Legislature(2003 - 2004)

02/25/2004 01:35 PM Senate 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                                                                  
                       February 25, 2004                                                                                        
                           1:35 p.m.                                                                                            
TAPE (S) 04-6                                                                                                                 
MEMBERS PRESENT                                                                                                               
Senator Bert Stedman, Chair                                                                                                     
Senator Thomas Wagoner, Vice Chair                                                                                              
Senator Gary Stevens                                                                                                            
Senator Kim Elton                                                                                                               
Senator Georgianna Lincoln                                                                                                      
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE JOINT RESOLUTION NO. 25                                                                                                  
Recommending that certain federal funding restrictions be eased                                                                 
so that more villages in Alaska would qualify for assistance                                                                    
relating to flooding and erosion.                                                                                               
     MOVED SJR 25 OUT OF COMMITTEE                                                                                              
SENATE BILL NO. 238                                                                                                             
"An Act relating to initiative and referendum petitions; and                                                                    
providing for an effective date."                                                                                               
     MOVED SB 238 OUT OF COMMITTEE                                                                                              
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SJR 25                                                                                                                  
SHORT TITLE: FLOODING AND EROSION CONTROL ASSISTANCE                                                                            
SPONSOR(s): SENATOR(s) OLSON                                                                                                    
02/06/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/06/04       (S)       CRA, STA                                                                                               
02/25/04       (S)       CRA AT 1:30 PM FAHRENKAMP 203                                                                          
BILL: SB 328                                                                                                                  
SHORT TITLE: NATIONAL FOREST INCOME PROGRAM/DCED REGS                                                                           
SPONSOR(s): SENATOR(s) STEDMAN                                                                                                  
02/13/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/13/04       (S)       CRA, FIN                                                                                               
02/23/04       (S)       SPONSOR SUBSTITUTE INTRODUCED-REFERRALS                                                                
02/23/04       (S)       CRA, FIN                                                                                               
02/25/04       (S)       CRA AT 1:30 PM FAHRENKAMP 203                                                                          
WITNESS REGISTER                                                                                                              
Senator Donny Olson                                                                                                             
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Sponsor SJR 25                                                                                           
Tony A. Weyiouanna Sr.                                                                                                          
Shishmaref Village Transportation Planner                                                                                       
P.O. Box 72100                                                                                                                  
Shishmaref, AK 99772                                                                                                            
POSITION STATEMENT:  Gave a presentation on SJR 25                                                                            
Luci Eningowuk                                                                                                                  
Shishmaref Erosion and Relocation Coalition                                                                                     
P.O. Box 72100                                                                                                                  
Shishmaref, AK 99772                                                                                                            
POSITION STATEMENT:  Gave a presentation SJR 25                                                                               
Kelly Eningowuk                                                                                                                 
Shishmaref Erosion and Relocation Coalition                                                                                     
P.O. Box 72100                                                                                                                  
Shishmaref, AK 99772                                                                                                            
POSITION STATEMENT:  Gave a presentation SJR 25                                                                               
JULIE BALTAR                                                                                                                    
Director, Kawerak Transportation Project                                                                                        
P.O. Box 948                                                                                                                    
Nome, AK 99762                                                                                                                  
POSITION STATEMENT:  Responded to questions on SJR 25                                                                         
Art Ivanoff                                                                                                                     
Executive Officer of the Native Village of Unalakleet                                                                           
Unalakleet, AK 99684                                                                                                            
POSITION STATEMENT:  Testified on SJR 25                                                                                      
DICK COOSE                                                                                                                      
Staff to Senator Bert Stedman                                                                                                   
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Introduced SSSB 328                                                                                      
BILL ROLFZEN                                                                                                                    
National Forest Receipt Program Administrator                                                                                   
Department of Community & Economic Development                                                                                  
PO Box 110800                                                                                                                   
Juneau, AK 99811-0800                                                                                                           
POSITION STATEMENT:  Answered questions on the national forest                                                                
receipt program as it relates to SSSB 328                                                                                       
ACTION NARRATIVE                                                                                                              
TAPE 04-6, SIDE A                                                                                                             
CHAIR  BERT  STEDMAN called  the  Senate  Community and  Regional                                                             
Affairs Standing Committee meeting to  order at 1:35 p.m. Present                                                               
were  Senators Gary  Stevens, Wagoner,  Elton and  Chair Stedman.                                                               
Senator Lincoln arrived a minute later.                                                                                         
         SJR 25-FLOODING AND EROSION CONTROL ASSISTANCE                                                                     
CHAIR BERT STEDMAN announced SJR 25 to be up for consideration.                                                                 
He asked Senator Olson to come forward to introduce the bill.                                                                   
SENATOR DONNY OLSON, sponsor of SJR 25, read the sponsor                                                                        
     SJR 25  is a  resolution requesting  the Army  Corps of                                                                    
     Engineers (Corps) ease their  cost and benefit analysis                                                                    
     for projects in rural Alaska.                                                                                              
     I  have proposed  this resolution  in response  to many                                                                    
     concerns voiced  by my constituents with  regard to the                                                                    
     erosion  and  flooding  problems  that  plague  western                                                                    
     Alaska.  Currently  many  of the  villages  in  western                                                                    
     Alaska do  not receiving the assistance  needed for the                                                                    
     protection of life and property.                                                                                           
     On November 8, 2003 a  winter storm hit western Alaska.                                                                    
     This  storm caused  considerable damage  to Unalakleet,                                                                    
     Shishmaref,  and  some  of  Nome's  surrounding  areas.                                                                    
     While  the governor  has declared  a state  of disaster                                                                    
     because  of  this  storm,   the  continued  effects  of                                                                    
     erosion on the  villages of Alaska are not  going to be                                                                    
     solved by emergency disaster.                                                                                              
SENATOR  GARY STEVENS  asked him  to  speak to  the cost  benefit                                                               
analysis and how the Corps  determines projects and what is wrong                                                               
with their method.                                                                                                              
SENATOR OLSON  explained that  the Corps looks  at what  it would                                                               
cost to  remedy a situation  and then they  look at what  it will                                                               
benefit. In  this case, the  erosion has  gone on for  many years                                                               
and the benefit will be to a relatively small population.                                                                       
As they  ask questions, he  charged, the Island of  Shishmaref is                                                               
eroding. Unfortunately the Corps  doesn't take into consideration                                                               
the culture,  lifestyle and the  social benefits  associated with                                                               
maintaining the integrity of the community.                                                                                     
CHAIR  STEDMAN said  the committee  would look  at a  Power Point                                                               
presentation then return with questions.                                                                                        
[A  copy  of  the  Shishmaref Erosion  and  Relocation  Coalition                                                               
booklet may be found in the bill file.]                                                                                         
TONY WEYIOWANNA  SR., Shishmaref Village  Transportation planner,                                                               
identified himself.                                                                                                             
LUCY  ENINGOWUK,  chairperson  of   the  Shishmaref  Erosion  and                                                               
Relocation Coalition,  identified herself  and advised  that they                                                               
have  been  working  on  the   coalition  since  1997  when  they                                                               
experienced  the  first damaging  storm.  The  three entities  in                                                               
Shishmaref have joined together to work at solving this problem.                                                                
She explained that Shishmaref is  located on a barrier island and                                                               
the  immediate   concern  is  to   get  help   providing  erosion                                                               
protection for the community. Beyond  that, their goal is to move                                                               
and reestablish Shishmaref on the mainland.                                                                                     
Shishmaref  is one  of the  18 to  20 communities  in the  Bering                                                               
Strait region  and the  village is farther  north than  any other                                                               
village. Transportation consists of  a few trucks, snow machines,                                                               
ATVs, small aircraft, and small boats.                                                                                          
LUCI  ENINGOWUK continued  to show  pictures  of community  life,                                                               
subsistence living and a number of different damaging storms.                                                                   
SENATOR LINCOLN asked where the  erosion is worst and whether any                                                               
houses have been lost.                                                                                                          
SENATOR  OLSON pointed  out that  a  number of  houses have  been                                                               
moved back  away from the water,  but some have already  gone in.                                                               
It's  of particular  concern that  the bulk  fuel tanks  are ever                                                               
closer to  the edge. This  is a threat  to the community  and the                                                               
KELLY  ENINGOWUK added  they  have already  moved  18 homes.  She                                                               
continued to show pictures and outline what isn't there anymore.                                                                
SENATOR  GARY  STEVENS asked  if  this  is  the result  of  major                                                               
climatic changes.                                                                                                               
KELLY ENINGOWUK replied they believe it  is a result of a warming                                                               
trend that is noticeable in her lifetime.                                                                                       
SENATOR GARY  STEVENS remarked the  situation probably  won't get                                                               
better in that case.                                                                                                            
KELLY ENINGOWUK  agreed and explained  that the bluffs  are sandy                                                               
so all  that is holding it  is the permafrost. Wave  action melts                                                               
the permafrost  and the  bluff fails, she  said and  proceeded to                                                               
show  examples including  the near  loss of  their power  supply.                                                               
Other  pictures  showed  that the  community  airstrip  has  been                                                               
jeopardized as well.                                                                                                            
SENATOR WAGONER asked  to see a map showing  the current location                                                               
of the village and the proposed relocation site.                                                                                
MR.  WEYIOWANNA SR.  produced a  map showing  that Shishmaref  is                                                               
located on  Sarichef Island in  the Chukchi Sea, about  120 miles                                                               
north of  Nome. The community  voted to relocate to  the mainland                                                               
about 13 miles away - 10  miles across Shishmaref Inlet and about                                                               
3 miles inland.                                                                                                                 
SENATOR ELTON asked  how fuel would be delivered to  the new site                                                               
and whether it  would be possible to get a  fuel barge inside the                                                               
barrier islands.                                                                                                                
MR.  WEYIOWANNA  SR. explained  the  study  that relates  to  the                                                               
placement  of the  fuel facility,  the size  needed and  delivery                                                               
particulars is a work in progress.                                                                                              
SENATOR OLSON  added that fuel  barges would travel up  the river                                                               
channel to  a marina and a  pipeline would run from  there to the                                                               
new village site.                                                                                                               
SENATOR GARY STEVENS  asked whether they expect  that the barrier                                                               
islands will one day be  gone altogether at which time Shishmaref                                                               
Inlet would be less protected from weather from the Chukchi Sea.                                                                
SENATOR OLSON  pointed to shallow  shoals offshore  and explained                                                               
that they help break wave action.                                                                                               
MR. WEYIOWANNA SR.  reported that the community  has been working                                                               
   · The  Natural  Resource  Conservation  Service  to  select  a                                                               
     relocation site,                                                                                                           
   · The U.S. Army Corps of  Engineers - most recently to provide                                                               
     beachfront protection for teacher's quarters                                                                               
   · Tribal partnership  program grant to assess  current erosion                                                               
     and teacher relocation                                                                                                     
   · Alaska Division of Emergency Services                                                                                      
   · Federal  Emergency  Management   Agency  (FEMA)  and  Alaska                                                               
     Community and Economic Development                                                                                         
   · HUD Housing Authority to relocate homes                                                                                    
   · Denali Commission                                                                                                          
2:10 pm                                                                                                                       
KELLY  ENINGOWUK said  the request  for state  assistance is  two                                                               
   · The  immediate goal  is to  provide erosion  control at  the                                                               
     current village site                                                                                                     
   · The long term goal is to relocate the community                                                                          
Recently  the  school  underwent  a $10  million,  state  funded,                                                               
renovation. Additionally,  the Corps has authorized  a Section 14                                                               
project to protect the school  property with the proviso that the                                                               
village  provides up  to  $400,000 in  local  match dollars.  The                                                               
village doesn't have that money and  they are asking the state to                                                               
help in any number of ways:                                                                                                     
   · Help the village receive a  waiver so that the program would                                                               
     be 100 percent federal                                                                                                     
   · Ask  the Army  Corps of  Engineers to  consider the  Kawerak                                                               
     Transportation Project of a riprap seawall as the local                                                                    
   · Authorize state funds - up to for the local match                                                                          
SENATOR  GARY STEVENS  asked if  it makes  sense to  do temporary                                                               
fixes when the long-term fix is to move the village.                                                                            
KELLY  ENINGOWUK said  it  does make  sense  because the  village                                                               
needs  protection now.  She  said she  doesn't  foresee the  move                                                               
happening inside of five years.                                                                                                 
SENATOR ELTON  asked how  much federal  money the  $400,000 match                                                               
would bring.                                                                                                                    
KELLY ENINGOWUK replied the cap is  $1 million for the Section 14                                                               
contract  then cautioned  that is  just for  the school  property                                                               
because those projects are limited to public facilities.                                                                        
MR. WEYIOWANNA SR. pointed to  pictures of single and double line                                                               
gabions and  explained that they  typically last just  one storm.                                                               
The Corps of  Engineers has admitted that even  though the riprap                                                               
project  is designed  to last  25 years,  it might  last just  10                                                               
years because of  the rising sea level. Although  this may appear                                                               
to be a band-aid fix, it would allow  them time to work on a plan                                                               
to move the community.                                                                                                          
KELLY ENINGOWUK said they have  done research and believe this is                                                               
the best cost effective solution.                                                                                               
SENATOR  WAGONER   asked  how  many  people   currently  live  in                                                               
KELLY ENINGOWUK reported the population is about 600.                                                                           
Continuing her presentation, she  said the riprap seawall project                                                               
to protect the  main road starts in March, but  they need erosion                                                               
protection in  other areas of  the town  as well. She  noted they                                                               
have  local  material and  previously  used  gabions from  failed                                                               
seawalls that they are prepared to use.                                                                                         
TAPE 04-6, SIDE B                                                                                                             
2:20 pm                                                                                                                       
Relocation,  she  repeated,  is   the  long-term  goal  and  they                                                               
specifically ask for state help to:                                                                                             
   · Request the federal government enact special measures to                                                                   
     ensure Alaska villages qualify for and receive federal                                                                     
     assistance for erosion protection and relocation                                                                           
     · Coordinate effort between federal and state agencies                                                                     
     · Ask (FEMA) to take the lead                                                                                              
   · Request the federal government enact legislation that                                                                      
     establishes Shishmaref as a demonstration project for both                                                                 
     erosion and relocation assistance                                                                                          
   · Request that various state agencies are fully involved and                                                                 
     engaged in establishing a new community                                                                                    
     · Full cooperation and coordination with federal agencies                                                                  
        and local entities                                                                                                      
   · Ask various state departments to provide technical                                                                         
     assistance and funding for establishing the new community                                                                  
SENATOR  GARY  STEVENS  noted  there  are  between  150  and  200                                                               
communities  that are  facing erosion  problems several  of which                                                               
are on Kodiak  Island. He asked if they were  actually asking the                                                               
Legislature to  support the  request that  is going  through U.S.                                                               
Senator Ted Stevens and the Corps.                                                                                              
KELLY ENINGOWUK agreed that is basically correct.                                                                               
MR. WEYIOWANNA SR. repeated that  the section-14 project requires                                                               
a 35 percent match for a  $1 million project so the village needs                                                               
between  $350,000 and  $400,000.  Because they  have no  economic                                                               
development and no  tax base in their area, they  don't have that                                                               
2:25 pm                                                                                                                       
SENATOR  GARY STEVENS  questioned  how many  millions of  dollars                                                               
would it  take to  satisfy both the  immediate and  the long-term                                                               
goals. What would it cost to  slow the erosion in the village and                                                               
also to relocate the village?                                                                                                   
KELLY ENINGOWUK said they don't  have an estimate for Shishmaref,                                                               
but for Kivalina the estimate is $110 million.                                                                                  
SENATOR GARY STEVENS asked how many people live in Kivalina.                                                                    
[Indiscernible answer  - the 2003  state demographer  estimate is                                                               
SENATOR  GARY STEVENS  asked  how much  the  temporary fix  would                                                               
KELLY  ENINGOWUK  replied  they  have pieces  of  it  being  done                                                               
including  the Kawerak  Transportation  Project,  the Section  14                                                               
project, and several others. They  do have equipment on site, but                                                               
they need $3.4 million for the section that isn't funded.                                                                       
SENATOR ELTON referenced the request  that the federal government                                                               
enact  special  measures  so that  Alaska  villages  qualify  for                                                               
federal  assistance  and  suggested an  additional  resolve  that                                                               
might read:                                                                                                                     
     Be   it  further   resolved  that   the  Alaska   State                                                                    
     Legislature request  that the federal  government enact                                                                    
     special measures to ensure  Alaska villages qualify for                                                                    
     and receive  federal assistance for  erosion protection                                                                    
     and relocation  and that  a coordinated  effort between                                                                    
     the federal and state agencies be led by FEMA.                                                                             
Although  he wasn't  sure that  the sponsor  is comfortable  with                                                               
FEMA  as  the  lead  agency,  he thought  that  was  key  in  the                                                               
presentation; the village needs assistance  that is provided in a                                                               
coordinated way.  Perhaps, he  said, subsequent  testifiers would                                                               
comment on that.                                                                                                                
CHAIR STEDMAN opened the floor to public testimony.                                                                             
JULIE  BALTAR,   director  of  Kawerak   Transportation  Project,                                                               
explained that  Kawerak is the regional  nonprofit corporation in                                                               
the  Bering Strait  region and  Kawerak supports  Senator Olson's                                                               
She said  they have  had direct interaction  with NRCS,  the U.S.                                                               
Army Corps  of Engineers and  a bit  of contact with  FEMA. After                                                               
working with  the Corps for  over three  and a half  years, their                                                               
observation is that  the Corps isn't in a position  to respond to                                                               
an emergency because of cumbersome regulations and policies.                                                                    
For example, U.S.  Senator Ted Stevens got about  $1 million into                                                               
Corps  appropriations  for  assistance   for  Shishmaref  for  an                                                               
expedited EIS  in February 2002.  It's now February 2004  and the                                                               
Corps  has  just determined  how  they  can expend  those  funds.                                                               
Because of  that inability to  respond, Kawerak believes  that if                                                               
there  were  to  be  a  joint agency  response,  FEMA  is  better                                                               
positioned to take the helm.                                                                                                    
Shishmaref coalition  members met with U.S.  Senators Stevens and                                                               
Murkowski in  January and a  high-level multi agency  meeting was                                                               
suggested.  They are  waiting  for  a date  to  be  set for  that                                                               
meeting,  but believe  the results  of the  meeting will  provide                                                               
great benefit to everyone that is working with erosion.                                                                         
Shishmaref  has plans  and would  like to  relocate by  2009, she                                                               
said,  but at  the  current rate  of erosion,  there  will be  no                                                               
village left to  move unless more permanent  erosion measures are                                                               
put in place.                                                                                                                   
SENATOR  LINCOLN noted  that the  federal  government would  have                                                               
responded quickly with  emergency help if the  villagers had done                                                               
nothing and  let the  houses and other  structures fall  into the                                                               
water.  The  villagers were  proactive  in  trying to  save  both                                                               
buildings  and  money  and   unfortunately,  because  of  current                                                               
federal   regulations,  their   action  disqualifies   them  from                                                               
receiving the emergency help they need so badly.                                                                                
She agreed  with the  resolution, but  wondered whether  there is                                                               
any  discussion  in  Washington  D.C.  to  remedy  the  situation                                                               
outlined above.  Certainly it is  cost effective to take  care of                                                               
the problem now.                                                                                                                
SENATOR OLSON  apologized that the  Shishmaref delegation  had to                                                               
leave,  but  advised  he  would stay  and  answer  questions.  He                                                               
described the  working relationship between the  city, the Native                                                               
corporation and  the IRA (Indian  Reorganization Act)  Council as                                                               
the  epitome  of  a  successfully  coordinated  effort.  Although                                                               
Shishmaref  illustrates the  extreme  problems  that villages  in                                                               
Bush Alaska encounter  with erosion, others such  as Kivalena and                                                               
Koyuk  are  similarly  affected.  He then  asked  Ms.  Baltar  to                                                               
address  Senator Lincoln's  question about  what is  happening in                                                               
Washington D.C.                                                                                                                 
MS.  BALTAR  reported  that  the  president  of  Kawerak  was  in                                                               
Washington  D.C. and  working on  the  issue of  how the  current                                                               
regulations were not working. During  discussions with the Alaska                                                               
Delegation   they  learned   that   there   is  opportunity   for                                                               
considerable flexibility in  interpreting the current regulations                                                               
in statute.  They hope that  a multi agency meeting  will provide                                                               
the  opportunity to  exercise that  flexibility and  move forward                                                               
without trying to make legislative changes.                                                                                     
SENATOR LINCOLN expressed  the desire to have in  hand the speech                                                               
that U.S. Senator  Stevens made to the joint body  and noted that                                                               
he spode  to the  fact that  he is  concerned about  erosion. She                                                               
asked  whether addressing  the  issue means  that  he intends  to                                                               
change some regulations.                                                                                                        
MS BALTAR  thought he  was trying  to do  that and  then remarked                                                               
that the  Corps' burdensome process  adds millions of  dollars to                                                               
the cost estimates for these  projects. That should be taken into                                                               
consideration because  Kawerak believes  that it would  cost much                                                               
less  to  move  a  village  than the  amount  that  is  currently                                                               
CHAIR STEDMAN called on Art Ivanoff.                                                                                            
ART  IVANOFF,  executive  director   of  the  Native  Village  of                                                               
Unalakleet,  participated via  teleconference and  concurred with                                                               
statements made  by the  Kawerak and  Shishmaref representatives.                                                               
He said  it is significant  that of  the 213 villages  in Alaska,                                                               
flooding  and   erosion  impact  184  and   four  are  immanently                                                               
threatened.  Because  global  warming is  occurring  he  wondered                                                               
where the villages would be in 10 to 20 years.                                                                                  
He  reported  that the  various  entities  have been  working  to                                                               
change  the federal  cost benefit  policy  because most  villages                                                               
don't have the  economies of scale or population  base to justify                                                               
the Corps spending money in the communities.                                                                                    
CHAIR STEDMAN asked  Senator Olson if he wanted  the committee to                                                               
consider the suggested change.                                                                                                  
SENATOR  OLSON  replied  the recommendation  was  good,  but  the                                                               
additional resolve could be inserted in another committee.                                                                      
SENATOR LINCOLN made a motion to  move SJR 25 from committee with                                                               
individual recommendations and attached  fiscal note. There being                                                               
no objection, it was so ordered.                                                                                                
        SB 328-NATIONAL FOREST INCOME PROGRAM/DCED REGS                                                                     
CHAIR BERT STEDMAN  announced SB 328 to be  up for consideration.                                                               
He  said he  was the  sponsor and  the bill  was titled,  "An Act                                                               
relating to the national forest  income program in the Department                                                               
of Community  and Economic  Development and  to the  authority of                                                               
the  department  to  adopt  regulations;  and  providing  for  an                                                               
effective  date." He  asked  his staff  member  to introduce  the                                                               
DICK  COOSE,   staff  to  the  sponsor,   Senator  Bert  Stedman,                                                               
explained  that, "This  legislation makes  the statutory  changes                                                             
required   for  the   Department   of   Community  and   Economic                                                               
Development to  disburse the  funds commonly  referred to  as the                                                               
timber receipts."  The original act  dates to 1908 and  calls for                                                             
25 percent of  national forest timber receipts  to be distributed                                                               
to counties, boroughs, cities and rural school districts.                                                                       
The "Secure  Rural Schools  and Community  Self-Determination Act                                                               
of  2000," substantively  changed the  timber receipt  program he                                                               
     The  payments  to the  state  under  the "Secure  Rural                                                                    
     Schools Act" are stabilized for  that period of 2002 to                                                                    
     2007  rather than  fluctuate the  way it  had been  and                                                                    
     dropping  rather   significantly  due  mainly   to  the                                                                    
     reduction of timber sales on the national forest.                                                                          
     The distribution  to the boroughs,  the cities  and the                                                                    
     rural education  attendance areas  changed only  in the                                                                    
     fact  that the  new federal  act  required a  15 to  20                                                                    
     percent  special projects  out  of that  money and  the                                                                    
     balance of it  be spent on the  traditional schools and                                                                    
     roads type things.                                                                                                         
     Special  projects are  defined in  the Act  and SB  328                                                                    
     allows  the   Department  of  Community   and  Economic                                                                    
     Development  to prepare  the  regulations that  reflect                                                                    
     this  distribution and  the accounting  of the  special                                                                    
     projects  and makes  the technical  corrections to  the                                                                    
SENATOR KIM ELTON asked him  to elaborate on the special projects                                                               
mentioned in the federal act.                                                                                                   
MR.  COOSE explained  there are  Title II  and Title  III special                                                               
projects.  Title  II  projects  are accomplished  by  the  Forest                                                               
Service  using  a resource  advisory  committee  while Title  III                                                               
special projects are controlled by  the local borough through the                                                               
local  elected body.  He added  it is  the local  government that                                                               
makes the  choice with regard  to which entity controls  and does                                                               
the project.                                                                                                                    
SENATOR ELTON asked  if this is a new distribution  of the timber                                                               
MR. COOSE said it is  new because under the original legislation,                                                               
100 percent  went to  the local entities  for schools  and roads.                                                               
That changed  with the new  act and now up  to 15 percent  of the                                                               
total  can be  directed to  special projects.  The limitation  is                                                               
that  any  body receiving  less  than  $100,000 doesn't  have  to                                                               
specially allocate 15 percent.                                                                                                  
SENATOR ELTON  asked if  that means that  now the  only guarantee                                                               
for schools  and roads is  85 percent  and the Forest  Service or                                                               
the local government determines the remaining 15 percent.                                                                       
MR. COOSE said, "That's true."                                                                                                  
SENATOR  LINCOLN advised  her  wasn't sure  what  she was  asking                                                               
because the  question came from  a community. She read,  "What is                                                               
the federal community  development quota program and  how does it                                                               
relate to the forest receipts program?"                                                                                         
MR.  COOSE replied  they  aren't  related. Community  development                                                               
referred to  in SB  328 relates  to technical  conforming changes                                                               
and has nothing to do with national forest receipts.                                                                            
SENATOR LINCOLN said  she had a second question  that asks, "Does                                                               
this  bill  give the  state  authority  to charge  administrative                                                               
costs  to the  forest  receipts program  over  which they  charge                                                               
MR. COOSE said  he too had that question and  he isn't aware that                                                               
it does give that authority, but he would defer to Mr. Rolfzen.                                                                 
SENATOR LINCOLN  noted that  the new  act changed  the allocation                                                               
for  schools  and roads  from  100  percent  to 85  percent.  She                                                               
continued, "I  always get  a little  concerned when  my colleague                                                               
from the other side of the  aisle is constantly asking, well what                                                               
do we contribute in the  rural areas towards schools." She didn't                                                               
want  to further  erode  funding  for schools  and  then have  to                                                               
defend doing so at  a later time. She asked Mr.  Coon if he could                                                               
help her respond.                                                                                                               
MR. COOSE  replied, "The  positive thing  about the  Secure Rural                                                               
Schools Act  is it stabilized it  at a higher level  than what we                                                               
were  getting the  last say  6 or  8 years  because it  was going                                                               
For example,  as a result  of the  new act the  Ketchikan Gateway                                                               
Borough  went  from  roughly  $100,000   to  $400,000  in  forest                                                               
receipts. Even though  the federal law requires that  they put 15                                                               
percent into special projects, they have had an overall gain.                                                                   
SENATOR  LINCOLN asked  if  Ketchikan could  have  used the  full                                                               
$400,000 for schools and roads or did they lose 15 percent.                                                                     
MR.  COOSE said  they  were not  able to  use  15 percent,  which                                                               
amounted to $60,000 in Ketchikan.                                                                                               
SENATOR LINCOLN said she wanted to hear Mr. Rolfzen's response.                                                                 
BILL  ROLFZEN,  national  forest receipt  program  administrator,                                                               
Department of  Community &  Economic Development,  explained that                                                               
the  federal legislation  back in  2000 severed  the tie  between                                                               
sharing  income from  timber harvest  with local  communities for                                                               
schools and  roads in favor  of a guarantee for  higher payments.                                                               
The compromise  at the federal level  came in the form  of the 15                                                               
percent  that  is set  aside  for  stewardship type  projects  on                                                               
federal lands.                                                                                                                  
One  eligible special  project is  search and  rescue on  federal                                                               
land and Juneau  has opted to set aside their  15 percent to help                                                               
fund  the helipad  at  the  hospital for  rescues  that occur  on                                                               
federal lands surrounding Juneau.                                                                                               
SENATOR  LINCOLN  asked  whether  communities could  use  the  15                                                               
percent for education.                                                                                                          
MR.  ROLFZEN said  there is  one special  projects category  that                                                               
calls  for after  school forest  related education  opportunities                                                               
and the REAAs  in particular have used their 15  percent for that                                                               
sort of activity.                                                                                                               
CHAIR STEDMAN  asked him to elaborate  on the fact that  there is                                                               
flexibility  in the  annual 15  percent  allowing communities  to                                                               
respond to different projects.                                                                                                  
MR.  ROLFZEN explained  that boroughs  and  communities have  the                                                               
option of setting aside a minimum  of 15 percent and a maximum of                                                               
20 percent each  year for special projects. So  far, all entities                                                               
have selected the minimum amount, he added.                                                                                     
The  projects  themselves  provide considerable  flexibility,  he                                                               
said,  and then  reiterated that  this is  a federal  requirement                                                               
that is implemented at the state level.                                                                                         
SENATOR GARY  STEVENS confessed he  wasn't sure that  he followed                                                               
the explanation  entirely and  asked if  the forest  income money                                                               
that goes to  communities for education becomes tied  in with the                                                               
contribution cap  that boroughs have  to fund education.  If it's                                                               
tied to  the cap then it  reduces the amount of  money that local                                                               
communities can contribute to education,  but if it's independent                                                               
then it is in addition to the cap.                                                                                              
MR. ROLFZEN  replied, "It adds to  their total. It has  no impact                                                               
on the state financial aid or the federal aid."                                                                                 
SENATOR GARY STEVENS  said, "So a local community can  put in its                                                               
cap and then this adds additional monies to education."                                                                         
MR. ROLFZEN nodded his head.                                                                                                    
SENATOR  ELTON  followed up  saying  he  thought timber  receipts                                                               
money figured into the foundation formula.                                                                                      
MR. ROLFZEN said it doesn't.                                                                                                    
SENATOR ELTON questioned,  "So it goes straight  to the districts                                                               
and then are  our foundation formula dollars  subtracted from the                                                               
districts then, to reflect the receipt of those dollars?"                                                                       
MR. ROLFZEN  replied, "To my knowledge,  it is not offset  in any                                                               
way a local aid for school districts."                                                                                          
SENATOR  ELTON understood  differently  and asked  for follow  up                                                               
because, "My understanding is that  this reduces kind of the bite                                                               
on our foundation formula -  the receipt of those timber receipts                                                               
and that  has always been....  seen as a local  contribution from                                                               
those rural schools..."                                                                                                         
Referring  back to  the discussion  on how  special receipts  are                                                               
used, he asked who decides how  and where the local share of that                                                               
15 percent is used.                                                                                                             
MR.  ROLFZEN explained  the Title  III funds  go straight  to the                                                               
borough and the borough assembly decides how to use the money.                                                                  
SENATOR LINCOLN returned to the  question of whether SB 328 gives                                                               
the state authority to charge  administrative costs to the forest                                                               
receipts program over and above what is currently charged.                                                                      
MR. ROLFZEN  stated the state  doesn't charge  any administrative                                                               
expense  against the  program  and noted  they  submitted a  zero                                                               
fiscal note  indicating no administrative cost.  "We pass through                                                               
every penny through to the communities," he asserted.                                                                           
CHAIR STEDMAN asked Senator Elton  whether he would like the bill                                                               
held until he got an answer to the foundation formula question.                                                                 
SENATOR ELTON  noted the bill was  moving to Finance and  said he                                                               
would ask  his staff member who  used to be special  assistant on                                                               
education  and  staff  to  the   State  Board  of  Education  for                                                               
clarification.  He  said  he  would   pass  that  information  he                                                               
receives along  to the committee  and he didn't have  any problem                                                               
moving the bill forward.                                                                                                        
SENATOR GARY STEVENS made a motion to move SSSB 328 from                                                                        
committee with individual recommendations and zero fiscal note.                                                                 
There being no objection, it was so ordered.                                                                                    
There being no further business to come before the committee,                                                                   
Chair Stedman adjourned the meeting at 2:58 pm.                                                                                 

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