposition comes from the Administration's opposition to SB 20                
 which is about the same, but with a $900,000 fiscal note because              
 the Administration did not like that bill.  SB 293 was held until             
 Wednesday and a request will be made for a corrected fiscal note.             
 There being no further business before the committee, the meeting             
 was adjourned at 2:22 p.m.                                                    

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