Legislature(2001 - 2002)

04/17/2002 01:45 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     ALASKA STATE LEGISLATURE                                                                                   
          SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE                                                                       
                         April 17, 2002                                                                                         
                            1:45 p.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Senator John Torgerson, Chair                                                                                                   
Senator Alan Austerman                                                                                                          
Senator Georgianna Lincoln                                                                                                      
Senator Pete Kelly                                                                                                              
MEMBERS ABSENT                                                                                                                
Senator Randy Phillips                                                                                                          
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 359                                                                                                             
"An Act relating to organization grants for mergers,                                                                            
consolidations, or unifications involving third class boroughs."                                                                
     MOVED SB 359 OUT OF COMMITTEE                                                                                              
HOUSE BILL NO. 312                                                                                                              
"An Act relating to the delay of the reduction of supplementary                                                                 
public school funding; and providing for an effective date."                                                                    
     MOVED HB 312 OUT OF COMMITTEE                                                                                              
CS FOR HOUSE BILL NO. 455(CRA)                                                                                                  
"An Act relating to the assessment of certain agricultural land                                                                 
for purposes of municipal taxation; and providing for an                                                                        
effective date."                                                                                                                
     MOVED CSHB 455(CRA) OUT OF COMMITTEE                                                                                       
CS FOR HOUSE BILL NO. 296(CRA)                                                                                                  
"An   Act    relating   to    mergers   and   consolidations    of                                                              
     MOVED SCS CSHB (CRA) OUT OF COMMITTEE                                                                                      
PREVIOUS COMMITTEE ACTION                                                                                                     
SB 359 - No previous action to record.                                                                                        
HB 312 - No previous action to record.                                                                                          
HB 455 - No previous action to record.                                                                                          
HB 296 - See CRA minutes dated 4/10/02.                                                                                         
WITNESS REGISTER                                                                                                              
Robert Venables                                                                                                                 
Box 50                                                                                                                          
Haines, AK 99827                                                                                                                
POSITION STATEMENT:  Testified on SB 359                                                                                      
Randy Ruaro                                                                                                                     
Staff to Representative William K. Williams                                                                                     
Alaska State Capitol, Room 515                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Introduced HB 312                                                                                        
Representative Gretchen Guess                                                                                                   
Alaska State Capitol, Room 112                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Testified on HB 312                                                                                      
Eddy Jeans                                                                                                                      
Department of Education &                                                                                                       
 Early Development                                                                                                              
801 W 10 St.                                                                                                                    
Juneau, AK  99801-1894                                                                                                          
POSITION STATEMENT: Testified on HB 312                                                                                       
Peter Fellman                                                                                                                   
Staff to Representative John Harris                                                                                             
Alaska State Capitol, Room 513                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Introduced HB 455                                                                                         
Steve Van Sant                                                                                                                  
State Assessor                                                                                                                  
Department of Community & Economic Development                                                                                  
550 W. 7 Ave Suite 1770                                                                                                         
Anchorage, AK 99701-4589                                                                                                        
POSITION STATEMENT: Testified on HB 455                                                                                       
ACTION NARRATIVE                                                                                                              
TAPE 02-9, SIDE A                                                                                                             
CHAIRMAN  JOHN TORGERSON  called the Senate  Community &  Regional                                                            
Affairs  Committee meeting  to  order at  1:45  p.m. Present  were                                                              
Senators Kelly, Austerman and Chairman  Torgerson. Senator Lincoln                                                              
arrived shortly.                                                                                                                
              SB 359-MUNICIPAL ORGANIZATION GRANTS                                                                          
CHAIRMAN  TORGERSON announced  the legislation  was introduced  at                                                              
the request  of the City and Borough  of Haines. It is  actually a                                                              
finance matter on whether or not  the state should help defray the                                                              
cost of  mergers and consolidation.  The language mirrors  what is                                                              
in  existing  statute  for  boroughs  to  incorporate.  There  are                                                              
expenses associated when a municipality  "merges up" and the state                                                              
should probably be a part of that.                                                                                              
ROBERT VENABLES  testified on behalf  of the Haines  City Manager,                                                              
Marco  Pignalberi  and  the  community  of  Haines.  He  read  the                                                              
following into the record:                                                                                                      
     I  have  lived  in  Haines  since  1984  and  have  been                                                                   
     involved in  numerous projects and committees  on behalf                                                                   
     of  the  City of  Haines,  the  Haines Borough  and  the                                                                   
     Haines  Chamber  of  Commerce. But  the  most  important                                                                   
     community project to date in Haines is consolidation.                                                                      
     For  the Haines  community, consolidation  is the  first                                                                   
     step toward achieving a home  rule government. SB 359 is                                                                   
     a  measure  that  will  help   us  transition  from  two                                                                   
     disparate   local  governments   into   one  home   rule                                                                   
     Haines has the only third-class  borough in the State of                                                                   
     Alaska.  It was designed  as a  compromise mechanism  to                                                                   
     allow for  school funding after  the citizens  of Haines                                                                   
     voted  three times  against  forming a  first or  second                                                                   
     class  borough. While  the third class  borough form  of                                                                   
     government seemed  to work for some time, it  was just a                                                                   
     matter of  time before its  inadequacies caught  up with                                                                   
     it. And now,  when there is a desire to  consolidate the                                                                   
     two  governments, we  find that  the task  before us  is                                                                   
     quite daunting.                                                                                                            
     What  has evolved  in Haines  is  two very  incompatible                                                                   
     systems  of government. This  community of 2,418  people                                                                   
     has  two legislative  bodies (Assembly  & Council),  two                                                                   
     mayors, two planning commissions  (five if you count the                                                                   
     two service  area boards and the state's  responsibility                                                                   
     in  the outlying  areas of  the  borough) with  separate                                                                   
     comprehensive  plans, two legal  systems, two  financial                                                                   
     systems,  two personnel systems  and two very  different                                                                   
     computer systems that do not  integrate with each other.                                                                   
     At our local election, last  October, the voters elected                                                                   
     new  mayors  and  implemented  a  city-manager  form  of                                                                   
     government.  This has  removed many  of the  contentious                                                                   
     personalities  and issues that  caused consolidation  to                                                                   
     fail in  1998 by  three votes. Our  two mayors and  city                                                                   
     manager  have   worked  hard   to  forge  a   spirit  of                                                                   
     cooperation that better represents  the community's best                                                                   
     interests.  It is  the consensus  of  all our  political                                                                   
     leaders  that  one  local government  can  serve  Haines                                                                   
     better  than the  current  two governments.  This  holds                                                                   
     great promise for the passing of consolidation.                                                                            
     The  Local  Boundary  Commission   approved  the  Haines                                                                   
     consolidation  proposal last  week and  the division  of                                                                   
     elections  has scheduled the  vote for consolidation  to                                                                   
     be held on  June 25, 2002. Transitional funding  will be                                                                   
     needed in  order to accomplish the consolidation  effort                                                                   
     in a timely and professional manner. It is a                                                                               
     significant challenge to maintain  government operations                                                                   
     while   simultaneously   changing    every   aspect   of                                                                   
     operations. Our  plan is to use consulting  expertise to                                                                   
     merge  our systems  of  accounting and  finance,  taxes,                                                                   
     legal  and   code  revisions,  comprehensive   planning,                                                                   
     platting   and   zoning,   computers   and   information                                                                   
     technology and personnel.                                                                                                  
     The consolidation of the Haines  Borough and the City of                                                                   
     Haines will  be in  the best interests  of the State  of                                                                   
     Alaska.  Having one  government  in Haines,  instead  of                                                                   
     two,  will  create  efficiencies   in  the  interactions                                                                   
     between the State of Alaska  and Haines. It will relieve                                                                   
     the state government of the  responsibility of providing                                                                   
     some of the  local services while promoting  the maximum                                                                   
     level of local self-government.                                                                                            
     The Local  Boundary Commission  is on record  supporting                                                                   
     both the creation  of new borough governments  and good,                                                                   
     sound   local  governmental   units.  Current  law   (AS                                                                   
     29.05.190)  provides   funding  for  new   boroughs  and                                                                   
     unified  municipalities. A borough  consolidated from  a                                                                   
     third-class  borough  and a  city  is not  eligible  for                                                                   
     funds at  this time.  Many governmental experts  believe                                                                   
     this to be an oversight.                                                                                                   
     Both  the City  of Haines  and the  Haines Borough  have                                                                   
     endorsed  the  consolidation   effort  and  are  working                                                                   
     together  to  insure that  it  has  the best  chance  to                                                                   
     succeed.  We would  ask  the committee's  assistance  in                                                                   
     making this hope a reality.                                                                                                
There was no further testimony.                                                                                                 
CHAIRMAN TORGERSON asked for the will of the committee.                                                                         
SENATOR  AUSTERMAN made  a  motion  to move  SB  359 and  attached                                                              
fiscal notes and individual recommendations.                                                                                    
There being no objection, it was so ordered.                                                                                    
        HB 312-SUPP. PUBLIC SCHOOL FUNDING/YOUTH ACADEMY                                                                    
RANDY  RUARO,  legislative  staff  to  Representative  William  K.                                                              
William, introduced  the legislation. Eddy Jeans  was available to                                                              
answer questions  on the fiscal notes and  Representative Gretchen                                                              
Guess was available to answer questions  on funding for the Alaska                                                              
Challenge Youth Academy.                                                                                                        
He said he  would address Sections 1  and 3 of the bill  that have                                                              
the affect of  suspending, for the fiscal year FY  03, the erosion                                                              
of the supplemental  funding floor that was created  by SB 36. The                                                              
reason for the one year suspension is that by next January, the                                                                 
Legislature should  have received a  new study of  school district                                                              
cost  factors. It  is  anticipated that  the  study would  provide                                                              
Legislators  with  a  base  of  information  upon  which  to  make                                                              
decisions on school funding for FY 04.                                                                                          
Section 3  makes it clear that  the suspension of the  erosion for                                                              
FY 03  does not affect  the funding  reductions that  have already                                                              
been made in FY 00, FY 01 and FY 02.                                                                                            
SENATOR  LINCOLN wanted  to hear from  Representative Guess  about                                                              
the Alaska Youth Academy Challenge Program.                                                                                     
REPRESENTATIVE GRETCHEN GUESS said  she helped create Section 2 of                                                              
the bill.  The Youth Academy Challenge  Program is run out  of the                                                              
Division of Military and Veteran's  Affairs and is a joint program                                                              
with the federal government to provide  educational and vocational                                                              
services to  at-risk youth.  These are youths  over the age  of 16                                                              
who have dropped out of school. Their  mornings are spent learning                                                              
basic reading, writing and computing  skills to prepare the youths                                                              
for  their  GED  testing.  Afternoons   are  spent  on  vocational                                                              
activities. It  is basically a boot  camp for youths and  has been                                                              
very successful.                                                                                                                
This part  of the  bill sets up  a funding  structure. They  get a                                                              
certain number  of dollars per  student; the federal  funding that                                                              
they receive  is subtracted and what  is left is the  general fund                                                              
dollar amount  that would need to  be authorized. They  have never                                                              
been funded per cadet and this sets  up the structure based on the                                                              
number of cadets in the program.                                                                                                
SENATOR  LINCOLN referred  to the  fiscal  note and  asked if  the                                                              
$334,000.00  was general  fund dollars.  Her  second question  was                                                              
whether  the   Department  of  Education  and   Early  Development                                                              
supported that portion of the legislation.                                                                                      
REPRESENTATIVE GUESS replied that  Nico Bus from the Department of                                                              
Military  and  Veteran's Affairs  was  available  to go  over  the                                                              
fiscal  note, but  she thought  $349,000.00 would  be required  in                                                              
addition  to the  federal allocation.  In response  to the  second                                                              
question,  she   said  the  Department  of  Education   and  Early                                                              
Development is very  supportive of the program  and recognizes the                                                              
importance of providing  the program stable funding.  This isn't a                                                              
school, it's a program and therefore  belongs in the Department of                                                              
Military and Veteran's Affairs but  the school is very supportive.                                                              
SENATOR KELLY  noted that this is  a $65,000.00 increase  over the                                                              
budget because  there were some general  funds "taken out  of both                                                              
SENATOR LINCOLN said, "65?"                                                                                                     
SENATOR KELLY replied,  "If this budget were to pass.  As it sits,                                                              
the fiscal  note is correct,  but if the  budget were to  pass, as                                                              
is, it would represent about a $65,000.00 increase."                                                                            
SENATOR AUSTERMAN said there were  two different fiscal notes from                                                              
the Department of Education and Early  Development, both dated the                                                              
same day,  and he wondered  whether Mr.  Jeans would  come forward                                                              
and briefly explain them.                                                                                                       
EDDY  JEANS, Finance  Manager  for  the Department  of  Education,                                                              
explained  there were  two  fiscal notes  because  there were  two                                                              
budget components  that are  affected by  the legislation.  One is                                                              
the foundation  program that has  the $334,000.00 fiscal  note and                                                              
the second component is the schools  for the handicapped where the                                                              
allocation  for  the  Challenge  Youth  Program will  sit  in  the                                                              
department's budget.                                                                                                            
SENATOR AUSTERMAN comment inaudible.                                                                                            
SENATOR KELLY question inaudible.                                                                                               
MR.  JEANS  said  he  wasn't sure  what  Senator  Kelly  meant  by                                                              
"reducing the federal  funds" but on the cover of  the fiscal note                                                              
for the  Challenge Program you could  see the calculation  for the                                                              
entitlement  for them and  from that  they subtracted the  dollars                                                              
that are  currently allocated to  the federal government  for that                                                              
program to come up with the additional state allocation.                                                                        
SENATOR KELLY said you're not actually  taking away federal funds;                                                              
you're using that as your formula.                                                                                              
MR.  JEANS replied  that was  correct,  it's very  similar to  the                                                              
foundation program.  They calculate an entitlement  then they make                                                              
adjustments for federal dollars.                                                                                                
CHAIRMAN TORGERSON  commented this bill was a  finance measure and                                                              
although  he didn't  think it  had  much chance  for survival,  he                                                              
didn't think it was appropriate to hold it in this committee.                                                                   
He asked for a motion.                                                                                                          
SENATOR  AUSTERMAN made  a  motion  to move  HB  312 and  attached                                                              
fiscal notes from committee with individual recommendations.                                                                    
There being no objection, it was so ordered.                                                                                    
         HB 455-MUNICIPAL TAXATION OF AGRICULTURAL LAND                                                                     
CHAIRMAN  TORGERSON  stated  this   was  a  companion  to  Senator                                                              
Therriault's  Senate bill  that the committee  heard the  previous                                                              
week. Since the House bill came over  it overcame the Senate bill.                                                              
PETER FELLMAN,  staff to Representative  John Harris, said  HB 455                                                              
is the  companion bill to  SB 352, but  there was a  slight change                                                              
made  by the  House.  They worked  with the  Office  of the  State                                                              
Assessor and changed  some language on the last page  of the bill.                                                              
They took  out the  word, "for  farm use  in accordance  with this                                                              
section."  and  added,  "based  upon  that  restricted  use."  The                                                              
assessor thought the bill was acceptable  to them with the change.                                                              
Alaska  already  recognizes  there   are  agricultural  restricted                                                              
lands,  fee  simple  lands  and agricultural  lands  that  have  a                                                              
covenant  in this  state. Under  this legislation,  it would  free                                                              
farmers with agriculturally  restricted land from  having to apply                                                              
for the required  annual exemption. They are trying  to remove the                                                              
requirement because  the land is  already restricted in  the state                                                              
and it  is cumbersome to  fill out an  annual request to  have the                                                              
land reassessed.                                                                                                                
SENATOR LINCOLN  asked for the approximate difference  between the                                                              
current tax  assessment and  what it  would be  if this  bill were                                                              
MR. FELLMAN  replied  the assessment  would still  be made  on the                                                              
value  of the  land.  This  will  allow people  with  agricultural                                                              
restricted land to go to the borough  assessor's office and make a                                                              
case for valuing  their land on its agricultural use  not on a fee                                                              
simple basis.                                                                                                                   
SENATOR  LINCOLN  said  the  bill   was  intended  to  reduce  the                                                              
assessment on lands that are used  for farms and that would reduce                                                              
the  amount of  money  collected. She  asked  what the  difference                                                              
would be because it could have an affect on the borough.                                                                        
MR.  FELLMAN said  that  would be  between  the  assessor and  the                                                              
people that own the agriculturally restricted land.                                                                             
SENATOR AUSTERMAN asked for the assessed  value of a piece of land                                                              
used for agricultural purposes if  it were appraised [assessed] at                                                              
$100,000.00 as fee simple land.                                                                                                 
MR. FELLMAN  replied the  law would stay  the same for  fee simple                                                              
land.  It requires  that  if  you are  using  fee simple  land  as                                                              
agricultural  land, they you  make an  annual application  and the                                                              
state  assessor  appraises  what   you  are  doing  then  makes  a                                                              
determination. That  wouldn't change under this  legislation. This                                                              
bill would remove  the requirement that agriculturally  restricted                                                              
land be evaluated on an annual basis.                                                                                           
CHAIRMAN  TORGERSON  asked  Mr.   Van  Sant  whether  he  had  any                                                              
STEVE VAN  SANT, State Assessor,  explained this bill  states that                                                              
those people with  agriculturally restricted lands  will no longer                                                              
have to  go to the  assessors office each  year to fill  out paper                                                              
work  to  remain  in  the  agricultural   tax  deferment  program.                                                              
Hypothetically, someone with agriculturally  restricted land could                                                              
have some fee simple  land that is worth between  3 thousand and 5                                                              
thousand  dollars per  acre. If that  land owner  is farming  that                                                              
land and  they apply to  the assessor on  an annual basis  for the                                                              
deferment, it will be assessed in  the neighborhood of 400 dollars                                                              
per acre and  the remainder of that  is being deferred  out of the                                                              
program.  Individuals who  have those parcels  are paying  between                                                              
400 and  600 dollars  per acre not  the 4  thousand to  6 thousand                                                              
dollars per acre it might be assessed as fee simple.                                                                            
SENATOR  AUSTERMAN  said that  process  is  already going  on.  He                                                              
wanted assurance  this bill only  removes the requirement  for the                                                              
annual deferment application.                                                                                                   
MR.  VAN SANT  said that's  what it  does. Those  people with  the                                                              
agriculturally  restricted lands wouldn't  have to apply  annually                                                              
and  they  would  be assessed  on  the  agriculturally  restricted                                                              
There were no further questions or testimony.                                                                                   
CHAIRMAN TORGERSON asked for the will of the committee.                                                                         
SENATOR  AUSTERMAN made  a  motion  to move  HB  455 and  attached                                                              
fiscal note from committee with individual recommendations.                                                                     
There being no objection, it was so ordered.                                                                                    
            HB 296-MUNICIPAL MERGER AND CONSOLIDATION                                                                       
CHAIRMAN TORGERSON announced the  bill was heard the previous week                                                              
and since  Mr. Waring  from the Local  Boundary Commission  wasn't                                                              
available  to testify,  the bill  was held. Mr.  Waring was  again                                                              
unavailable to comment  but members received a copy  to his letter                                                              
to the  Chairman dated April  10, 2002 and  a copy is in  the bill                                                              
CHAIRMAN  TORGERSON called  attention to  the supplemental  packet                                                              
for  HB 296  that  contained three  amendments.  Amendment #1  was                                                              
pending  from the  April 10,  2002 meeting.  There was  discussion                                                              
about changing the amendment to allow  a merger to move forward if                                                              
one  municipality  voted  to  not join  in  the  merger.  Proposed                                                              
amendment #2 would do that.                                                                                                     
He asked for a motion to withdraw amendment #1.                                                                                 
SENATOR AUSTERMAN  made a motion  to withdraw amendment  #1. There                                                              
was no objection.                                                                                                               
SENATOR AUSTERMAN  made a  motion to  adopt amendment #2,  version                                                              
\F.4 Cook. There being no objection, amendment #2 was adopted.                                                                  
CHAIRMAN TORGERSON stated amendment  #3, version \F.3 Cook affects                                                              
applicability. It  doesn't affect  any petition that  is currently                                                              
pending before the Department of Community and Regional Affairs.                                                                
SENATOR AUSTERMAN  made a  motion to  adopt amendment #3,  version                                                              
\F.3 Cook. There being no objection, amendment #3 was adopted.                                                                  
CHAIRMAN TORGERSON asked for the will of the committee.                                                                         
SENATOR AUSTERMAN made a motion to move SCS HB 296(CRA).                                                                        
There being no objection, it was so ordered.                                                                                    
There being no further business before the committee, the Senate                                                                
Community and Regional Affairs Committee meeting was adjourned at                                                               
2:10 pm.                                                                                                                        

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