Legislature(2003 - 2004)

04/09/2003 01:40 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         April 9, 2003                                                                                          
                           1:40 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Thomas Wagoner, Chair                                                                                                   
Senator Gary Stevens                                                                                                            
Senator Georgianna Lincoln                                                                                                      
Senator Kim Elton                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Robin Taylor, Vice Chair                                                                                                
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
Legislative Directive for Unorganized Borough Review:                                                                           
Local Boundary Commission                                                                                                       
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
No previous action to report                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Darroll Hargraves                                                                                                               
Local Boundary Commission (LBC) Chair                                                                                           
Department of Community & Economic Development                                                                                  
550 West Seventh Avenue, Suite                                                                                                  
Anchorage, Alaska 99501-3510                                                                                                    
POSITION STATEMENT: Presented the LBC Report                                                                                  
                                                                                                                                
Dan Bockhorst                                                                                                                   
Staff to the Local Boundary Commission                                                                                          
Department of Community & Economic Development                                                                                  
PO Box 110800                                                                                                                   
Juneau, AK 99811-0800                                                                                                           
POSITION STATEMENT: Answered questions on LBC Report                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-10, SIDE A                                                                                                            
                                                                                                                                
CHAIR  THOMAS WAGONER  called the  Senate Community  and Regional                                                             
Affairs Standing Committee meeting to  order at 1:40 p.m. Present                                                               
were Senators Gary Stevens, Lincoln, Elton and Chair Wagoner.                                                                   
                                                                                                                                
He  announced the  business before  the committee  was the  Local                                                               
Boundary Commission borough review.                                                                                             
                                                                                                                                
     Legislative Directive for Unorganized Borough Review:                                                                  
                   Local Boundary Commission                                                                                
                                                                                                                              
DARROLL HARGRAVES, Local Boundary  Commission Chair from Wasilla,                                                               
reported commission members Robert  Hicks from Seward, Georgianna                                                               
Zinnerle  from   Ketchikan  and  Fairbanks  member   Dr.  Anthony                                                               
Nakazawa were  also in attendance.  Robert Harcharek  from Barrow                                                               
wasn't able to attend. He gave the following report:                                                                            
                                                                                                                                
     The commission is  here today at the  invitation of the                                                                    
     Senate  Community  and  Regional Affairs  Committee  to                                                                    
     present  information   about  the   recently  completed                                                                    
     review of the unorganized borough.                                                                                         
                                                                                                                                
     Last year,  the legislature passed SB  359 by unanimous                                                                    
     vote among  all members  of the  Senate and  House that                                                                    
     were present.  The legislation was  signed into  law as                                                                    
     Chapter 53, Session Laws of Alaska, 2002.                                                                                  
                                                                                                                                
     The  law directed  the LBC  to  review the  unorganized                                                                    
     borough  in   terms  of   the  standards   for  borough                                                                    
     incorporation. It  also directed  the LBC to  report to                                                                    
     the 2003 Legislature those  unorganized areas that meet                                                                    
     the standards for borough incorporation.                                                                                   
                                                                                                                                
     Four  members of  the commission  that participated  in                                                                    
     the review of the unorganized  borough are no longer on                                                                    
     the  commission. It  is fitting  that  I recognize  the                                                                    
     hard work of those  former commissioners regarding this                                                                    
     matter. Those  former members  are Kevin  Waring, Allan                                                                    
     Tesche, Ardith Lynch, and Myrna Gardner.                                                                                   
                                                                                                                                
     The commission  began its review shortly  after the law                                                                    
     took  effect   on  September  17  of   last  year.  The                                                                    
     commission   endeavored   to   promote   broad   public                                                                    
     awareness about and participation in the review.                                                                           
                                                                                                                                
     The   commission   met   six   times   concerning   the                                                                    
     unorganized borough review:  October 22, 2002, November                                                                    
     13, 2002, December 9, 2002,  January 22, 2003, February                                                                    
     8, 2003 and February 11, 2003.                                                                                             
                                                                                                                                
     During the  February 8 meeting,  the commission  held a                                                                    
     statewide hearing on the  matter and received testimony                                                                    
     from   residents  of   twenty-seven  communities.   110                                                                    
     individuals   and   organizations   submitted   written                                                                    
     comments on the matter to the commission.                                                                                  
     All written  comments, along with  a transcript  of the                                                                    
     commission's  meetings  of   December  9,  January  22,                                                                    
     February  8, and  February 11  are part  of the  record                                                                    
     reviewed by the commission.                                                                                                
                                                                                                                                
     The commission  filed its  report with  the Legislature                                                                    
     on February 19  of this year. A copy of  the report was                                                                    
     provided to each  legislator. The report and  a copy of                                                                    
     the  correspondence  and  transcripts  have  also  been                                                                    
     provided to the  Secretary of the Senate  and the Chief                                                                    
     Clerk of the House.                                                                                                        
                                                                                                                                
     Again,  four  of  the  five   current  members  of  the                                                                    
     commission  did not  participate in  the review  of the                                                                    
     unorganized borough.  However, the  currently appointed                                                                    
     members of  the commission have had  the opportunity to                                                                    
     fully review the February 19  report on the unorganized                                                                    
     borough.  The commission  met two  days age  to address                                                                    
     the matter at length.                                                                                                      
                                                                                                                                
     Chapter 53, SLA  2002 imposed on the  commission a duty                                                                    
     only to  make a  determination as to  which unorganized                                                                    
     areas meet  borough standards. The  law was  clear that                                                                    
     the  commission's report  to  the  legislature did  not                                                                    
     constitute  a formal  recommendation for  incorporation                                                                    
     of boroughs  in any areas  under Article X,  Section 12                                                                    
     of the  constitution. As such, the  commission's duties                                                                    
     under Chapter  53 have  been fulfilled.  The commission                                                                    
     will address  any future directives by  the legislature                                                                    
     regarding in accordance with the law.                                                                                      
                                                                                                                                
     Dan Bockhorst, staff to the  commission, is prepared to                                                                    
     provide  a summary  of the  commission's review  of the                                                                    
     unorganized borough.  The summary that he  will provide                                                                    
     reflects the current views of the commission.                                                                              
                                                                                                                                
     Mr. Bockhorst  will provide you  with a summary  of the                                                                    
     study and report.                                                                                                          
                                                                                                                                
CHAIR WAGONER announced  that no public testimony  would be taken                                                               
that day.                                                                                                                       
                                                                                                                                
SENATOR KIM ELTON  asked where previous members  Ardith Lynch and                                                               
Myrna Gardner resided.                                                                                                          
                                                                                                                                
MR.  HARGRAVES  replied Ms.  Lynch  was  from Fairbanks  and  Ms.                                                               
Gardner was from  Juneau. He added he is  the member-at-large and                                                               
therefore serves as chair.                                                                                                      
                                                                                                                                
SENATOR  GARY STEVENS  asked  if SB  359 required  this  to be  a                                                               
continuing process.                                                                                                             
                                                                                                                                
MR. HARGRAVES  said it  is his understanding  this is  a one-time                                                               
event.                                                                                                                          
                                                                                                                                
He reported  the group was  economical and conservative  in their                                                               
approach and much of the  $50,000 appropriated for the report was                                                               
not spent.                                                                                                                      
                                                                                                                                
SENATOR ELTON asked  about the process. He noted no  one from the                                                               
unorganized part of  the state was involved and  he wondered what                                                               
kind of  public process the  commission went through to  bring in                                                               
public comment from individuals in the unorganized borough.                                                                     
                                                                                                                                
MR. HARGRAVES said he would defer to Mr. Bockhorst.                                                                             
                                                                                                                                
DAN BOCKHORST,  staff to the  Local Boundary  Commission, advised                                                               
he prepared a  Power Point presentation. [Copy in  bill file] The                                                               
outline is as follows:                                                                                                          
                                                                                                                                
                        SUMMARY ADDRESS                                                                                       
                                                                                                                              
        1. LBC's duty to review the unorganized borough &                                                                       
          study local government boundary problems                                                                              
        2. Key background information about establishment of                                                                    
          boroughs                                                                                                              
        3. Significant conclusions reached by the LBC                                                                           
          regarding borough establishment                                                                                       
        4. Unorganized areas that meet borough incorporation                                                                    
          standards                                                                                                             
                                                                                                                                
                             Part I                                                                                           
                                                                                                                              
   · Last year the Legislature passed a law that stated, "The                                                                   
     Local Boundary Commission shall review conditions in the                                                                   
     unorganized borough. ....the commission shall report to the                                                                
     legislature  the  areas  it has  identified  that  meet  the                                                               
     standards for incorporation."                                                                                              
   · "The Local  Boundary Commission shall make  studies of local                                                               
     government boundary problems..."                                                                                           
   · "Shortcomings  in the  manner in  which the  borough concept                                                               
     has  been implemented"  were studied  by  the commission  in                                                               
     2001                                                                                                                       
   · "The commission considers the lack  of a strong state policy                                                               
     promotion  the extension  of borough  government  to be  the                                                               
     most  pressing 'local  government  boundary problem'  facing                                                               
     Alaska."                                                                                                                   
                                                                                                                                
                            Part II                                                                                           
                                                                                                                              
   · Borough  government,  as  a  concept  for  regional  service                                                               
     entity   in    Alaska   was   conceived    during   Alaska's                                                               
     Constitutional  Convention.  The  session lasted  nearly  11                                                               
     weeks  beginning in  November  1955 and  ending in  February                                                               
     1956.                                                                                                                      
   · The  Committee  on  Local Government  met  44  times  before                                                               
     presenting the Local Government Article to the Convention.                                                                 
   · Delegates formally  considered the Local  Government Article                                                               
     on January 19, 20 and 30, 1956.                                                                                            
   · The minutes  show discussion about  how the  borough concept                                                               
     would be  implemented in Alaska.  John Rosswog  from Cordova                                                               
     and Chair of the Committee  on Local Government said, "...we                                                               
     allow for the boroughs  remaining unorganized until they are                                                               
     able to take on their local government functions."                                                                         
   · Delegate   Barrie  White   expressed  concern   whether  the                                                               
     provisions   proposed   by   the  committee   didn't   offer                                                               
     incentives for areas to remain unorganized.                                                                                
   · Member Victor  Rivers replied the state  would create enough                                                               
     inducements  to  cause  areas   to  embrace  government  and                                                               
     organize voluntarily.                                                                                                      
   · Member  Maynard  Londborg  from  Unalakleet  added  boroughs                                                               
     could be organized  on a voluntary or  mandatory basis, with                                                               
     voluntary being the best approach.                                                                                         
   · Delegate  James  Hurley  from  Palmer  asked,  "Is  my  idea                                                               
     correct that  no organized  borough will  become effectuated                                                               
     without the voice of the people in the area?"                                                                              
   · Secretary  Vic  Fischer  responded, "The  answer,  I  think,                                                               
     would be  'no'. ...when  a certain  area reaches  a position                                                               
     where it  can support  certain services and  act in  its own                                                               
     behalf,  it   should  take   on  the   burden  of   its  own                                                               
     government."  He continued,  "...we don't actually visualize                                                               
     that the state will force boroughs to organize, since we                                                                   
     feel that they should be set up on such a basis that there                                                                 
     will be enough inducement for each one to organize."                                                                       
   · Article X was adopted by the convention on January 30,                                                                     
     1956.                                                                                                                      
   · The constitution was ratified by a two to one margin by                                                                    
     voters on April 24, 1956 and took effect January 3, 1959.                                                                  
   · Provisions   in   the   constitution   dictated   that   the                                                               
     Legislature would establish policy for the institution of                                                                  
     borough government in Alaska.                                                                                              
        · Boroughs,  organized   or  unorganized,   must  be                                                                    
          established throughout Alaska.                                                                                        
        · All  boroughs, organized  or unorganized,  must be                                                                    
          established according to  standards and procedures                                                                    
          enacted by the legislature.                                                                                           
   · The 1961 Legislature set the initial state policy regarding                                                                
     establishment of boroughs.                                                                                                 
        · Procedures   for    incorporation   of   organized                                                                    
          boroughs by local option were enacted.                                                                                
        · Standards for incorporation  of organized boroughs                                                                    
          were enacted.                                                                                                         
        · Independent   school    districts   formed   under                                                                    
          Territorial   law,   but  not   sanctioned   under                                                                    
          Alaska's constitution, were given  two years to be                                                                    
          integrated into boroughs.                                                                                             
        · A  single  unorganized   borough  was  established                                                                    
          encompassing  all of  Alaska not  within organized                                                                    
          boroughs. The amounted to 656,000 square miles.                                                                       
   · Significant   evidence   indicates   state   policy   makers                                                               
     anticipated the Borough Act of 1961 would be generally                                                                     
     ineffective in promoting borough formation.                                                                                
        · Representative   Jay  Hammond   said,  "Attractive                                                                    
          enough  on  paper,   in  practice,  the  organized                                                                    
          borough   concept  had   little  appeal   to  most                                                                    
          communities.  After  all,   why  should  they  tax                                                                    
          themselves to  pay for services received  from the                                                                    
          state, gratis?"                                                                                                       
        · Affairs  Agency Director,  Roger W.  Pegues wrote,                                                                    
          "It   was  generally   believed   that  the   1963                                                                    
          legislature would adopt  a mandatory incorporation                                                                    
          law."                                                                                                                 
        · A   later  study   indicated  Alaskans   were  not                                                                    
          generally    induced    to    voluntary    borough                                                                    
          incorporation.                                                                                                        
        · Then Attorney General John Rader said, "...the                                                                        
          moment  [a  proposed  borough] began  to  have  an                                                                    
          immediate  tax equalization  feature, the  borough                                                                    
         had two chances for success - slim and none."                                                                          
   · Arguments against boroughs in the early 1060s were similar                                                                 
     to those voiced today.                                                                                                     
        · "School district officials wanted to avoid loss                                                                       
          of autonomy, city residents saw  no need for a new                                                                    
          layer  of government  and  taxation, and  Alaskans                                                                    
          outside  cities  and  school districts  wanted  to                                                                    
          preserve their tax-free status."                                                                                      
   · As anticipated, the Borough Act of 1961 proved to be                                                                       
     generally ineffective in promoting borough formation.                                                                      
        · In the two years allowed, none of the nine                                                                            
          regions  containing  independent school  districts                                                                    
          had formed boroughs.                                                                                                  
        · The deadline for integration of independent                                                                           
          school  districts into  boroughs  was just  months                                                                    
          away when the 1963 Legislature convened.                                                                              
        · John Rader said, "...the greatest unresolved                                                                          
          political problem  on the state was  the matter of                                                                    
          boroughs.   ...A  great   opportunity  to   create                                                                    
          something of value could be lost."                                                                                    
                                                                                                                                
   · In 1963, Representative Rader sponsored HB 90                                                                              
    mandating    that   the    nine   election    districts                                                                     
    encompassing   independent    school   districts   must                                                                     
     incorporate boroughs by January 1, 1964.                                                                                   
                                                                                                                                
        · HB 90 was amended to exclude one of the nine                                                                          
          areas.                                                                                                                
                                                                                                                                
        · Ch. 52, SLA, 1963 mandated boroughs in:                                                                               
          Ketchikan,  Sitka,   Juneau,  Kodiak  Island,                                                                         
          Kenai   Peninsula,  Anchorage,   Mat-Su,  and                                                                         
          Fairbanks.   Icy    Strait/Lynn   Canal   was                                                                         
          excluded.                                                                                                             
                                                                                                                                
   · When the Legislature directed the eight areas must                                                                         
     organize, they expressed their intent.                                                                                     
                                                                                                                                
        · "It is the intention of the Legislature to                                                                            
           provide for maximum local self-government                                                                            
           with a minimum number of local government                                                                            
          units and tax-levying jurisdictions."                                                                                 
                                                                                                                                
        · "...No area incorporated as an organized                                                                              
          borough shall be deprived of state services,                                                                          
            revenues, or assistance or be otherwise                                                                             
          penalized because of incorporation."                                                                                  
                                                                                                                                
   · In 1964, the Alaska Supreme Court characterized the                                                                        
     1963 Mandatory Borough Act as a means of accomplishing                                                                     
       a constitutional objective of establishing borough                                                                       
     government.                                                                                                                
                                                                                                                                
        · John Rader said, "It was only after a series                                                                          
          of repeated  failures that in 1963  the State                                                                         
          Legislature  finally exercised  the authority                                                                         
          which  had   previously  been   delegated  to                                                                         
          others."                                                                                                              
                                                                                                                                
   · Despite the proven ineffectiveness of the local option                                                                     
     approach, the state returned to the policy of delegating                                                                   
     borough establishment to local residents after 1963.                                                                       
                                                                                                                                
        · In 44 years of statehood, boroughs have formed                                                                        
          under the local option process in areas                                                                               
          encompassing just 4 percent of Alaskans.                                                                              
                                                                                                                                
        · In contrast, the eight boroughs formed under the                                                                      
          1963 Mandatory Borough Act encompass 83 percent                                                                       
          of Alaskans.                                                                                                          
                                                                                                                                
        · Incentives to incorporate boroughs were generally                                                                     
          inadequate in the early 1960s.                                                                                        
                                                                                                                                
        · Since then, borough incentives have diminished                                                                        
          dramatically.                                                                                                         
                                                                                                                                
   · The Alaska Municipal League expressed some of the same                                                                     
     concerns the commission has raised.                                                                                        
                                                                                                                                
        · The state has failed to continue the evolution of                                                                     
          local government as intended under the Alaska                                                                         
          Constitution.                                                                                                         
                                                                                                                                
        · Alaska is the only state in the nation that has                                                                       
          voids in terms of regional government.                                                                                
                                                                                                                                
        · "Article X of the constitution also states, 'The                                                                      
          purpose of this article  is to provide for maximum                                                                    
          local  self government  with  a  minimum of  local                                                                    
          government units.' In  the Unorganized Borough the                                                                    
          opposite is true. There is  currently a minimum of                                                                    
          local  self-government  with  a maximum  of  local                                                                    
          government units."                                                                                                    
                                                                                                                                
        · "Adding borough government would not be a new,                                                                        
          expensive layer of  government. Local services are                                                                    
          currently provided  by the  state and  a patchwork                                                                    
          of over  400 separate [entities].  Current service                                                                    
          delivery is neither  inexpensive or efficient, due                                                                    
          to the lack of coordinated service delivery."                                                                         
                                                                                                                                
                          Part III                                                                                            
                                                                                                                                
 Significant Conclusions Reached by the Commission Regarding                                                                    
             Establishment of Borough in Alaska                                                                                 
                                                                                                                                
   · Fundamental provisions in the constitution remain                                                                          
     unfulfilled                                                                                                                
        · Lack of standards for establishment of                                                                                
          unorganized boroughs as called for                                                                                    
        · Procedures for establishment of unorganized                                                                           
          boroughs have not been enacted                                                                                        
        · The single unorganized borough has highly                                                                             
          diverse  interests, not  common interests  as                                                                         
          required in the constitution                                                                                          
   · Boroughs promote equity among Alaskans                                                                                     
        · Art. 1, Sec. 1 is referred to as the equal                                                                            
          protection  clause  and  should also  be  the                                                                         
          equal responsibility clause                                                                                           
        · Local contributions required of municipal                                                                             
          school  districts under  AS 14.17.410  reduce                                                                         
          education   foundation  funding   that  would                                                                         
          otherwise be  paid by  the state  to boroughs                                                                         
          and  home rule  & first  class cities  in the                                                                         
          unorganized borough.                                                                                                  
        · Reduction of funding conflicts with the 1963                                                                          
          Act                                                                                                                   
             · "...No area incorporated as an                                                                                   
               organized    borough    shall    be                                                                              
               deprived    of   state    services,                                                                              
               revenues,   or  assistance   or  be                                                                              
                 otherwise penalized because of                                                                                 
               incorporation."                                                                                                  
        · The local contribution requirement is, in                                                                             
          effect,  a  $160  million  annual  state  tax                                                                         
          levied  only on  organized boroughs  and home                                                                         
          rule & first class  cities in the unorganized                                                                         
          borough.                                                                                                              
        · In the absence of standards and procedures                                                                            
          to determine  whether unorganized  areas have                                                                         
          the  capacity to  take on  responsibility for                                                                         
          their own  government, the  current disparate                                                                         
          treatment isn't rational.                                                                                             
   · Organized boroughs promote maximum local self-                                                                             
     government                                                                                                                 
        · Attorney General, Representative and Senator                                                                          
          John  Rader:   "...A  great   opportunity  to                                                                         
          create something of value could be lost."                                                                             
        · Legislative intent to provide maximum local                                                                           
          self-government                                                                                                       
                                                                                                                                
   · The 1974 Alaska Supreme Court reviewed an appeal of a                                                                      
     borough incorporation proposal                                                                                             
                                                                                                                                
        · They favored upholding the organization of                                                                            
          boroughs   wherever   the   LBC   determined   the                                                                    
          standards had been met                                                                                                
                                                                                                                                
        · They indicated the constitution encourages the                                                                        
          creation of organized boroughs                                                                                        
                                                                                                                                
   · Boroughs promote maximum local self-government                                                                             
        · Provide capacity to supplement funding for                                                                            
          essential  services  like   education  (REAAs  are                                                                    
          dependent upon the state)                                                                                             
        · Establishing an entity with ability to issue                                                                          
          bonds to construct  to rebuild regional facilities                                                                    
          such as schools (REAAs  have no authority to issue                                                                    
          bonds)                                                                                                                
        · Creating a government to levy taxes to provide                                                                        
          services   not    otherwise   available   (borough                                                                    
          governments  are  the  only regional  entity  with                                                                    
          taxing power)                                                                                                         
        · Borough governments have authority to act as a                                                                        
          municipal   platting  authority   (The  state   is                                                                    
          responsible in the unorganized areas)                                                                                 
        · Offers a mechanism to provide alcohol control on                                                                      
          a regional basis (currently available only on a                                                                       
          community basis in the unorganized borough)                                                                           
        · Providing the capacity to participate in the                                                                          
          National Flood Insurance Program (currently                                                                           
          limited in the unorganized borough to areas                                                                           
          within city government boundaries)                                                                                    
                                                                                                                                
                           Part IV                                                                                            
                                                                                                                                
   · Unorganized Areas That Meet Borough Standards:                                                                             
        · Aleutians West, Upper Tanana Basin, Copper                                                                            
           River Basin, Prince William Sound, Glacier                                                                           
          Bay, Chatham, Wrangell-Petersburg                                                                                     
   · Standards for Incorporation                                                                                                
        · Population Size and Stability: The                                                                                    
          seven  regions had  populations in  2000                                                                              
          ranging  from   1,354  to   6,964;  each                                                                              
          region exceeded  the presumptive minimum                                                                              
          population standard  of 1,000; 1980-2000                                                                              
          population   trends    were   reasonably                                                                              
          stable in  all regions  except Aleutians                                                                              
          West; when  adjusted for  base closures,                                                                              
          Aleutians     West    population     was                                                                              
          reasonably stable                                                                                                     
        · Regional      Commonalities:     Natural                                                                              
          geography;  social, cultural  & economic                                                                              
          characteristics;          transportation                                                                              
          facilities;      communications      and                                                                              
          exchange;    consideration    of    REAA                                                                              
          boundaries;  and  presence  of  multiple                                                                              
          communities                                                                                                           
        · Economic capacity: Mandatory powers of                                                                                
          boroughs; anticipated  borough expenses;                                                                              
          projected  borough revenues;  ability to                                                                              
          generate  income;  economic  base,  land                                                                              
          use, &  development; property valuation;                                                                              
          personal   income;  and   prior  borough                                                                              
          feasibility studies                                                                                                   
        · Broad public interest: maximum local                                                                                  
          self-government; promoting  a minimum of                                                                              
          local  government  units; and  relieving                                                                              
          the  state of  responsibility for  local                                                                              
          services                                                                                                              
                                                                                                                                
MR. BOCKHORST  concluded the establishment of  borough government                                                               
is often acrimonious  and difficult, but when  boroughs have been                                                               
established  they  have proven  themselves  to  be efficient  and                                                               
effective in delivering service.                                                                                                
                                                                                                                                
CHAIR WAGONER asked if there were any questions.                                                                                
                                                                                                                                
SENATOR  ELTON  restated his  question  regarding  the manner  of                                                               
decision-making.  His  concern  was that  people  from  organized                                                               
boroughs made decisions about the Unorganized Borough.                                                                          
                                                                                                                                
MR.  BOCKHORST explained  there are  five commission  members and                                                               
statute  directs that  one member  is selected  from each  of the                                                               
four judicial districts while the  fifth member is appointed from                                                               
the state-at-large. Arguably, each  member reflects 20 percent of                                                               
Alaskans  and the  Unorganized Borough  represents 13  percent of                                                               
the  population.  The  commission  encouraged  participation  and                                                               
received considerable  written testimony,  but in  that instance,                                                               
no commission member was a resident of the Unorganized Borough.                                                                 
                                                                                                                                
SENATOR ELTON found it startling  that the LBC concluded that, by                                                               
not  shrinking  the  Unorganized  Borough,  the  Legislature  was                                                               
assessing a  tax on  the organized borough  that equated  to $160                                                               
million  for school  services. He  asked  whether the  Commission                                                               
ever  discussed  TL874  funds  that  come  from  the  Unorganized                                                               
Borough and flow into the foundation program.                                                                                   
                                                                                                                                
MR.  BOCKHORST replied  the  commission is  aware  that both  the                                                               
Unorganized and the Organized Borough receive TL874 money.                                                                      
                                                                                                                                
SENATOR ELTON  asked how  much money  comes from  the Unorganized                                                               
Borough into the foundation program.                                                                                            
                                                                                                                                
MR. BOCKHORST  said the commission  didn't get  that information,                                                               
but there was  information in the report regarding  the levels of                                                               
TL874 money that flowed from the seven areas.                                                                                   
                                                                                                                                
SENATOR ELTON  asked that he  be provided with  that information.                                                               
He found  that statement  to be  inflammatory because  he thought                                                               
the ability to pay should  be evaluated. Several times throughout                                                               
the  presentation   it  seemed  as  though   the  commission  was                                                               
comparing  the  success of  borough  governments  created in  the                                                               
early  1960s and  assuming that  same level  of success  could be                                                               
reached  in the  Unorganized Borough.  As the  report noted,  the                                                               
original boroughs  encompassed 83  percent of the  population and                                                               
clearly, that  must be  a factor  in the  success of  those local                                                               
governments.                                                                                                                    
                                                                                                                                
CHAIR WAGONER said his questions ran  in the same vein as Senator                                                               
Elton's. He  noted the population of  one of the models  was just                                                               
1,354, which  seemed rather  small to  form a  successful borough                                                               
government.                                                                                                                     
                                                                                                                                
He asked  why there wasn't a  record of the October  and November                                                               
meetings held by the LBC.                                                                                                       
                                                                                                                                
MR. BOCKHORST  explained the  commission adopted  a work  plan at                                                               
the  first meeting  and he  could provide  a transcript  for that                                                               
meeting. The  second was a  presentation to the  Municipal League                                                               
and there  was no transcript.  All the other meetings  dealt with                                                               
the topic and were transcribed.                                                                                                 
                                                                                                                                
SENATOR LINCOLN acknowledged the  commission's task was difficult                                                               
because of  the staff  turnover, which was  one of  her concerns.                                                               
Because  four of  the five  commission members  were new  and the                                                               
continuing member wasn't  present, she felt it  was unlikely that                                                               
the new  members could  answer her questions.  She noted  much of                                                               
the unorganized areas were in her  district and many of the model                                                               
boroughs were in  her district as well. She  firmly believes that                                                               
when  an area  is able  to  meet the  qualifications for  borough                                                               
formation it  would step forward.  The Denali Borough,  the North                                                               
Slope  Borough  and the  Haines  Borough  are examples  of  that.                                                               
Skagway,  too,  is ready  to  assume  the responsibilities  of  a                                                               
borough, but  the LBC did not  embrace that decision and  she was                                                               
interested in the explanation of that judgment.                                                                                 
                                                                                                                                
Her  second question  was in  regard  to a  letter from  previous                                                               
commissioners, Nancy  (Cannington) Galstad and  Kathie Wasserman.                                                               
They wrote to  suggest the report was flawed because  some of the                                                               
data that was used was from  1989 and not from 2000 as indicated.                                                               
She asked for clarification.                                                                                                    
                                                                                                                                
MR.  HARGRAVES responded  to the  second  question regarding  the                                                               
economic capability  and population for borough  formation saying                                                               
the criteria would have to  be evaluated separately regardless of                                                               
how  the petition  was  presented to  the  commission. A  borough                                                               
could be  mandated and the  commission would apply  the standards                                                               
at  that point  so he  thought there  were a  number of  ways the                                                               
commission would have  a say in the new  boroughs. The difference                                                               
would be  how the Legislature approached  mandating or requesting                                                               
that new boroughs come into existence.                                                                                          
                                                                                                                                
MR.  BOCKHORST  advised  the  commission  used  the  latest  data                                                               
whenever possible  and, for  the most part,  they used  year 2000                                                               
federal census  data, which was  released on September  25, 2002.                                                               
He was  unaware of the allegation  that data from 1989  was used,                                                               
but he  assured her they used  the most recent data  available in                                                               
every instance.                                                                                                                 
                                                                                                                                
SENATOR LINCOLN  said she misspoke;  the economic data  came from                                                               
1986 rather than 1989.                                                                                                          
                                                                                                                                
MR.  BOCKHORST   replied  the  commission  did   examine  borough                                                               
feasibility  studies for  areas under  consideration and  some of                                                               
the studies might have gone back to 1986.                                                                                       
                                                                                                                                
SENATOR LINCOLN asked if the data from that time was used.                                                                      
                                                                                                                                
MR.  BOCKHORST said  it was  not; in  every case,  the commission                                                               
examined  year  2000  federal  census   data.  In  addition,  the                                                               
commission reviewed  any borough feasibility studies,  but didn't                                                               
necessarily rely on that data to make the determination.                                                                        
                                                                                                                                
SENATOR LINCOLN asked what census data was used.                                                                                
                                                                                                                                
MR.  BOCKHORST  replied  it   was  employment,  personal  income,                                                               
poverty, and percentage of employment for an area data.                                                                         
                                                                                                                                
SENATOR LINCOLN asked for a copy of the data that was used.                                                                     
                                                                                                                                
MR. BOCKHORST  agreed and said  much of the information  could be                                                               
found in the report.                                                                                                            
                                                                                                                                
SENATOR  GARY STEVENS  said he  could understand  why communities                                                               
might  not want  to become  part of  a borough,  but in  terms of                                                               
equity,  each case  needed  to be  carefully  examined. He  asked                                                               
about  combining  geographically  proximate areas  into  existing                                                               
boroughs rather than creating separate  ones. He used the example                                                               
of the Aleutians East and West as a possibility.                                                                                
                                                                                                                                
MR. BOCKHORST  said that could  happen in  a couple of  ways. The                                                               
existing  East  Aleutians  Borough could  annex  the  unorganized                                                               
territory  to the  west or  an  Aleutians West  borough could  be                                                               
incorporated  and the  two boroughs  could consolidate.  Starting                                                               
small  with the  presumption  that consolidation  would occur  is                                                               
difficult to achieve once the status  quo is set. The Bristol Bay                                                               
borough is  the smallest borough  in Alaska and is  surrounded on                                                               
three  sides  by the  Lake  and  Peninsula Borough,  which  meets                                                               
inside  the Bristol  Bay Borough.  In fact,  their administrative                                                               
headquarters  is in  the Bristol  Bay Borough,  but the  two have                                                               
resisted efforts to voluntarily consolidate.                                                                                    
                                                                                                                                
SENATOR  GARY   STEVENS  added  the   school  district   is  also                                                               
headquartered in another borough.                                                                                               
                                                                                                                                
CHAIR  WAGONER returned  to the  Skagway decision  and asked  for                                                               
additional explanation.                                                                                                         
                                                                                                                                
MR.  BOCKHORST stated  the Skagway  circumstance is  quite clear.                                                               
There are  two levels of  government recognized under  the Alaska                                                               
Constitution:  city  governments  and borough  governments.  City                                                               
governments  are community  based with  constitutional limits  on                                                               
the  size and  scope of  that type  of government.  They serve  a                                                               
community while borough  governments serve a region.  In the case                                                               
of  Skagway, an  area encompassing  a city  government wanted  to                                                               
become a  borough government with  no expansion or change  in the                                                               
size of the  area in question. They simply applied  to change the                                                               
City of Skagway  to Skagway Borough. Both the  department and the                                                               
commission find  a city government is  not the same as  a borough                                                               
government  and   the  consequences  of  ratifying   the  Skagway                                                               
petition would be very troublesome.  Oftentimes there is interest                                                               
in areas within existing boroughs that  want to detach and form a                                                               
separate   borough.   Not   only  is   this   inconsistent   with                                                               
constitutional intent it would have  many adverse consequences in                                                               
terms of detachment and formation of new, small boroughs.                                                                       
                                                                                                                                
CHAIR  WAGONER  recalled  the  borough  and  city  government  of                                                               
Anchorage  merged and  a borough  government was  formed for  the                                                               
entire area.                                                                                                                    
                                                                                                                                
MR.  BOCKHORST   agreed;  the   city  governments   of  Girdwood,                                                               
Anchorage and  Glen Alps were  dissolved and the  Municipality of                                                               
Anchorage was formed as a borough government.                                                                                   
                                                                                                                                
CHAIR WAGONER added it was voted on as well.                                                                                    
                                                                                                                                
SENATOR  LINCOLN advised  she had  information from  Skagway that                                                               
says  the footprint  is  not the  same; it  was  expanded in  the                                                               
borough petition. She asked for  an explanation of the difference                                                               
between  what Skagway  requested  to do  and Haines  successfully                                                               
accomplished in 2002.                                                                                                           
                                                                                                                                
MR. BOCKHORST assured  her the boundaries of the  City of Skagway                                                               
and the  proposed borough were  identical. The boundaries  of the                                                               
Haines  Borough were  much more  expansive and  included multiply                                                               
communities. Neither  the commission nor the  department believes                                                               
the Haines Borough was ideal  in terms of boundaries. Compromises                                                               
were made to  get voter approval and it actually  took four votes                                                               
before  the voters  finally approved  incorporation.  One of  the                                                               
evident   deficiencies  is   that   Klukwan   isn't  within   the                                                               
jurisdiction   of  the   Haines   Borough  even   though  it   is                                                               
geographically positioned  within the  borough boundaries.  It is                                                               
part of  the Chatham  REAA and  receives education  services from                                                               
Angoon  on Admiralty  Island even  though  there is  a school  at                                                               
Mosquito Lake several miles away.  Both schools are underutilized                                                               
but that was one of the compromises.                                                                                            
                                                                                                                                
SENATOR ELTON followed  up on the Skagway issue and  asked if the                                                               
"recipe" is outlined in the constitution.                                                                                       
                                                                                                                                
MR. BOCKHORST  explained the constitution provides  that boroughs                                                               
are  intermediate units  of government  and  community units  are                                                               
city governments.   Both  the statutes  and the  constitution are                                                               
very general  with regard to a  "recipe" but the LBC  has defined                                                               
model   boundaries  to   guide  prospective   petitioners.  Those                                                               
guidelines  have  been  adopted  in  administrative  regulations,                                                               
which  the commission  has  a  duty to  adopt  under statute  for                                                               
standards  for   borough  incorporation.  Therefore,   the  model                                                               
boundaries identified  by the commission are  reflective of their                                                               
interpretation of the constitution and statutes.                                                                                
                                                                                                                                
SENATOR  ELTON  asked if  he  meant  there was  a  constitutional                                                               
prohibition against Skagway forming a  borough along the lines of                                                               
their application.                                                                                                              
                                                                                                                                
MR. BOCKHORST  replied the constitution  clearly does  not intend                                                               
for a  city government and a  borough government to be  the same.                                                               
Skagway is a city government and  they were proposing to become a                                                               
borough government  with no change  in jurisdiction  or services.                                                               
The proposal  was essentially a  change in the name,  which isn't                                                               
consistent with constitutional intent.                                                                                          
                                                                                                                                
SENATOR  ELTON  said  he  had  difficulty  with  the  explanation                                                               
because there is  no duplication of local  and borough government                                                               
because there would be no more local government.                                                                                
                                                                                                                                
He also questioned the model  borough encompassing Petersburg and                                                               
Wrangell because  those two communities  demonstrate dramatically                                                               
different types  of culture.  The economic  and socio-demographic                                                               
differences are  pronounced even  though they  are geographically                                                               
proximate. He  could see a  battle in  the making over  where the                                                               
borough  manager lived.  Because  of this,  he  was curious  what                                                               
difference it makes to the state  on whether or not there are two                                                               
local  governments,  or  a  borough   government  and  two  local                                                               
governments,  or a  borough government  and no  local government.                                                               
Given their diversity, he couldn't  imagine those two communities                                                               
relinquishing   their  local   governments.  As   cited  in   the                                                               
presentation, it is  the intention of the  Legislature to provide                                                               
for maximum local self-government with  a minimum number of local                                                               
government  units.  He  couldn't  understand how  this  would  be                                                               
possible with the Petersburg/Wrangell proposed model borough.                                                                   
                                                                                                                                
MR.  BOCKHORST  responded  there   are  three  levels  of  school                                                               
districts  serving   that  territory.  They  are:   the  Regional                                                               
Educational  Attendance  Area  (REAA) that  serves  outside  both                                                               
cities, the City  of Petersburg school district, and  the City of                                                               
Wrangell school district. With borough  formation, there would be                                                               
a single  school district serving  the territory.  The commission                                                               
would be willing to entertain  another proposal to see whether it                                                               
met  the standard,  but this  is  what they  determined based  on                                                               
information gained through  an extensive review over  a period of                                                               
years in  the early  1990s. He noted  there were  strong feelings                                                               
expressed,  but  the  commission  was guided  by  the  idea  that                                                               
borough governments are more than a large community government.                                                                 
                                                                                                                                
SENATOR ELTON  asked whether anyone  from that area  came forward                                                               
to petition  to create a  Petersburg/Wrangell borough or  was the                                                               
idea generated from outside forces.                                                                                             
                                                                                                                                
MR. BOCKHORST  acknowledged no petition was  filed to incorporate                                                               
either a Wrangell borough or  a Petersburg borough. A feasibility                                                               
study was recently  completed that looked at  several options for                                                               
Petersburg including  city annexation and  borough incorporation.                                                               
He understood  there was  an unsuccessful  effort in  Wrangell to                                                               
gather signatures to incorporate a Wrangell borough.                                                                            
                                                                                                                                
SENATOR ELTON stated, "The  commission balanced the consolidation                                                               
of  the school  districts against  the proliferation  of regional                                                               
government layered on top of local government."                                                                                 
                                                                                                                                
MR. BOCKHORST agreed;  that is one of the  factors the commission                                                               
applied,  but if  a  petition  were filed,  there  would be  more                                                               
intensive evaluation and review.                                                                                                
                                                                                                                                
SENATOR ELTON said  the adage that says that  the best government                                                               
is  the government  that is  closest  to the  people would  argue                                                               
against formation of a  Petersburg/Wrangell borough. He remembers                                                               
an argument regarding where the  school superintendent would live                                                               
if those districts  were consolidated. Because of  this, there is                                                               
another issue  in addition to consolidation  of school districts.                                                               
That is the philosophical issue of  how close you want your local                                                               
government to be.                                                                                                               
                                                                                                                                
MR.  BOCKHORST   recognized  that  sentiment  and   said  it  was                                                               
reflected  in  the  presentation.   Pelican  has  fewer  than  20                                                               
students and is  interested in forming its own  borough. There is                                                               
a structure for local government  established in the constitution                                                               
that provides  for city  and borough governments  and there  is a                                                               
distinction.   The   commission   often   struggles   with   that                                                               
circumstance and there definitely are gray areas.                                                                               
                                                                                                                                
Several years ago the Legislature  enacted a provision that set a                                                               
tone regarding efficiency,  economy of scale and  the creation of                                                               
school districts.  Lacking compelling reasons, there  wouldn't be                                                               
any more school  districts created with fewer  than 250 students.                                                               
Currently,  about  35 percent  of  the  school districts  in  the                                                               
Unorganized  Borough are  below that  threshold. Ultimately,  the                                                               
commission respectfully  recognizes it is the  Legislature's task                                                               
to set the policy for organization of boroughs.                                                                                 
                                                                                                                                
SENATOR  LINCOLN  admitted she  had  a  roster of  questions.  In                                                               
particular, she was baffled that  a community that wanted to form                                                               
a  borough was  denied  because the  commission determined  their                                                               
footprint was the  same as the proposed borough.  She returned to                                                               
the  letter from  the former  boundary commissioners  that stated                                                               
Skagway should be a borough because it meets the standards.                                                                     
                                                                                                                                
She assured  the commissioners she  meant no disrespect,  in fact                                                               
she applauded  them for  taking the time  to serve.  However, she                                                               
felt the system was flawed due  to the requirements placed on the                                                               
commissioners, the  turnover rate for commissioners,  and because                                                               
there were  just two DCED staff  members to do so  much work. The                                                               
two  previous commissioners  voiced  the same  concerns in  their                                                               
"Statement of Views" letter.                                                                                                    
                                                                                                                                
She asked  commission members  to keep an  open mind,  review the                                                               
model   borough  requirements,   and  determine   ways  to   help                                                               
communities that want  to become a borough as well  as those that                                                               
say  they are  unable to  do so.  She advised  her interpretation                                                               
regarding  mandated boroughs  throughout the  state is  different                                                               
than the presentation. She interprets  the language to mean there                                                               
will  be   both  organized  and   unorganized  boroughs.   It  is                                                               
legitimate that  unorganized areas  remain that  way if  they are                                                               
unable to support a borough.                                                                                                    
                                                                                                                                
MR. HARGRAVES  expressed opposition to changing  the requirements                                                               
placed  on  the  commission.  He   said  he  has  served  on  the                                                               
commission  before and  changing the  requirements would  enhance                                                               
the  potential for  commissioners to  become politicized.  Having                                                               
served under governors  of both parties, he advised  he would not                                                               
serve on  the commission  if it were  to become  politicized. The                                                               
prohibition  against  ex-parte contact  is  a  protection, not  a                                                               
hindrance.                                                                                                                      
                                                                                                                                
SENATOR LINCOLN stated that was not the intent.                                                                                 
                                                                                                                                
SENATOR ELTON advised  he had a 3:00 pm meeting  and requested he                                                               
be provided with  information from DCED regarding  the anomaly in                                                               
the Haines Borough in which Klukwan  was part of the Chatham REAA                                                               
rather  than the  Haines School  District. If  the net  result is                                                               
supposed to  be efficiency in  government, that appears to  be an                                                               
inefficiency that  was allowed to persist  while efficiencies are                                                               
sought in Petersburg and Wrangell.                                                                                              
                                                                                                                                
MR. BOCKHORST  advised he would  be happy  to follow up  on those                                                               
issues and give a response.                                                                                                     
                                                                                                                                
SENATOR LINCOLN  thanked the commission and  staff for dedicating                                                               
their time and efforts.                                                                                                         
                                                                                                                                
CHAIR WAGONER  acknowledged sitting on boards  and commissions is                                                               
sometimes difficult but necessary for government to operate.                                                                    
                                                                                                                                
There being  no further  business to  come before  the committee,                                                               
Chair Wagoner adjourned the meeting at 3:15 pm.                                                                                 
                                                                                                                                

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