Legislature(2003 - 2004)

05/07/2003 01:38 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                                                                  
                          May 7, 2003                                                                                           
                           1:38 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Thomas Wagoner, Chair                                                                                                   
Senator Robin Taylor, Vice Chair                                                                                                
Senator Gary Stevens                                                                                                            
Senator Georgianna Lincoln                                                                                                      
Senator Kim Elton                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE CONCURRENT RESOLUTION NO. 12                                                                                             
Requesting the Local Boundary Commission to consider borough                                                                    
incorporation for certain unorganized areas.                                                                                    
     HEARD AND HELD                                                                                                             
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
No previous action to record.                                                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Senator Gary Wilken                                                                                                             
Alaska State Capitol, Room 518                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor SCR 12                                                                                            
                                                                                                                                
Darroll Hargraves                                                                                                               
Chair, Local Boundary Commission                                                                                                
Department of Community & Economic Development                                                                                  
550 West Seventh Avenue, Suite                                                                                                  
Anchorage, Alaska 99501-3510                                                                                                    
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Kathie Wasserman                                                                                                                
Pelican, AK 99832                                                                                                               
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Bob Ward                                                                                                                        
Skagway, AK 99840                                                                                                               
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Keith Bettridge                                                                                                                 
Hoonah City Administration                                                                                                      
Hoonah, AK 99829                                                                                                                
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Carl Crosman                                                                                                                    
HC 60 Box 306T                                                                                                                  
Copper Center, AK 99573                                                                                                         
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Roger Lewis                                                                                                                     
Tenakee Springs, AK 99841                                                                                                       
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Terry Kennedy                                                                                                                   
Tenakee Springs, AK 99841                                                                                                       
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Galen Atwater                                                                                                                   
HC 72 Box 7190                                                                                                                  
Delta Junction, AK 99737                                                                                                        
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Daniel Boone                                                                                                                    
Box 53                                                                                                                          
Chitina, AK 99566                                                                                                               
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Allen Minish                                                                                                                    
Box 118                                                                                                                         
Chitina, AK 99566                                                                                                               
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Peter Jack, SR.                                                                                                                 
Angoon, AK 99820                                                                                                                
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Floyd Jim                                                                                                                       
Angoon, AK 99820                                                                                                                
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Denny Kay Weathers                                                                                                              
Box 1791                                                                                                                        
Cordova, AK 99574                                                                                                               
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Lamar Cotton                                                                                                                    
City of Delta Junction                                                                                                          
Box 229                                                                                                                         
Delta Junction, AK 99737                                                                                                        
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Robert Lee                                                                                                                      
Box 3140                                                                                                                        
Delta Junction, AK 99737                                                                                                        
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Patrick Dalton                                                                                                                  
Box 873                                                                                                                         
Delta Junction, AK 99737                                                                                                        
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Glen Marunde                                                                                                                    
Box 193                                                                                                                         
Tok, AK 99780                                                                                                                   
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Roslyn Isaac                                                                                                                    
Box 129                                                                                                                         
Tok, AK 99780                                                                                                                   
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Sy Neeley                                                                                                                       
Box 88                                                                                                                          
Glennallen, AK 99588                                                                                                            
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Albert Shaw                                                                                                                     
300 Hermit Street                                                                                                               
Juneau, AK 99801                                                                                                                
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
Jon Bolling                                                                                                                     
Craig City Administrator                                                                                                        
Box 725                                                                                                                         
Craig, AK 99921                                                                                                                 
POSITION STATEMENT: Testified on SCR 12                                                                                       
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-13, SIDE A                                                                                                            
                                                                                                                                
CHAIR  THOMAS WAGONER  called the  Senate Community  and Regional                                                             
Affairs Standing Committee meeting to  order at 1:38 p.m. Present                                                               
were  Senators Taylor,  Elton and  Chair  Wagoner. Senators  Gary                                                               
Stevens and Georgianna Lincoln arrived momentarily.                                                                             
                                                                                                                                
The first order of business to  come before the committee was SCR                                                               
12.                                                                                                                             
                                                                                                                                
           SCR 12-BOROUGH INCORPORATION: UNORG AREAS                                                                        
                                                                                                                                
CHAIR THOMAS  WAGONER announced the  sponsor would  introduce the                                                               
bill then Darroll Hargraves the  LBC Chair would give a statement                                                               
and  answer questions.  Finally the  committee would  take public                                                               
testimony.                                                                                                                      
                                                                                                                                
SENATOR  GARY WILKEN,  bill sponsor,  read the  sponsor statement                                                               
into the record:                                                                                                                
                                                                                                                                
     Senate  Concurrent  Resolution  12 requests  the  Local                                                                    
     Boundary   Commission   (LBC)   to   consider   borough                                                                    
     incorporation  for  four  areas  of  the  state:  Upper                                                                    
     Tanana Basin  Model Borough,  Copper River  Basin Model                                                                    
     Borough, Glacier Bay Model  Borough, and Chatham Region                                                                    
     Model  Borough,  These four  areas  of  the state  were                                                                    
     recently identified  in a February  2003 report  by the                                                                    
     LBC,  Unorganized Areas  of  Alaska  that Meet  Borough                                                                  
     Incorporation  Standards,   as  meeting   the  existing                                                                  
     standards for borough incorporation.                                                                                       
                                                                                                                                
     Although  the aforementioned  model boroughs  are named                                                                    
     in  the recent  LBC  report as  having  the fiscal  and                                                                    
     administrative    capacity     to    operate    borough                                                                    
     governments, the majority of  the residents do not live                                                                    
     in home  rule and first  class cities. As  residents of                                                                    
     the  unorganized   borough,  these  Alaskans   are  not                                                                    
     required  to  financially  support their  local  school                                                                    
     system.  This  resolution   recognizes  this  fact  and                                                                    
     establishes a  procedure to determine if  the residents                                                                    
     of the  four areas  have the  ability to  contribute to                                                                    
     their local school districts.                                                                                              
                                                                                                                                
     SCR 12 requests the LBC  to review these areas in depth                                                                    
     and  make a  recommendation  for borough  incorporation                                                                    
     for each  of the model  boroughs that is  determined to                                                                    
     have   met   the   applicable   borough   incorporation                                                                    
     standards.    The   exact    details   regarding    the                                                                    
     establishment  of each  particular recommended  borough                                                                    
     would be  included in each legislative  review proposal                                                                    
     as  submitted   by  the  LBC.  Each   proposed  borough                                                                    
     incorporation would  be adopted unless  the legislature                                                                    
     disapproved  the recommendation  within 45  legislative                                                                    
     days.                                                                                                                      
                                                                                                                                
SENATOR  WILKEN advised  the report  prepared by  the LBC  is the                                                               
basis upon  which SCR  12 is founded.  It identifies  seven areas                                                               
that would  have the  capacity to  support local  government. All                                                               
seven are within the Unorganized  Borough. SCR 12 identifies four                                                               
of those  seven that have  support of  local schools as  a common                                                               
thread. The three  that aren't addressed are first  class or home                                                               
rule cities that currently support their local schools.                                                                         
                                                                                                                                
He noted the handout titled  "Profile of the Unorganized Borough"                                                               
and reviewed four of the 14 points.                                                                                             
     · Created in 1961 as an instrumentality of the State of                                                                    
       Alaska                                                                                                                   
     · Encompasses 11 census areas                                                                                              
     · Residents total 13 percent of Alaska's population -                                                                      
       82,809 residents                                                                                                         
     · Includes 37 of Alaska's 53 school districts (70 percent                                                                  
       of all school districts)                                                                                                 
                                                                                                                                
Often the  LBC efforts are  viewed as arbitrary and  punitive. He                                                               
pointed to the  table that identifies the  11 different standards                                                               
for  borough  incorporation.  Included  are  the  citations  that                                                               
provide the authority on behalf of the state. [See bill packet.]                                                                
                                                                                                                                
SENATOR  WILKEN  noted  organized Alaska  would  contribute  $254                                                               
million before they  get any state aid. Of  that $120,500 million                                                               
will  be  distributed  to  local   REAAs  that  don't  contribute                                                               
anything to  local schools. He  suggested there are areas  of the                                                               
state  that  could  be  asked  to support  some  level  of  local                                                               
government and support  their local schools.   Wage statistics in                                                               
the  REAA  indicate  16,541  people earned  an  average  wage  of                                                               
$25,934 per person.                                                                                                             
                                                                                                                                
Every  year the  LBC asks  the Legislature  for relief  to remove                                                               
some of the disincentives associated  with becoming organized. He                                                               
said,                                                                                                                           
     The best  government is the  government closest  to the                                                                    
     people and there are areas  of our state that are being                                                                    
     called upon  to contribute  to help  with education....                                                                    
     Those  areas of  the  state that  are  able to  support                                                                    
     their schools to  a level that the  state mandates, the                                                                    
     four mil limit...When people sit  down to write a check                                                                    
     every  month  or every  year  for  their schools,  they                                                                    
     start to care  a little more about what  happens in the                                                                    
     little  red  school house.  I  think  that's almost  as                                                                    
     important an issue,  maybe even more so  than the money                                                                    
     issue itself.                                                                                                              
                                                                                                                                
SENATOR GARY  STEVENS referred to  the REAA Wage  spreadsheet and                                                               
asked what A through Q represented.                                                                                             
                                                                                                                                
SENATOR WILKEN replied  those were the REAAs  and they're grouped                                                               
by census areas.                                                                                                                
                                                                                                                                
SENATOR GARY STEVENS asked if there  was some way to identify the                                                               
four areas.                                                                                                                     
                                                                                                                                
SENATOR WILKEN  said he was  sure they were  on the list,  but he                                                               
hadn't identified them. He noted  section three in the LBC report                                                               
speaks to  the earned  wages as an  economic capacity  to support                                                               
government.                                                                                                                     
                                                                                                                                
SENATOR GARY  STEVENS commented  it would  take some  research to                                                               
identify  any one  of the  four model  boroughs to  determine the                                                               
average wage per employee.                                                                                                      
                                                                                                                                
SENATOR WILKEN  admitted he had another  table to cross-reference                                                               
the names.                                                                                                                      
                                                                                                                                
SENATOR ELTON referred to the  REAA wage spreadsheet and asked if                                                               
it included resident workers or all workers.                                                                                    
                                                                                                                                
SENATOR  WILKEN  replied  it  included  all  workers.  The  check                                                               
follows  the  person,   so  the  check  is   reported  where  the                                                               
employment takes place.                                                                                                         
                                                                                                                                
SENATOR ELTON referred  to the third resolve on page  3, line 23.                                                               
He asked  how the LBC  would work  with area residents  on issues                                                               
regarding boundaries,  assembly composition and  different taxes.                                                               
He questioned whether  the LBC would make  recommendations to the                                                               
Legislature or  would that information come  from the communities                                                               
through the LBC and on to the Legislature.                                                                                      
                                                                                                                                
SENATOR WILKEN said,                                                                                                            
     The  LBC   would  bring   the  recommendation   to  the                                                                    
     Legislature   and  the   Legislature   would  deny   or                                                                    
     disapprove  the recommendation.  What  I envision  what                                                                    
     will happen is  that the LBC, I would  hope, would say,                                                                    
     'Well, I think  area X should have  review.' So they'll                                                                    
     go through  the review  process and....they  would look                                                                    
     at the 11 standards and....it's going  to be a six or a                                                                    
     12 month  period that they  would work with  the people                                                                    
     to identify per those 11  standards the proper form and                                                                    
     funding and  organization of that  proposed government.                                                                    
     So it  would be in  concert and  then it would  come to                                                                    
     the Legislature.                                                                                                           
                                                                                                                                
There are ways  to pick and choose the different  powers that are                                                               
desired as  a government.  The powers could  be minimal  or "full                                                               
blown borough  powers." He added  his only request would  be that                                                               
there would be some component for education funding.                                                                            
                                                                                                                                
SENATOR  ELTON  acknowledged his  question  might  not have  been                                                               
precise.   He   suggested    using   assembly   composition   and                                                               
apportionment as an  example. In his community there  are some at                                                               
large seats  and others that  are apportioned by  different parts                                                               
of the borough.  He asked if the LBC would  go to the Legislature                                                               
with recommendations  for assembly composition  and apportionment                                                               
and  the Legislature  would  then decide  whether  to follow  the                                                               
recommendations or  not. He  opined it would  be better  to leave                                                               
those  decisions   to  the  people  who   would  be  representing                                                               
themselves rather than to the LBC and the Legislature.                                                                          
                                                                                                                                
SENATOR  WILKEN said  he wasn't  sure he  knew those  details. He                                                               
didn't know what  the LBC would recommend but  it would certainly                                                               
include the qualifications of how the 11 standards would be met.                                                                
                                                                                                                                
SENATOR GARY  STEVENS asked if consolidation  into an established                                                               
borough was a possibility for any of the four.                                                                                  
                                                                                                                                
SENATOR WILKEN didn't believe so.                                                                                               
                                                                                                                                
SENATOR ROBIN  TAYLOR said the  spreadsheets don't  reflect PL874                                                               
money. [Federal impact  aid payments made to  school districts in                                                               
lieu of local  property taxes lost because students  live on non-                                                               
taxable federal  property or parents work  on non-taxable federal                                                               
land.]  If the  state  assessor hasn't  done  assessments in  the                                                               
unorganized  area,  it's  difficult  to determine  what  the  tax                                                               
values might be and therefore, it's  not known how much the PL874                                                               
money would contribute to fulfilling  the 4 mil standard. For the                                                               
larger  communities  with  large  military  installations  it  is                                                               
likely to  amount to a  mil or two.  Using the Glacier  Bay model                                                               
borough he said  he'd like to know how much  PL874 money comes in                                                               
because of Glacier Bay National Park.                                                                                           
                                                                                                                                
He said  Juneau took Greens Creek  mine and he doesn't  know that                                                               
they have  a specific  representative on  the Assembly,  but they                                                               
probably  should.  He could  agree  with  the Glacier  Bay  model                                                               
borough if they  could take Greens Creek back. The  point is that                                                               
PL874 money should be addressed.                                                                                                
                                                                                                                                
SENATOR  WILKEN   said  PL874   money  isn't  counted   as  local                                                               
contributions.  The Federal  Director of  the Impact  Aid Program                                                               
announced on 3/29/00 that,                                                                                                      
     ....  A state  may consider  all local  resources funds                                                                    
     received under  this title...Only in proportion  to the                                                                    
     share  that local  tax revenues  covered under  a state                                                                    
     equalization program are of total local tax revenues.                                                                      
All but  a ten percent  paperwork payment  flows right on  by the                                                               
Unorganized  Borough into  the general  fund. It  then goes  down                                                               
through the foundation formula and everyone gets a bit that way.                                                                
                                                                                                                                
SENATOR TAYLOR  said that's what  he meant. Whether  organized or                                                               
unorganized, there  is a funding  mechanism and if  they organize                                                               
they benefit because  they pick up 10 percent they  don't have to                                                               
account for  under the  formula. Whether they  form a  borough or                                                               
not,  the  area   [federal  land]  is  still  the   one  that  is                                                               
contributing  toward education  because  the money  flows to  the                                                               
state  from the  federal  government in  lieu  of local  property                                                               
taxes.                                                                                                                          
                                                                                                                                
CHAIR  WAGONER asked  if  he had  population  statistics for  the                                                               
areas as well.                                                                                                                  
                                                                                                                                
SENATOR WILKEN  replied the information  was in section  three of                                                               
the LBC report.                                                                                                                 
                                                                                                                                
SENATOR  TAYLOR reported  the 2000  census indicated  Chatham had                                                               
1,354 people and Glacier Bay had 1,739.                                                                                         
                                                                                                                                
SENATOR WILKEN  added each area would  have to have at  least two                                                               
communities and a population of at least 1,000.                                                                                 
                                                                                                                                
SENATOR  GEORGIANNA  LINCOLN advised  she  wouldn't  ask all  the                                                               
questions  she  had  because  she knew  there  were  many  people                                                               
waiting to testify, but she  wanted to note the reports discussed                                                               
had old data. Even the  wage information is misleading because it                                                               
doesn't  separate  money that  stays  in  the proposed  boroughs.                                                               
There's  a  lot  of  seasonal  work in  the  fishing  and  timber                                                               
industries and that isn't reflected.  Some of the villages in the                                                               
model  borough areas  don't report  their  unemployment and  they                                                               
don't  have  unemployment benefits  so  that's  not shown  as  an                                                               
accurate  number.  Additionally,  it clearly  states  that  PL874                                                               
impact aid  provides funds  to school  districts for  children of                                                               
parents living  and/or working on  federal land in lieu  of local                                                               
tax revenues. Ninety percent of  those eligible funds are used in                                                               
the calculation of state aid.                                                                                                   
                                                                                                                                
SENATOR  WILKEN  said  she  was taking  the  information  out  of                                                               
context. The report uses the date  of the information to show two                                                               
things: First, it  shows that there's a basis  for the discussion                                                               
and it's  been around  for some time.  The conclusions  are drawn                                                               
from data from  the late 1990s and early 2000.  It's not meant to                                                               
be completely accurate; it's just  to support the suggestion that                                                               
perhaps these areas should go  under investigation, with the help                                                               
of  the  people  that  live  there, to  come  up  with  the  best                                                               
government. He said  the report is based on  the best information                                                               
available.                                                                                                                      
                                                                                                                                
SENATOR  ELTON wanted  everyone  to be  clear  that Greens  Creek                                                               
proposed they become part of the Juneau Borough.                                                                                
                                                                                                                                
DARROLL  HARGRAVES,   Chair  of  the  LBC,   briefly  stated  the                                                               
Legislature enacted a  law last session that directed  the LBC to                                                               
determine which  areas of the  Unorganized Borough  qualified for                                                               
incorporation. The report, Unorganized  areas of Alaska that Meet                                                             
Borough   Incorporation  Standards,   dated   February  2003   is                                                             
available in the committee file.                                                                                                
                                                                                                                                
SENATOR ELTON  repeated his  question regarding  the role  of the                                                               
LBC  in  determining  assembly  composition,  apportionment,  the                                                               
proposed operating  budget and the  type of taxes levied  for the                                                               
model boroughs.  He asked  how the LBC  would make  the decisions                                                               
that would lead  to recommendations particularly in  light of the                                                               
process  in which  the  commission makes  a  presentation to  the                                                               
Legislature  and it's  up  to  them to  reject.  If  there is  no                                                               
rejection, the recommendation moves forward.                                                                                    
                                                                                                                                
MR. HARGRAVES  replied LBC staff  might be available  to respond,                                                               
but  there is  precedent  for organization  to  take place  under                                                               
certain stipulations.                                                                                                           
                                                                                                                                
SENATOR ELTON  said he would  have a follow up  conversation with                                                               
staff on those issues.                                                                                                          
                                                                                                                                
SENATOR  LINCOLN asked  if the  LBC was  following just  the four                                                               
model boroughs or all seven.                                                                                                    
                                                                                                                                
MR. HARGRAVES  advised they take  no part  regarding prioritizing                                                               
the seven areas for organization.                                                                                               
                                                                                                                                
There were no further questions.                                                                                                
                                                                                                                                
KATHIE WASSERMAN  from Pelican  spoke from  the perspective  of a                                                               
former  LBC  member and  pointed  to  the  flaws in  the  current                                                               
process  for borough  formation. See  the STATEMENT  OF VIEWS  ON                                                             
BOUNDARY  FORMATION IN  ALASKA  in the  committee  file from  the                                                             
4/9/03 hearing.                                                                                                                 
                                                                                                                                
She  noted  anyone  of  the  four  areas  might  have  difficulty                                                               
financially supporting  a borough,  which raises the  question of                                                               
whether the LBC would be in  the position to deny a petition from                                                               
one of those  four areas thus making the entire  system look more                                                               
flawed than it does currently.                                                                                                  
                                                                                                                                
CHAIR WAGONER  asked Ms. Wasserman  to send her testimony  to his                                                               
office because the first part of didn't come through.                                                                           
                                                                                                                                
MS. WASSERMAN  agreed to do  so and  said the first  part pointed                                                               
out  that government  was higher  in the  four highlighted  model                                                               
boroughs due to large expanses of  water and land. [See bill file                                                               
for full testimony.]                                                                                                            
                                                                                                                                
BOB  WARD   from  Skagway  testified   both  the   Model  Borough                                                               
Boundaries Act and Standards are  in need of complete revision to                                                               
reflect changes that have occurred since the act was adopted.                                                                   
                                                                                                                                
KEITH  BETTRIDGE  from  the Hoonah  City  Administrator's  office                                                               
testified  the City  of Hoonah  is investing  a lot  of resources                                                               
with reference to the borough  formation and study. At this point                                                               
they asked  the state  to hold off  on mandatory  formation until                                                               
they complete the process.                                                                                                      
                                                                                                                                
CARL  CROSMAN from  Kenny  Lake [Copper  River  Basin] noted  the                                                               
report  on the  last legislative  conference came  from a  survey                                                               
that  was mailed  and  all that  proves is  that  the people  who                                                               
answered the  survey have mailboxes;  it doesn't prove  they live                                                               
there. He can't imagine anyone  inviting someone from the borough                                                               
into their home  and showing them how much their  house should be                                                               
worth and  bragging about how much  money they make. He  asked if                                                               
residents came up with a plan  to fund their school, whether that                                                               
would address the legislative concern.                                                                                          
                                                                                                                                
SIDE B                                                                                                                          
2:30 pm                                                                                                                         
                                                                                                                                
TERRY KENNEDY from Tenakee reported she  had lots to say, but she                                                               
would  be  brief and  state  she  wasn't  in favor  of  mandatory                                                               
borough formation. It  would create a financial  hardship for the                                                               
residents. The  state receives  90 percent  of the  PL874 federal                                                               
impact aid for  schools and the Chatham School  District that she                                                               
is  in  received just  ten  percent.  From her  perspective,  she                                                               
couldn't see  where the  state would get  more money  from taxing                                                               
the model boroughs than they're  already getting from the federal                                                               
impact aid.                                                                                                                     
                                                                                                                                
She noted the  community only received 24 hours  notice this bill                                                               
would be heard  and public testimony taken.  There would probably                                                               
be more people testifying that day if they had more notice.                                                                     
                                                                                                                                
CHAIR WAGONER advised the meeting  was noticed on Saturday, which                                                               
is  far more  than  24 hours.  He asked  her  to send  additional                                                               
testimony to his office.                                                                                                        
                                                                                                                                
ROGER LEWIS from  Tenakee stated the community has  had a borough                                                               
formation committee for several years  and the consensus is clear                                                               
that they see nothing to be  gained by forming a borough in their                                                               
area and, in fact, something may  be lost. They are not convinced                                                               
the areas under consideration have  anything in common; they have                                                               
no   transportation    links,   little    communication   between                                                               
communities,  and   are  separated   by  great   distances.  It's                                                               
difficult to see  how Tenakee would fit into any  of the criteria                                                               
for a model borough at any time.  If they were mandated to form a                                                               
borough, they  would like to form  a third class borough  so they                                                               
could maintain control over their own planning and zoning.                                                                      
                                                                                                                                
SENATOR  TAYLOR  said the  amount  of  PL874 money  was  probably                                                               
equivalent  to  one  mil  for  that area  and  all  other  school                                                               
districts except Barrow are required to  put up a minimum of four                                                               
mils. He asked  how many children were currently  enrolled in the                                                               
school.                                                                                                                         
                                                                                                                                
MS.  KENNEDY  informed  him  there  were  11  children  currently                                                               
enrolled in the Tenakee school.                                                                                                 
                                                                                                                                
SENATOR TAYLOR  remarked that  was close to  the minimum  to keep                                                               
the school open.                                                                                                                
                                                                                                                                
GALEN  ATWATER   from  Meyers  Lake  Roadhouse,   170  Richardson                                                               
Highway,  reported he  was  involved when  Eagle  River tried  to                                                               
secede from the  Anchorage Borough. He moved away  from that area                                                               
to get away from a borough and  is faced with being in one again.                                                               
There's no need to hurry the  process until they get some type of                                                               
tax base.                                                                                                                       
                                                                                                                                
DANIEL BOONE from  Chitina spoke in opposition to SCR  12. In his                                                               
view,  the  entire Copper  Basin  could  not support  a  borough.                                                               
Unemployment  in  this  area  is higher  than  reported  and  the                                                               
figures used in the report are incorrect.                                                                                       
                                                                                                                                
SENATOR LINCOLN questioned the figures  used in the February 2003                                                               
Alaska  Local  Boundary  Commission   report.  According  to  the                                                               
report, Chitina  had a population  of 42 in  1980 and 49  in 1990                                                               
and 123 people in 2000. She asked if the data was accurate.                                                                     
                                                                                                                                
MR. BOONE  thought the 2000  population figure  probably included                                                               
everyone from  Strelna to Lower  Tonsina and the  unemployment is                                                               
around 95 percent.                                                                                                              
                                                                                                                                
SENATOR LINCOLN wasn't sure how  many of the unemployed residents                                                               
apply  for unemployment  benefits  and asked  if  that was  being                                                               
reported.                                                                                                                       
                                                                                                                                
MR. BOONE replied it was not.                                                                                                   
                                                                                                                                
ALLEN MINISH from  Chitina testified in opposition to  SCR 12. He                                                               
has been  a property owner  in the area  for many years  and just                                                               
recently became a full time  resident. He spoke against formation                                                               
of this  model borough because it  would be just another  form of                                                               
government created for educational  purposes. He was also against                                                               
all property  owners not being  treated the  same way if  in fact                                                               
non-natives were taxed and natives were not taxed.                                                                              
                                                                                                                                
CHAIR  WAGONER advised  native  land  would be  taxed  if it  was                                                               
subdivided or developed.                                                                                                        
                                                                                                                                
MR. MINISH thought  the number of individuals  supporting the tax                                                               
base would be disproportionate compared  to those benefiting from                                                               
the tax base.                                                                                                                   
                                                                                                                                
That legislative information office  didn't receive copies of the                                                               
bill and he asked that the information be sent.                                                                                 
                                                                                                                                
CHAIR WAGONER  said they would  get them the material  as quickly                                                               
as possible and the LBC report was available online.                                                                            
                                                                                                                                
PETER JACK  SR. from  Angoon testified in  opposition to  SCR 12.                                                               
Several years  ago the community  investigated forming  a borough                                                               
and determined they had little  to gain. The unemployment rate is                                                               
very high in  the Angoon area. Most of the  employment comes from                                                               
fishing and that industry is seasonal and no longer robust.                                                                     
                                                                                                                                
He stated he heard about this meeting just today.                                                                               
                                                                                                                                
SENATOR GARY STEVENS  asked how he suggests  paying for education                                                               
in Angoon.                                                                                                                      
                                                                                                                                
MR. JACK SR.  replied that was a good question  and if they could                                                               
think of a good way they would already be doing it themselves.                                                                  
                                                                                                                                
SENATOR TAYLOR remarked  Angoon looked at forming  a borough with                                                               
Greens Creek  in the  tax base.  He thought  that review  was the                                                               
catalyst for  Greens Creek  to ask  Juneau to  annex them  in the                                                               
hope that the  tax rate would be lower. That's  why he brought up                                                               
the point earlier regarding who should be taxing the facility.                                                                  
                                                                                                                                
FLOYD JIM from  Angoon testified in opposition to  SCR 12. Angoon                                                               
is the only  community in the Admiralty  Island National Monument                                                               
and employment opportunities  are few. To reach  the 1,000 person                                                               
minimum for borough formation it  would be necessary to include a                                                               
number of small communities that  are separated by large expanses                                                               
of water, which is ridiculous.                                                                                                  
                                                                                                                                
SENATOR LINCOLN  asked Angoon and  others testifying to  be aware                                                               
that not everyone feels that  the rural areas aren't paying their                                                               
way. In Angoon a raw fish tax is  paid and although it may not go                                                               
directly   to  education,   any   employment   in  the   villages                                                               
contributes to  help pay the  way for the  state. She is  one who                                                               
feels the rural areas are paying every bit they can.                                                                            
                                                                                                                                
DENNY K WEATHERS  from Prince William Sound said  the meeting was                                                               
originally  noticed  as testimony  by  invitation  only and  they                                                               
learned differently just the day  before. She read a statement in                                                               
opposition to SCR  12. During the last published  LBC hearing she                                                               
testified  that the  information  on Cordova  was incorrect.  She                                                               
requested that the  information be corrected and it  was not. The                                                               
Cordova data comes  from a time when the economy  was doing well,                                                               
which is definitely not the case  any longer.  [See bill file for                                                               
full testimony.                                                                                                                 
                                                                                                                                
LAMAR  COTTEN from  the City  of Delta  Junction testified  he is                                                               
currently working on  a regional government option  study for the                                                               
Delta/Greely  REAA,  which is  half  of  the Upper  Tanana  model                                                               
boundary.  He hopes  it is  understood the  LBC could  change the                                                               
boundaries of  a model borough. They  would like the LBC  to look                                                               
at  the  Delta/Fort Greely  REAA  as  a  separate area  from  the                                                               
Gateway REAA.                                                                                                                   
                                                                                                                                
ROBERT LEE a  Delta Junction resident spoke in  opposition to SCR                                                               
12. He would like to see less government rather than more.                                                                      
                                                                                                                                
PATRICK DALTON  from Delta  Junction spoke  in opposition  to SCR                                                               
12.  He pointed  out  this is  mostly a  group  of Senators  from                                                               
organized  boroughs imposing  a borough  on an  unorganized area.                                                               
Areas will  organize when they are  ready, which would be  a more                                                               
just form of government.                                                                                                        
                                                                                                                                
SENATOR  LINCOLN  asked  Mr.  Cotton if  the  regional  study  he                                                               
referred to included Big Delta,  Delta Junction, Deltana and Fort                                                               
Greely.                                                                                                                         
                                                                                                                                
MR. COTTEN said it did.                                                                                                         
                                                                                                                                
SENATOR  LINCOLN  observed  the  population  base  for  the  four                                                               
accounted  for a  bit over  half of  the 6,300  proposed for  the                                                               
Upper Tanana Basin.                                                                                                             
                                                                                                                                
MR. COTTEN replied that's his understanding.                                                                                    
                                                                                                                                
GLEN MARUNDE from Tok testified in  opposition to SCR 12. He made                                                               
the  point that  city government  is the  most proper  choice for                                                               
government in small communities  in unorganized Alaska. There are                                                               
145  cities in  Alaska  and 96  of them  are  in the  unorganized                                                               
borough.  These are  organized  communities  with city  charters.                                                               
Starting government at the city level  is logical and that is the                                                               
way  it has  been done  across  the nation  since the  beginning.                                                               
Traditionally, the LBC  has operated from the  local community up                                                               
to  meet  the  needs  of   those  ready  and  willing  to  govern                                                               
themselves. He  emphasized the  LBC is not  under the  control of                                                               
the  Legislature; it  is specifically  under the  control of  the                                                               
Executive  Branch.  He  asked  Mr.   Hargraves  whether  the  LBC                                                               
actually was independent.                                                                                                       
                                                                                                                                
ROSLYN  ISAAC  from  Tanacross  represented  a  number  of  small                                                               
villages  in  the  area  and  spoke  in  opposition  to  SCR  12.                                                               
Unemployment  is  high in  this  area  and supporting  a  borough                                                               
government is  economically unfeasible  at this time.  They, too,                                                               
took issue with the validity of the data used in the report.                                                                    
                                                                                                                                
SY NEELEY from  Glennallen spoke as a member of  the LBC from the                                                               
1960s.  According to  his calculations,  the  state is  receiving                                                               
more  PL874 money  than it  would from  taxes if  a borough  were                                                               
formed. If borough  formation does move forward, he  would like a                                                               
spreadsheet to  be published to  show the income, where  it comes                                                               
from and  what the  expenditures would be  to operate  a borough.                                                               
The  valley residents  could then  evaluate whether  or not  they                                                               
could afford to support a borough.                                                                                              
                                                                                                                                
SENATOR LINCOLN  asked whether  the LBC intent  in the  1960s was                                                               
for boroughs to be formed in all areas of the state.                                                                            
                                                                                                                                
MR.  NEELEY  said yes,  then  outlined  the process  for  drawing                                                               
boundaries.                                                                                                                     
                                                                                                                                
SENATOR  LINCOLN questioned  whether  they anticipated  mandatory                                                               
borough formation  or were communities  expected to  step forward                                                               
on their own.                                                                                                                   
                                                                                                                                
MR. NEELEY  remembered it was  to be  left up to  the communities                                                               
and originally there were 13 or 14 boroughs in the entire state.                                                                
                                                                                                                                
TAPE 03-15 SIDE A                                                                                                             
                                                                                                                                
CHAIR  WAGONER announced  SCR 12  would not  move from  committee                                                               
that  day. There  would  be  one more  chance  for testimony  and                                                               
discussion   on   Friday.   He  acknowledged   the   notice   was                                                               
misunderstood and a few more people might want to testify.                                                                      
                                                                                                                                
ALBERT SHAW from Juneau testified he  was part of the Juneau City                                                               
Council and  helped draw  the Juneau boundaries.  He said  he was                                                               
under the  impression the rest  of the state would  be organized.                                                               
He said  he would  have taken  more area if  he'd been  given the                                                               
opportunity.                                                                                                                    
                                                                                                                                
He  said, "If,  because of  the resolution  and new  boroughs are                                                               
formed,  it  appears an  area  should  be  added to  an  existing                                                               
borough, the LBC is encouraged to do so."                                                                                       
                                                                                                                                
SENATOR TAYLOR  asked if he agreed  with Mr. Cotten that  the LBC                                                               
should be able  to consider taking in parts  of existing boroughs                                                               
if necessary.                                                                                                                   
                                                                                                                                
MR. SHAW replied borough lines should be logical.                                                                               
                                                                                                                                
JON BOLLING, Craig City Administrator  and Chair of the Prince of                                                               
Wales Community  Advisory Council  (POWCAC), said he  didn't come                                                               
to speak  for or against  the resolution. He  came to ask  that a                                                               
specific analysis  be done  as part  of the  LBC work.  Prince of                                                               
Wales  communities have  followed this  matter closely  since the                                                               
Legislature tasked the LBC with preparing the report.                                                                           
                                                                                                                                
He pointed  out there is  an important analysis missing  from the                                                               
February 2003 report  and he would like it to  be included in any                                                               
subsequent work  authorized by the  resolution. That is  that the                                                               
Timber  Receipts Program  and  PILT (Payment  in  Lieu of  Taxes)                                                               
payments to municipalities in the  Unorganized Borough were based                                                               
on  the amount  of acreage  in  the Unorganized  Borough. If  the                                                               
Chatham and  Glacier Bay  Boroughs were  formed, Craig  and other                                                               
communities in the Unorganized Borough  in Southeast that have no                                                               
school  districts  would  see  significant  reductions  in  those                                                               
payments. For  example, the  timber receipt  funds paid  to Craig                                                               
for education  amounted to $800,000,  which is twice  the formula                                                               
equivalent. If any  other borough were formed  in Southeast, they                                                               
would all  be negatively impacted  financially by the  change. He                                                               
said he  would like  to see  that analysis  accounted for  in any                                                               
subsequent report issued by the LBC.                                                                                            
                                                                                                                                
SENATOR TAYLOR  asked if the  timber receipt payments  alone were                                                               
twice the required 4-mil local effort for Craig.                                                                                
                                                                                                                                
MR. BOLLING replied the timber  receipts Craig received last year                                                               
were approximately twice the formula equivalent.                                                                                
                                                                                                                                
SENATOR   TAYLOR   remarked   that   would   be   equivalent   to                                                               
approximately  8 mils.  He asked  if  that money  was put  toward                                                               
education.                                                                                                                      
                                                                                                                                
MR. BOLLING  said the  law requires  the entire  amount to  go to                                                               
education.                                                                                                                      
                                                                                                                                
SENATOR  TAYLOR pointed  out the  money  could also  be used  for                                                               
roads.                                                                                                                          
                                                                                                                                
MR.  BOLLING said  there's  a  second fund  for  roads and  Craig                                                               
received between $30,000  and $40,000 as the  roads component for                                                               
the timber receipts money.                                                                                                      
                                                                                                                                
SENATOR TAYLOR asked what the PILT payments were.                                                                               
                                                                                                                                
MR. BOLLING replied they were approximately $170,000.                                                                           
                                                                                                                                
SENATOR  TAYLOR  said that's  roughly  $1  million that  went  to                                                               
education.                                                                                                                      
                                                                                                                                
MR. BOLLING  clarified the PILT  payments went into  general fund                                                               
operations. Just  the $800,000 in  timber receipts to  Craig that                                                               
were  directly  earmarked  for education  was  delivered  to  the                                                               
school.                                                                                                                         
                                                                                                                                
SENATOR TAYLOR asked if he was referring to PL874 money.                                                                        
                                                                                                                                
MR. BOLLING replied it was a different program.                                                                                 
                                                                                                                                
SENATOR TAYLOR remarked Craig got PL874 money too.                                                                              
                                                                                                                                
MR. BOLLING  said that was  correct, that money goes  straight to                                                               
the district.                                                                                                                   
                                                                                                                                
SENATOR TAYLOR  stated the total  contribution from Craig  in the                                                               
form  of PILT  or Timber  Receipts taxes  was probably  twice the                                                               
amount  they would  be  paying  if they  organized  and formed  a                                                               
borough.                                                                                                                        
                                                                                                                                
MR. BOLLING agreed the community  now supports their local school                                                               
in excess of the required 4 mils.                                                                                               
                                                                                                                                
SENATOR  TAYLOR  said that  was  his  point.  If a  borough  were                                                               
formed,  they might  find themselves  restricted to  contributing                                                               
only $400,000 to $500,000 for education.                                                                                        
                                                                                                                                
MR.  BOLLING acknowledged  he hadn't  calculated what  the Timber                                                               
Receipts payments  to the  Prince of Wales  borough would  be. He                                                               
did know that if areas in  Southeast Alaska that are currently in                                                               
the  Unorganized  Borough became  organized,  that  would have  a                                                               
significant  financial  impact   on  the  remaining  incorporated                                                               
communities that have school districts.                                                                                         
                                                                                                                                
SENATOR TAYLOR stated:                                                                                                          
     There  is a  fixed  amount of  money  coming in  that's                                                                    
     currently divided  up on acreage  so if  somebody takes                                                                    
     some of the acreage  you're currently relying upon they                                                                    
     get a bigger piece out  of that fixed pool of money...I                                                                    
     believe there  are areas  of the  state where  when you                                                                    
     combine PL874  monies, timber  receipt monies  and PILT                                                                    
     monies  that  land  base  that  would  become  the  new                                                                    
     borough  is actually,  today,  generating  more in  the                                                                    
     form of  receipts toward education  than if it  were to                                                                    
     go out and tax all of  the homeowners say in Craig at 4                                                                    
     mils.                                                                                                                      
                                                                                                                                
     And then I don't know what  happens - I'm going to have                                                                    
     to talk with Eddy Jeans -  at that point with the state                                                                    
     cap that  we have  placed on organized  communities for                                                                    
     the  amount   of  money  they  can   contribute  toward                                                                    
     education. I  believe you would  be up against  the cap                                                                    
     if not  in excess of  it and once  you go in  excess of                                                                    
     the cap, you  then have to pay back to  the state, more                                                                    
     money than  you've actually received or  paid above the                                                                    
     cap...You're  receiving  monies   based  on  a  federal                                                                    
     formula,  because it's  not for  cutting trees,  it's a                                                                    
     formula  for  not  cutting trees.  I  don't  know  what                                                                    
     happens to those  funds if you cannot  dedicate them to                                                                    
     education  as  the  federal law  requires...What's  the                                                                    
     penalty going to be on  your school district for paying                                                                    
     too much toward education?                                                                                                 
                                                                                                                                
MR. BOLLING advised that the City of Craig contributes closer to                                                                
the cap than the floor now.                                                                                                     
                                                                                                                                
CHAIR WAGONER held the bill in committee.                                                                                       
                                                                                                                                
CHAIR WAGONER adjourned the meeting at 3:45 pm.                                                                                 
                                                                                                                                
                                                                                                                                

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