Legislature(1995 - 1996)
02/28/1996 01:35 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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. SENATOR TORGERSON announced SB 287 (UNINCORP. COMMUNITY MATCHING) 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 transition. 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 communities. 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.